Bankers have expressed fears that the re-named Homeowners Protection Bill would result in The Bahamas’ own ‘credit crunch’ ...if passed into law as is...

Homeowners Bill Still ‘Shoots Risk Through The Roof’




By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

 

 

Bankers yesterday expressed fears that the re-named Homeowners Protection Bill would result in the Bahamas’ own ‘credit crunch’ if passed into law as is, with Tribune Business told there were no “material changes” from the first draft.

 

While no commercial bankers were prepared to speak openly yesterday, under condition of anonymity senior executives said the proposed legislation “fundamentally changes” the risk/reward calculation associated with lending.

 

This, Tribune Business was told, was largely due to the Bill giving the Supreme Court the power to intervene when commercial banks were attempting to realise exercise their power of sale on delinquent properties.

 

Further exercising commercial bank concerns is that the Bill plans to give the courts the ability to delay this process for an unspecified time period, creating huge uncertainty about the industry’s ability to realise mortgage security/collateral.

 

As a result, senior bankers explained, the risk associated with mortgage lending in the Bahamas would dramatically increase, with potentially huge implications for the wider economy - especially the real estate and construction industry.

 

Tribune Business understands that a meeting to discuss the proposed legislation, involving government representatives, the Central Bank of the Bahamas, the Clearing Banks Association (CBA) and members’ attorneys, and other lenders has been scheduled for today.

 

However, a copy of the Homeowners Protection Bill, which has been obtained by Tribune Business, is little changed from the first version - also seen by this newspaper.

 

That document was panned by many, including former minister of state for finance and Central Bank governor, James Smith, who is now a key Ministry of Finance adviser. The banking industry, which had expected the legislation to be radically revised, is also likely to have been disappointed.

 

“I don’t think there’s a material change in it,” one banker told Tribune Business. “What they are doing is allowing the courts to intervene in a transaction where the lender has assessed the risk and levied an appropriate rate of return.

 

“When there’s a borrower default, that’s already been priced into the rate, and you have some expectation as to what happens when there’s a default.

 

“But the Bill will allow the courts to determine what happens, which means the underlying risk fundamentally changes. Why would any lender enter into an open-ended contractual arrangement where the court can intervene and fundamentally change the risk in the middle of the contract?

 

“All these open-ended arrangements shoot the risk through the roof.”

 

The banking/lending industry’s concerns are focused on sections four-seven of the proposed Bill. Clause four allows the court to give a borrower relief “from consequences of the breach of a covenant or the non-payment of the principal or interest of the loan”, while number five gives borrowers time to “remedy” their delinquency when the lender is seeking to take possession of the property.

 

In particular, clause five allows the courts to prevent a lender taking possession of a delinquent property “for such period or periods as the court thinks reasonable”.

 

They can do this if they believe the borrower can pay sums due, or remedy, their default “within a reasonable period”. Both terms are short on specific, leaving everything to the court’s and judge’s discretion, and creating a nightmare of uncertainty for the banks.

 

Suggesting that the Bill’s drafters were likely unaware of the potential ‘unintended consequences’, one banker said: “What this is going to do is simply increase the risk of the lender.

 

“You are stuck with risk that you cannot manage, because in the event of default the courts can intervene, and you can’t charge a rate commensurate with the underlying risk.

 

“It’s all about risk and return. If you’re risk can’t be controlled and defined fully upfront, with all this uncertainty you will act appropriately.”

 

Essentially, with the risks associated with mortgage lending increased, and returns reduced, Bahamian bankers said there would be major ramifications for home lending in this nation.

 

Potential consequences, they added, included fewer persons qualifying for mortgage loans; higher downpayments and interest rates; and potential withdrawal from the mortgage market.

 

All were conditions for a ‘credit crunch, and the bankers said this would impact home ownership, the real estate market and overall prices, and the construction industry.

 

“Anything that increases a lender’s risk is going to be reflected in some other action, whether it’s an increased interest rate, smaller advances or withdrawal from the lending market,” one banker warned.

 

“Any combination of those things could apply, and it will not be good for the economy.”

 

The same banker also questioned whether the overstretched court system would be able to cope with potentially 4,000 delinquent mortgage borrowers.

 

Another banker added of the Bill: “There’s still a lot of gaps in it. It would not have the desired impact.” They suggested it would impact interest income, and solvency and capital ratios, creating problems in complying with international accounting standards.

