Notes From a Native Son: Pressuring Credit Unions to Shore up Foreign-owned Banks is a Missed Opportunity

Hal Austin

Hal Austin

Introduction:
There is a lot of back room chat about whether or not the Financial Services Commission has been putting one or more credit unions under pressure to move capital to foreign-owned commercial banks. Although this is wrong, based on the principles of financial regulation and financial management, the only legitimate exclamation has got to be political.

The other exclamation, of course, and one that neither the government nor central bank would entertain, is that the economy is in such bad shape that the ministry of finance, through the proxy of the FSC, has moved to capture all available institutional cash in the economy in order to meet its day-to-day costs. Whatever the official or unofficial explanation, it is simply wrong.

Credit Unions:
The key principle behind the creation of credit unions is to allow members to pool resources in order to provide alternative services to more commercial retail banks and at reasonable costs. They are not meant to operate in the same financial space as banks; their business models are different and their democratic decision-making may be cumbersome, but allows members to have a say in the management of the society. In Barbados, and indeed globally, they have been enormously successful, particularly so since the 2007/8 banking crisis, which has largely left mutual societies undamaged.

Regulation:
Regulating credit unions, however, presents new challenges to the two-pronged regulatory framework we have in Barbados, with the central bank overseeing conventional banks, and the FSC regulating and supervising the non-banking financial sector. This arrangement, however, presents enormous difficulties as was seen by the joint stress-testing regime in operation. Banks, insurance companies, credit unions, trusts, mutual funds, and other deposit-taking and investment institutions all have different business models which makes a single stress test almost impossible, unless, of course, it is simplistic, which means by definition, not fit for purpose. Avoiding the uniqueness of Barbadian financial regulation and concentrating instead on the more conventional universal regulatory and supervisory models, once again the local version – the so-called Barbados Model – is found wanting.

Why the FSC Intervention:
As suggested, even if there has been a misunderstanding about the FSC intervention, this is as good an opportunity as any to discuss the kind of regulatory structure and principles on which the FSC should be operating. As yet, the FSC has not given us any guidance as to how it intends to regulate those institutions that come under its remit. Is it going to be a principles-based system or a rules based one. The problem with rules-based regulation is that it plays right in to the hands of unscrupulous lawyers and clever executives who will use the rules to operate in the shadows of the law. Enforcing the law will become a constant relay between the disciplinary committee of the regulator and the high courts.

Given this, if the FSC intervention was perceived as lending risk, or even investment risk, there is any number of instruments that the regulator could have used to nudge the credit union, or credit unions, in to doing the right thing: it is simple behavioural regulation. But this is theoretical. So far neither the government nor the regulator has given a financial or regulatory case for compelling the credit union movement to move its cash on to the books of foreign-owned banks. In terms of regulation, the implication is that if the money remains in the non-banking sector it will be at risk. So, does this mean those non-banking institutions are not properly capitalised? Does it mean that cracks in their finances have been discovered during supervisory or regulatory visits? Is there a whistleblower?

Further, is this demand duplicating other regulatory requirements or is it just adding complexity and confusion to an already incompatible regulatory framework? Is one of the unintended consequences of this decision (at least I hope it is unintended) is to concentrate the banking sector in fewer foreign-controlled hands, rather than diversifying the sector to minimise risk and to promote a prudent and much-needed diversified financial sector?

Credit Union Bank:
Whatever the reason for the FSC’s intervention, with the ministry of finance and central bank pulling the strings, the more damaging outcome is that this narrow-view of financialisation is that, once more, the authorities have missed an opportunity to encourage the development of an alternative to commercial banks. A Barbados domiciled credit union bank would be in a position to fund households, small and medium enterprises and the micro-finance need for the self-employed. This is badly needed since the foreign-owned retail banks are just not lending to local people and businesses. It would also be a hedge against the oncoming financial tsunami crashing around Barbados. On top of this, the global banking convergence is sweeping down on us like a tornado and little economies like Barbados will be swept away like debris. The fundamental duty of our politicians and policymakers is to defend us, stand in the path of the oncoming giant and protect us.

