Eastern Caribbean Central Bank (ECCB) Proposed Banking Act Is Not The Answer

I believe that Caribbean economies remain in the dark ages. The new Eastern Caribbean Central Bank (ECCB) proposed Banking Act and discussions around it display our affliction with Knight blindness and our regional obsession with “Sirvitude”.

We talk about knowledgeable discussions and informed debate; we hope people with pedigreed degrees, doctored qualifications, and banking expertise will lead that debate. That is not the solution! In fact, that is the problem!

Here’s why.

When we talk about “knowledge and expertise” we mean that which is American and or Euro-American endorsed and approved. American and Euro-American economic and banking needs are vastly different from those in the Caribbean. It is silly to use what is good for the “well” as medicine for the “sick” regardless of what those doctors say.

We need innovative solutions to all our problems. We must first be aware enough to understand that we have different problems in our different societies and need different solutions. The Caribbean must stop mindlessly mimicking what others do. Look at the history. This has not helped us!

I am wary of politicians and bankers. Their records show they have no clear idea or philosophy of what government is about and neither plan nor agenda to make their societies better.

This is frustrating but quite understandable. It is not rocket science. They are focused on manipulating a remarkably inflexible political and economic system that was not designed for us in our unique circumstances for our changing needs.

Even the strongest defenders of big banks are becoming increasingly concerned about their bad influence in shaping economic policy. Front Runner Presidential candidate, Hilary Clinton, under pressure from her opponents, pledged that, unlike Obama, "Wall Street representatives will not be in my cabinet.”

Clinton admitted that: “The business model of Wall Street is fraud.”

While we are frantically and thoughtlessly rushing to please or appease some Caribbean Wall Street Clone, Democratic Party presidential candidate Martin O’Malley is warning that America needs to “stop taking our advice from economists on Wall Street.”

The overriding reason for increasing the size of banks is to increase profits. This may seem like a wonderful thing if one is casual or traditional about making important economic decisions. Small banks are closer to their customers. If they are not focused on big bank methods and if their governments don’t subject them to rules that favour big banks without increasing overall efficiency, they do a better job in serving their communities. Germany in the late 1930’s and early 1940’s showed that international efficiency can be bad for national prosperity.

The really big point however is that those greater profits come from the community so bigger, more profitable, banks are actually weakening the community. Money is a resource; it is not a sign of economic genius to make losing loans to other communities while punishing one’s own community with high interest rates and low support for investments. (When will our governments put in place permanent bodies to provide comprehensive support for local investors?)

A bank that is making little or no profits can be doing more to make a prosperous, financially-healthy, community than that big old bank. Big banks focus so much on profits that in the long run they always hurt their clients and themselves. Governments then run to rescue them with unjust laws because they are “too big to fail”.

The counter claim that the Bank of Montserrat is too small to succeed is cynical and denies the record.

I believe that whatever the arguments for passing this new Banking Bill, it will not address any real problems of Montserrat’s banking. It will for example give credibility to the phony case requiring a bank that has been working relatively well for over a decade to get an additional $12 million dollars in investment.

This bill is likely to make things worse. If the IMF, that Michael Manley once called the “International MFs”, has anything to do with it, the “likely" becomes the guaranteed.

Montserratians must stop outsourcing their policies and their development strategies. Even with our low expectations outsourcing has never worked for us.

There are people who will tell you that Montserrat is too small; we have no natural resources. (Some of these people are my very good friends.) Jamaica has resources as do Trinidad, Guyana and Antigua. They all, like Montserrat, pay inadequate attention to the most important resource: their people.

We will never understand this until we stop outsourcing our dreams, our education, our expectations and our imaginations.