During the Budgetary Proposal Debate in the House of Assembly between Tuesday and Thursday engaged in a historic debate. It was a debate which saw the delivery of Prime Minister David Thompson’s first budget. During the debate a point was raised by Minister of Tourism Richard Sealy which has gotten very little coverage but has raised some alarm in the BU household. Minister Sealy announced to the nation that an outstanding loan of 58 million, in the name of Hotel and Resort Barbados Ltd (HRL) has now grown to 250+ million. What should be instructive to Barbadians is the reason posited by Minister Sealy as to why the previous BLP government allowed the HRL debt to mount.
Our recollection is that he said ‘someone’ in the Ministry of Finance communicated to the Ministry of Tourism (responsible for HRL) that the real estate property in Barbados was rising and would eventually equalize the HRL loan (58 million) plus interest. Minister Sealy shocked the BU household when he went on to announce that the HRL properties in question have been valued and are worth 70 million dollars. We should remind the BU family that former Prime Minister Owen Arthur and Junior Minister of Finance Clyde Mascoll managed the HRL ‘mess’ in the months leading up to the last general election. We should also remind the BU family that this is the same Clyde Mascoll who had fought a valiant battle using the now famous JAWS argument.
This is the reference point we have used since then, to argue the point when Mascoll crossed the floor, that he had thrown his political career down the toilet. By now we all know that Mascoll is not a politician anyway.
The revelation that people in high places in our government would have made a decision based on speculation is scary. We are surprised that we have not seen the revelation by Minister Sealy thoroughly investigated to date by the Barbados media. But are we entitled to say: What is new?
Even as we bang out the words to this blog we have an eye on CNN network which has been analyzing the news of another failed mortgage company Indymac Bank in the United States. It is no secret that the US financial market has been groggy in the aftermath of the sub-prime fallout and in more recent times the failure and bailout of Bear Stearns. However it is the Indymac failure which has caught our attention. According to analysts the quality of mortgages which have been disbursed by Indymac are highly suspect. It seems that not unlike the Ministry of Finance in the HRL matter, when ‘someone’ speculated that the value of HRL properties would rise to equalize the rising bank debt, it is the same approach which was being taken by Indymac Bank, one of speculation.
According to analysts the failed bank had been issuing mortgages while speculating that the value of the properties taken as collateral would rise in value. The recent spiral in the property market in the United States has obviously blown this approach to smithereens. Has the BU family seen the common position in the two situations outlined? For so many Barbadians there is the perception that the much more developed United States would know the folly of build a financial market on a base of NINJA loans. We would have thought that the rich legacy of governance which Barbados has enjoyed would have recognized the folly in the decision to not service a 58 million dollar loan while speculating on the value of HRL property value rising to compensate.
In the two cases we have highlighted how the PEOPLE were duped, In the case of HRL Barbados Ltd, by the government of Barbados. In the case of Indymac Bank, by the greed of the private sector. It seems that the PEOPLE are always playing catch-up.
The blogmaster invites you to join the discussion.