A joint credit union bank, playing to its strengths by being restricted to simple relationship banking would provide an invaluable financial service to households and small businesses. In fact, by allowing credit unions to diversify their investments in to retail services, including supermarkets, farming and small manufacturing, would see a radical departure from traditional collecting of fees and warehousing that cash. This is the traditional credit union model and, in a low interest environment, will simply die a slow death. Instead of providing cheap capital for over-consuming people to go shopping for durables that will soon lose their value, should rightly be the drivers of micro-finance for the self-employed and small businesses, with proper planning, a credit union bank could be at the heart of the renewal of the Barbados economy.

Risk and Compliance:
What is not clear, since it is not the practice of the central bank and the Financial Services Commission to publish details of their risk and compliance methodologies, is the nature of supervision, the processes, if each firm has a dedicated supervisor and, if the requirement to bank with the foreign-owned banks is a direct result of the failure credit unions’ risk models. The bottom line is that our regulatory architecture is flawed due to the inward-looking nature of policymaking in Barbados. Since the 2007/8 global banking crisis, almost the entire world has undergone financial regulatory and supervisory changes and, under normal circumstances, Barbadian regulators and parliamentarians had a enormous opportunity to craft a structure from the best systems in place in other jurisdictions. What makes the FSC directive so bizarre is that many of the foreign-owned banks are suspected of having capital adequacy problems and a long list of bad loans on their books, making them vulnerable to a disastrous run.

Analysis and Conclusion:
Typical of the ruling elite in Barbados, orders are issued from on high, but the ordinary people are not allowed to question them, to interrogate the authors of such orders or even to raise serious concerns. The minister of finance and the central bank governor had a opportunity to show some innovative thinking with the credit unions by legislating to create a single credit union bank, which all the credit unions would have been compelled by law to be affiliated to. Such a conventional balance sheet lender would have accounted for a fraction of the approximately Bds$1bn in credit unions and provide the financialisation that the economy so badly needs. They did not do this because their collective imaginations did not reach this far, or they were scared of failure. The governor of the central bank, and the government’s senior economic adviser, is a known fan of Canadian central bank policies. Therefore it is interesting to take a brief look at how Ottawa has prospered since 2007/8, so much so that the British chancellor George Osborne has stolen the Bank of Canada governor Mark Carney from his native country to head up the Bank of England.

About two decades ago Canada had one of the worst economic crises in post-second World War history. However, controversially, it cut government spending, balanced its budget and introduced a series of pro-market measures which collectively have been praised for dragging the North American nation out of its troubles. These included reducing corporate tax rates, large scale privatisation, and lowering trade barriers. Whatever the technical and political concerns some of us may have about some, or all, of these initiatives, the bottom line is that the 2007/8 crisis hardly affected Canada. What is more, the economy took off, jobs were created and the dollar reached parity with the Greenback. Yet, for reasons that have not been fully explained, either by policymakers, politicians or academic government cheerleaders, there have been no cutbacks in government spending by a defiant, almost obstinate minister of finance; so much so that even the Anglican Bishop of Barbados has joined the chorus of praise for the government’s stubbornness in keeping hundreds of under-productive civil servants in highly paid jobs while hundreds of teenagers and young men and women loiter on the block with nothing to do. Government, through the agency of financial regulation, has a moral duty to correct market failure or create the conditions for such a correction; However, it is not incumbent on government to use the shadow of market or risk management failure as a device through which to force through other monetary policy initiatives.

Of course, regulatory scrutiny, both of equity-based companies and mutual societies, is necessary as a protective consumer device, but fishing expeditions are disruptive and fear-inducing. This FSC intervention looks like a fishing expedition. Like any other business, the executives of credit unions must prove that their business models are sustainable by expertise, argument and persuasion, not just by emoting sentiment.

This blog is not the time or place for discussions on the technical aspects of investment strategy, however the regulator could use this opportunity to encourage (or preferably compel) credit unions to draft a strategy document on suitability for investments, detailing how they reach investment decisions. In fact, all fund houses, banks, trusts and other non-banking financial institutions should be compelled to produce such a document as part of their regulatory approval process. This should be a central plank of the ongoing joint stress testing apparatus with the central bank (even if stress testing a credit union as pointed out is totally different to that of a retail bank). One regulatory requirement should be that all credit unions should have an investment committee made up of suitably qualified members, excluding lawyers and accountants, unless they have had further training in the discipline of investment planning and advice.

This then raises other issues for the regulator, such as suitability guidelines, clients’ risk tolerance (even institutional investors have a collective risk tolerance) and appropriateness of the strategy. Does the regulator have the necessary professional expertise to challenge individual credit unions on their investment strategies? We must also bear in mind that the first duty of any deposit-taking organisation is wealth preservation; this includes the interest rates paid on a basic saving accounts. If the institution, be it bank or credit union or retail bank, is paying an interest rate below inflation (CPI or RPI), then the saver is a loser measured by purchasing power parity, which means that what a dollar can today will be much more than it would this time next year. Investment strategy is meant to provide a return above inflation.

In any case, at the same time, the board members of the national insurance scheme should also be compelled by law to produce a similar investment strategy document. However this regulatory intervention should not go down as a missed opportunity for a wider debate on the role of social enterprise in the future development of the economy and the role that mutuals such as credit unions could play in the economic development of the nation. Good corporate governance and mutual behaviour cannot be legislated, nor can a rules-based regulatory framework be the alternative, for reasons already stated.

Finally, bad regulation can undermine the competitive advantage of the credit union – and wider social enterprise – business model. While it is right to tightly regulate capabilities and performance, the regulator and government must be careful not to throw out the baby with the bath water.
Barbados needs well-run credit unions now more so than at anytime in their 50-odd year history.

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No Comments on “Notes From a Native Son: Pressuring Credit Unions to Shore up Foreign-owned Banks is a Missed Opportunity”

  1. David May 31, 2013 at 5:37 AM #

    Not sure if credit unions can be construed as shoring up banks. The debate is more about whether the move is meant to shore up government. The big issue for Barbados is that we cannot continue to governance behind a veil of secrecy. CLICO, Stanford and a financial market in crisis has taken care of this attitude where people’s money is concerned.

    Like

  2. Snipes May 31, 2013 at 9:46 AM #

    I wish people in this country would investigate/check things for themselves before they make comments based on one person’s perception of a particular situation or wanting to take an argument in a certain direction for they selfish purposes. The FSC did not mandate credit unions to divest their investments and place it in commercial banks. The wrote a letter to Credit Unions indicating that some of them were in breach of section 34A of the Cooperative Societies Act as amended in 2007. That section of the act specifies how members monies at credit unions can be invested. The letter also went on to ask the credit unions to submit by April 15, 2013 a report of all their investments and where they are they are located. There was NO demand for divestment and place those funds in the commercial banks. I would know as I am the secretary of the board of a credit union and most correspondence comes through me. Without proper vigilance it is easy for a credit union to exceed the limits set by the act.

    The talk about Capita is sensationalist and designed to grab attention with talk that is baseless. CHECK THE FACTS.

    Like

  3. David May 31, 2013 at 9:55 AM #

    @Snipes

    Did you see the most recent Capita financials?

    Have you heard CEO of City of Bridgetown?

    Like

  4. Bush Tea May 31, 2013 at 11:22 AM #

    As Bushie said on another blog, the FSC is simply applying the Law.

    However the LAW is the problem.
    This “Law”, rather that seek to facilitate and expand the credit union concept WHICH HAS WORKED WITH PHENOMENAL SUCCESS FOR ORDINARY BAJANS, instead bounded the movement with ridiculous rules and restrictions which were CLEARLY designed to protect the status of the banks and other financial elites in Barbados.

    This law was passed by a BLACK government (inclusive of Miller) to frustrate a majority BLACK enfranchisement movement…..and has done so.

    The other thing that the Government managed to achieve was to ensure that no strong cooperative leader emerged within the system by forcing rising stars to move – just when they are beginning to shine – for a new trainee to take over…. Institutionalized mediocracy.

    APART FROM CASWELL, …..name another product of the movement who has been able to rise above these chains that were attached by a black government of Barbados……

    …..and Caswell only made is because he is strong headed to a fault… :)
    Obviously the movement has been frustrated and compromised to the point of disfunction by the very government that should be facilitating its enfranchisement agenda….
    And it was done THROUGH THE LAW…..

    Like

  5. David May 31, 2013 at 11:36 AM #

    @Bush Tea

    Isn’t this the same Co-operatives Act under which the movement grew?

    Like

  6. Well Well. May 31, 2013 at 11:46 AM #

    Bushy……………now that is what i meant about contributing……….just guess what you just said taught me?

    Like

  7. Bush Tea May 31, 2013 at 12:25 PM #

    Isn’t this the same Co-operatives Act under which the movement grew?
    ***********
    Of course NOT David.

    Changes in the 90’s…
    ….and then again in 2007 when it still persisted in growing and threatening the status quo…. :)

    As Caswell has pointed out in earlier threads, it is now ripe for the exploitation by the political vultures…..thus the Capita…. And the long list of party hacks who have been on the scene in the last 10 years or so….

    LOL but first they have to get rid of Caswell…… Well so far PWCCUL has ….LOL

    Like

  8. Hants May 31, 2013 at 4:09 PM #

    Royal Bank of Canada’s ceo Gordon Nixon’s total pay package was US$12.6 million in 2012 according to the listings, up 25 per cent from the year before, when he was in eighth place.

    Bank of Nova Scotia’s (TSX:BNS) Richard Waugh was bumped down one spot to seventh place, with US$11.1 million,

    Gerald McCaughey, CEO of the Canadian Imperial Bank of Commerce (TSX:CM), took home US$9.3 million, nearly eight per cent less than the year

    Like

  9. David May 31, 2013 at 4:15 PM #

    That is some serious moolah there Hants!

    Like

  10. Hal Austin May 31, 2013 at 4:33 PM #

    @ David,

    Once the money is on the banks’ balance sheet it is easier for the central bank to control it ie through capital adequacy.

    Like

  11. David May 31, 2013 at 4:43 PM #

    @Snipes

    Another point. If the law commands the credit unions to deposit excess/reserve cash with banks or other credit unions, why all this hullabaloo? The credit unions (some by their public utterances have confirmed they hold funds with non bank companies. Logically therefore if the FSC plans to do what the Registrar of Cooperatives did not do ie. enforce the law then it is obvious a directive will soon come. Plus, the BCCUL has admitted it is in talks to mediate the matter. Stop bullshittin BU!

    Like

  12. Well Well. May 31, 2013 at 4:45 PM #

    That is probably a politician trying to spread propaganda.

    Like

  13. Hants May 31, 2013 at 5:44 PM #

    David the “hint” I am making is that putting Credit Union deposits in Canadian Banks is safe.

    Canadian Banks do not need “shoring up”. That is why their CEOs are obscenely well paid

    Like

  14. David May 31, 2013 at 6:09 PM #

    @Hants

    Your point was not lost at all although how safe is safe…lol.

    Seriously this whole business raises the issue whether the FSC is enforcing the law NOW because of what it sees as the state of the non bank sector. Guess we will have to wait to find out.

    Like

  15. Caswell Franklyn May 31, 2013 at 6:24 PM #

    David

    The FSC came into existence in April 2011, and every three month credit unions are required by law to submit financial statements to them. For three quarters in 2011 and four quarters in 2012 the FSC was aware of credit union deposits in non-bank financial institutions and said and did nothing. Suddenly, Government needs to unload bonds and the FSC is forcing credit unions into a corner where only Government bonds would be the only viable investment available to them. Also note that the conspiracy involves the Central Bank: it lowered the savings rate. My credit union was shopping around for banks to deposit our funds in accordance with FSC dictates, and the banks offered an interest rate of 1%.

    The options are 1% interest from the banks or Government bonds at 5%.

    Like

  16. David May 31, 2013 at 6:32 PM #

    @Caswell

    Have to agree it is an interesting coincidence. A point of correction, the government has not lowered the minimum savings rate. It has restricted the rate only to savings from the look of the link below.

    http://www.centralbank.org.bb/WEBCBB.nsf/3c4ed692dff0e11d042573680000d20d/8b72fc4b3507fba204257b4300520fdb?OpenDocument

    Like

  17. David May 31, 2013 at 6:47 PM #

    @Hal

    Is it therefore fair to say that if non bank institutions in Barbados had to measure up to the same capital adequacy standard for banks they would fall short? Doesn’t this explain why banks have been identified in the law as the safest haven for credit union reserves? If the credit union movement were to suffer a shock would it not impact investor confidence and therefore the government has a responsibility regulate the market?

    Like

  18. Hants May 31, 2013 at 6:51 PM #

    The options are 1% interest from the banks or Government bonds at 5%.

    All I hope is that Bajans do not lose their savings due to another “Clico mistake”.

    Like

  19. Well Well. May 31, 2013 at 6:53 PM #

    I keep saying that………….

    Like

  20. Hants May 31, 2013 at 6:58 PM #

    David can you tell me why Barbados is not “leveraging” these stats on Riri.

    The recipient of six Grammy Awards and seven Billboard Music Awards, she currently holds the record as the top-selling digital artist of all time. Forbes named Rihanna as the world’s number-one social media star, with over 2.9 billion views on YouTube – the most ever for any female artiste – over 63 million Facebook fans, and more than 27 million Twitter followers.

    Sorry for buttin in on Hal’s blog. Well not really. Visit my link in sports corner.

    Like

  21. Well Well. May 31, 2013 at 7:19 PM #

    Hants………..unfortunately as things go, that is to the benefit of twitter, facebook, Rihanna’s handlers, and as long as Rihanna stays in America and do what she is supposed to do, it also benefits her………..maybe they can hire a social media expert to see where they can insert Barbados on every feed, but be warned, it’s a jungle out there.

    Like

  22. David May 31, 2013 at 7:24 PM #

    @Hants

    Rihanna is under contract to the BTA. What are her obligation under said contract God knows.

    Like

  23. PLANTATION DEEDS FROM 1926-2013 AND SEE MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS May 31, 2013 at 7:41 PM #

    Credit Unions , also in the land fraud , see their books on their on land and buildings, they fixed up and rent Belonging to the Estate of Beatrice Henry and Violet Beckles, Bay Plantation Deed 1930 John Beckles to Beatrice Henry 190 acres..

    Like

  24. Hants May 31, 2013 at 7:41 PM #

    David did you visit F1.com? At least we got a little plug with the phrase “Barbados born singer” .

    Formula 1 racing has massive coverage in all media so I was offering a “layman” opinion that this race in Singapore and her show could provide some opportunities for Advertising.

    Like

  25. David May 31, 2013 at 7:46 PM #

    @Hants

    Rihanna is not the property of Barbados except what has been agreed under contract.

    Like

  26. islandgal246 May 31, 2013 at 8:37 PM #

    Rhianna is advertising Barbados well enough…Pot smoking, bare botsying, and looking for love in the wrong places. I agree with David Barbados does not own her and she has a right to do whatever she chooses to do even though I do not always agree. I hope she will mature soon and invest her money well. There are many sharks out there waiting for a juicy bite.

    Like

  27. Hants May 31, 2013 at 9:14 PM #

    David wrote “Rihanna is not the property of Barbados”.

    Agreed.

    But she has real value since she has over 63 million Facebook fans, and more than 27 million Twitter followers.

    But doan mine me. I gettin dull wid old age and jus catchin at straws.

    I gine back to focusin on what is really important. The Montreal grand prix next weekend.lol

    Like

  28. newblood June 1, 2013 at 2:14 AM #

    @David
    snipes is not bullshitting bu. I saw the correpondence as well. Yes the issue is being sensationalised.

    Like

  29. newblood June 1, 2013 at 2:15 AM #

    @David

    capita will show a profit of over 1m

    Like

  30. newblood June 1, 2013 at 2:17 AM #

    the bpwccu roi this financail is about 13%

    Like

  31. The People's Democratic Congress June 1, 2013 at 3:45 AM #

    We have lately been telling many people on this BU blog site that the idea by some persons that there is high liquidity in the banking and financial system in Barbados is a total myth and an absolute lie.

    Now, yesterday we were reliably informed by a patriotic Barbadian, that there was this supervisors/managers meeting of the Royal Bank of Canada in Barbados, and that it took place a couple days ago at the Broad street branch. We were also told by this citizen that it was revealed at this meeting that through out the entire network of RBC branches in Barbados, and that for the month of April, ONLY a measly total of 8 loans and 1 mortgage were transacted.

    Now, if true, this is further evidence of the destructive effects that are taking place as a result of the very backward and misguided fiscal financial monetary policies of this DLP government, and further evidence too of the enormous extent to which these idiotic DLP/BLP governments have largely put this country in throes of a brutal and localized political economic depression that is by the day worsening and deepening.

    PDC

    Like

  32. newblood June 1, 2013 at 5:38 AM #

    @PDC

    is there a correlation between liquidity and the amount of loans dispersed by an institution, or other factors must be considered,

    Like

  33. The People's Democratic Congress June 1, 2013 at 6:35 AM #

    newblood,

    You are correct in every sense of what you asked.

    The fewer the credit transfers (so-called loans) by the relevant financial institutions in Barbados, the more it indicates that there are liquidity problems developing in the banking and financial system in the country.

    With the liabilities of commercial banks, credit unions, and finance houses still increasing and debit transfer difficulties ( so-called loan repayment difficulties) increasing, there will be fewer and fewer credit transfers by the relevant financial institutions to individuals, businesses, and other entities, and especially in a context where this political economic depression is worsening.

    The website wfhummel.cnchost.com, tells us that bank liquidity is defined as the ability of a bank to meet its financial obligations.

    The website http://www.occ.gov, tells us that liquidity is the risk to a bank’s earnings and capital arising from its inability to timely meet obligations when they come due without incurring unacceptable losses.

    PDC

    Like

  34. Bush Tea June 1, 2013 at 8:50 AM #

    @ PDC
    Why you don’t do something useful…..like go and get a sea bath or something nuh…

    Like

  35. David June 1, 2013 at 9:40 AM #

    @PDC

    With respect there is absolutely no logic in your last two comments.

    Like

  36. Well Well. June 1, 2013 at 10:24 AM #

    I don’t know which part of very liquid some people don’t understand, the trick is investing wisely so that the returns are 10 or 20 fold, very challenging in these times, one slip up and all could be lost.

    Like

  37. Hal Austin June 1, 2013 at 12:21 PM #

    @ David

    Yes, credit unions can shore up banks with their cash. I won’t make the point again, because it is tiresome. Banks are regulated in a totally different way than any other corporate; they also have a different capital structure.
    Whether it is written in law or not, the government is the lender of the last report for banks and it unwrites ban debt ie savings.
    The other important point is that corss-border regulation is not as simple as it may appear, or as our ignorant politicians may like to suggest.

    @ PDC
    I am glad that you have got inside information on the strike by foreign-owned banks and have been for sometime.
    The other problem, which is not discussed, is that cross-border bank regulation is very complex, and the idea that foreign=-owned banks are regulated by the central bank is boloney.
    Are they regulating subsidiaries or branches and how do they regulate them?
    It is interesting that I raise dthe issue of the financialisation of the Barbados economy through the creation of a credit union bank.
    I am aware tthat sometimes some loud mouths shoot off their mouths when they do not understand what they are talking about.
    But, @Snipes, plse reread my blog.
    The important things is that it does not matter if the FSC wrote to credit unions or not.
    What is important is to use that issue to raise other arguments about credit union policy.

    Like

  38. Well Well. June 1, 2013 at 12:34 PM #

    Hal…………glad to see you did some research on the cross border banking, i would not want to be accused of thinking i know everything by some who know very little or nothing about international banking laws.

    Like

  39. David June 1, 2013 at 12:59 PM #

    @Hal

    Maybe you need to check the balance sheets of the credit unions to establish the amount of cash we are talking about.

    Like

  40. Hal Austin June 1, 2013 at 1:04 PM #

    @ David

    That is another story. It is highly irresponsible for credit unions to lend people money to go shopping in Venezuela, Puerto Rico and Heavens know where else.
    We all have relatives and friends in Barbados, many of them in fultime work, and who seem never to hear the word ‘save’.
    This is another area for tougher legislation to control credit unions.
    Easy lending, but disciplined lending.

    Like

  41. David June 1, 2013 at 1:22 PM #

    Two credit unions in Barbados define the movement. Both are heavily lent. Yes they have cash but when compared to banks it is not an issue.

    Here is the balance sheet for public workers:

    http://www.publicworkers.bb/documents/news/areports/Annual_Report_2012.pdf

    AND

    City of Bridgetown:

    http://www.cobcreditunion.com/site/images/PDF/NEW/cob_annual_report_2012.pdf

    You be the judge.

    Like

  42. David June 1, 2013 at 2:22 PM #

    @Hal et al

    The point BU has been making is that the regulator has a right to ensure the reserves of the credit union are allocated in the system in a way which manages inherent market risk for the very reason you have stated. The banks have the Central Bank as a recourse entity.

    Like

  43. Hal Austin June 1, 2013 at 2:32 PM #

    @ David
    Again you are right. But the regulator has two weapons: regulation, which is market-wide and includes such things as stress-testing; and supervision, which includes supervisors being in day to day touch with the credit unions and being informed of anything wrong on their books immediately.
    Failure to report any problems is a regulatory offence and the person responsible can be barred from the industry.
    However, we do not talk about enforcement. What is the FSC’s model for regulatory? What are the enforcement parameters?
    Again I make the point that the FSC and central bank carrying out a joint stress test is a bit odd. It is like mixing ginger and fruit cake mix and calling it all cake. It does not add up.
    And, a few weeks later, to enter discussions, at the very least, on governance in credit unions, from where I stand wreaks of incompetence.
    I can tell you that if the Financial Conduct Authority in Britain had done any such thing jointly with the Bank of England financial journalists would go mad.
    To deviate a bit, why can’t our leading paper used some of its money to employ journalists who are qualified in law and economics so that we get a good public discussion on the issues and not silly party politics?

    Like

  44. David June 1, 2013 at 2:45 PM #

    The local media/practitioners are so lowly thought off that it is only a matter of time before the Trini crew begin to encroach. It is a profession which has not been able to build standards. Many in the profession when they grow wings fly to corporate as communication specialist and the like. They have been unable to make the BAJ into an association with teeth. Why do you think BU was conceived with all of its imperfections? That any individual who as acquired accreditation in a financial discipline would work in the media in Barbados maybe laughable.

    Like

  45. Hal Austin June 1, 2013 at 3:01 PM #

    @ David

    O ye of little hope. Tell you a story. After the banking crisis started I became that Britain’s greatest and best financial journalists did not have a clue.
    The answer, I thought, was a post-graduate course in financial journalism. I took the idea to my then managing director and suggested City University was the best institution to work with.
    He backed me, I spoke to the then head of journalism at City, now the course is one of the most in-demand in Britain.
    You have the community college, the university, and at least three major journalism institutions.
    If between them they cannot come up with decent training courses then they are worse off than I thought.

    Like

  46. Bush Tea June 1, 2013 at 3:17 PM #

    @ David
    What exactly is the point that you are seeking to sharpen? Did you think that the Credit Union would have $500 million in cash to distribute among the banks?
    In fact the amount of liquidity in a credit union should be just that which is adequate to service its ongoing operations.

    Look the fundamental difference between credit unions and banks is that the CU is really just a mechanism through which a definable group of MEMBERS choose to pool collective resources – in this case money, to meet the needs of members of the group.

    The idea being that, like a meeting tern, when one has excess one assists another with a shortage etc.

    These people are dealing WITH THEIR OWN MONEY. Unlike a bank where speculators take Money from individuals who have excess, lend it to those who don’t have enough at a price and cream off the profits (and sometimes the principal)
    You HAVE to place tight regulations on Banks.

    If you look at any credit union….
    Whose money is it?… Members
    To whom is it lent?…..Members
    Who does the lending?….members
    Who manages the operations?…..members
    Who supervises governance?…..members
    If there are problems who suffers?….members

    Why do we need a FSC to dictate to such an organization in the same way as with banks?

    There is ONLY ONE REASON…to protect the status quo.

    Pound for pound, the cooperative way will win every time….unless they are constrained in some significant way.

    Our first constraint in Barbados is LEADERSHIP….saddled with visionless morons. Riding an elephant and useless as sheep.

    What have they been able to leverage with such resources as have been under their control for the last 20 years?

    Any kind of productive enterprise?
    Any kind of service needed by members? ….a supermarket? A car dealership? A hotel or guest house? A Bank?…any shite?

    …..no!!! Those brass bowls just sit around playing with themselves (and with one another) while looking for “conferences” to attend.

    Do you know that one of the ways they are ALLOWED to use funds is in COOPERATIVE ventures?

    Another constraint occurred when the RIGHT of members to elect or REJECT leaders was constrained BY LAW with the introduction of politician-like rotation systems, where persons were elected for FOUR LONG YEARS at a time. Once elected members are stuck for four long years with some idiots ….
    on the other hand, since there are term limits, any Good candidates MUST STEP DOWN after a given time EVEN IF DOING AN EXCELLENT JOB and if wanted by the members to continue

    Do you know how much progress was made in the 10 years before these stupid laws were enacted? Compare progress before and after…even considering the significant increase in assets and membership afterwards….

    The POWER of the credit union does not lie in cash in hand, but in LEVERAGE, and the movement have more than enough resources to do ANYTHING that needs to be done bout here….
    They only lack leadership and vision.

    Like

  47. David June 1, 2013 at 3:31 PM #

    @Bush Tea

    In your exposition you forgot to factor that credit unions, the two big ones, have taken on the face of a bank in how the deal with the membership and public. If you take on risk which is not congruent with the philosophy of the movement then you invite others to take notice.

    Like

  48. Bush Tea June 1, 2013 at 3:36 PM #

    @ David
    Absolutely true and valid.
    …but it just underscores the point that these “leaders” do not understand the animal they are riding

    You are right. Perhaps that is why they are treated the same way that banks are….

    Like

  49. David June 1, 2013 at 3:47 PM #

    @Bush Tea

    One example which Brother Caswell et al have broached on BU many time, Capita. Why the hell has Public Workers exposed it balance sheet to the risk which this finance company brings?

    Like

  50. PLANTATION DEEDS FROM 1926-2013 AND SEE MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS June 4, 2013 at 7:20 AM #

    PDC@The entire network of RBC branches in Barbados, and that for the month of April, ONLY a measly total of 8 loans and 1 mortgage were transacted. @
    If true ,it will go to show . That the BANKS are now going by world rules of banking . Clear TITLES for land loans and not BLP and DLP favors on lawyers words alone.
    With that type of movement or lack of, more people will go home .
    The More the Fraud the less the loans ,money makes the World go around and fraud stops all manner of things.

    Like

  51. PLANTATION DEEDS FROM 1926-2013 AND SEE MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS June 4, 2013 at 10:59 AM #

    http://afraraymond.wordpress.com/2013/06/03/video-time-to-face-the-facts-26-may-2013-part2/

    Like

  52. Hal Austin June 4, 2013 at 11:16 AM #

    @ Deeds

    That is collateral lending. The business of banks is to lend. It is like having a supermarket and not selling groceries.
    The central bank has the power to order banks to lend or to provide the additional liquidity for lending to houses and small business or, most important of all, to diversify financialisation.
    We are witnessing foreign-owned banks refusing to lend to Barbadian borrowers, while at the same time taking their savings; and a central bank that does not know what to do.
    Where is the voice of the opposition in all this?

    Like

  53. PLANTATION DEEDS FROM 1926-2013 AND SEE MASSIVE FRAUD ,LAND TAX BILLS AND NO DEEDS June 5, 2013 at 7:41 PM #

    Hal Austin@ This is why We say that their no clear titles , So no need to lend to Bajans to buy land nor business when some come with land.
    There is now Title Companies in Barbados to insure the deals, No collateral to back the loans, on a fraud deeds made up by crooks lawyers , An Audit had to be done to see the loans are not secured by land. Therefore all loan and land , building will Halt until the 22 crook Ministers agree to follow the LAW. and not follow PONZI fraud.
    If you read back to BFP and BU you will see,I will not and will never change my tune until people listen and take a look at the chain reaction of Fraud by the BLP and now the DLP. I know what will happen base on the evidence we have . All the PHDs MDs ESQ, Sir, AG, GG and other MP crooks cant hide from , The World is watching and not Backing and proof of a Clear Titles will leave then all stuck , Looking for Plane loads of people looking to save they asses , By also defrauding them as they leave their cash behind and get nothing nor justice by the same crook judges.
    We hope they never get any loan until they set the records right ,
    Welcome to the Land of the Moors ,
    By the time more than 6000 Bajans go home , then they may have time to .listen to why they are home, base on a fraud economy .
    The only Person that can make the deeds Clear is Me,
    Not the PM , not the GG and no crook lawyer for none of them own this, They have no title nor right to title.of nothing, They only got voted in office and office dont come with a deed.
    We also love to see which Ministers have Clear Titles and judges,
    We also have a Deed for the PINE 410 acres.
    All government building are recorded rentals by Me for 2.7 Million a month at Inland Rev. High court , airport also , If its Fraud they know where i am 18 counts . We did not record Welfare ,

    Like

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