 

Meanwhile, section six of the Bill proposes to allow courts to consider advance payments made by delinquent borrowers, while section seven permits them to give borrowers a period “of no less than 12 months” to make good their arrears under certain circumstances.

 

Other clauses exempt banks/lenders from paying Stamp Duty if they sell a foreclosed property within five years of granting the loan; give borrowers the right to choose their attorneys, appraisers and property insurers; allow borrowers to remortgage with another institution at no cost; and aim to prevent “excessive salary deductions”.

 

September 14, 2012

 

Tribune242

 

Caribbean Blog International

 

Constitutional reform, pt. 4: ... ...I now offer some recommendations for consideration in the reform of Chapter 2 of the Bahamian Constitution

Constitutional reform, pt. 4

By Alfred Sears

In part 3, I described the instances of unequal and discriminatory treatment of Bahamian women citizens who are married to non-Bahamian spouses and their children born outside of The Bahamas; and the condition of statelessness which results when children born in The Bahamas, neither of whose parents are citizens of The Bahamas, are not regularized in a timely fashion.  I now offer some recommendations for consideration in the reform of Chapter 2 of the Bahamian Constitution.

 

Recommendations

The citizenship provisions of the Constitution should balance the principles of (1) careful control of national membership in the Bahamian nation; (2) a recognition of the human rights claim of those who have a genuine link to The Bahamas; and (3) the competition within the global marketplace amongst countries to attract and maintain the human resources of the world.  The most critical resource in The Bahamas, I contend, is the people.  The talent, creative imagination and intellectual production of the Bahamian people and residents are the critical factors that will determine whether The Bahamas realizes its full potential.

Therefore, we should be inclusive in our citizenship policies, giving all persons who have a genuine link to The Bahamas the security of a legal status to inspire in them a sense of loyalty to The Bahamas and a desire to make their best contribution to the development of The Bahamas.  In this context, I therefore recommend that the citizenship provisions of our Constitution be amended in the following respects:

1. That all gender discrimination be removed from the citizenship provisions, especially with respect to the non-national spouses of Bahamian women and their children born outside of The Bahamas.  Bahamian men and women should be treated equally in all respectS under the citizenship provisions of the constitution.  The norm of nondiscrimination should be the guiding principle as we reconstruct the constitution.

2. The protection of the status of children and the avoidance of statelessness amongst children in The Bahamas should inform the citizenship provisions of the constitution dealing with children.  Therefore, children born in The Bahamas should be deemed citizens at birth where at least one parent is a citizen of The Bahamas, a permanent resident, an immigrant on work permit or is registered under the Immigration Act 1967.  Further, a child under five years found in The Bahamas, whose parents are not known, should be presumed to be a citizen of The Bahamas by birth.  Like the 14th Amendment of the United States Constitution and Article 5 of the Constitution of Jamaica, which grant citizenship to all persons born in the United States and Jamaica, we should retain and strengthen Article 7 of the Bahamian Constitution so that children born in The Bahamas, neither of whose parents are citizens, are given citizenship at birth.  We should not punish children for the illegal conduct of their parents.

3. Also children born overseas to a citizen of The Bahamas serving in a diplomatic or consular capacity should be recognized as citizens by birth.

4. The constitution should be revised to recognize dual and multiple citizenship.  Increasingly more Bahamian nationals are residing outside of The Bahamas, particularly in the United States.  These Bahamians have benefited from obtaining the citizenship of other countries.  Some may argue that dual and multiple nationalities may affect the security of The Bahamas, such as facilitating the fraudulent use of passports, the commission of major crimes, the provision of safe harbor for fugitives and the smuggling of would-be immigrants.  While these concerns must be carefully considered, I believe that the Bahamians across the diaspora have always shown an unswerving patriotism towards The Bahamas.

Bahamians have always sought self-improvement and increased opportunities in other countries without losing their loyalty to The Bahamas and their sense of national pride.  This was reflected in the “Project” during the 1940s and 1950s when thousands of Bahamian men and women worked as migrant workers in the United States.  Today thousands of Bahamians reside outside The Bahamas in pursuit of higher education and professional opportunities.  In fact, the Bahamian diaspora should be perceived and used as a critical source of influence, investment and remittances in the international community to advance the Bahamian strategic development, security and global brand.

Dual and multiple nationalities would not, in my opinion, undermine the loyalty Bahamians have to The Bahamas.  Further, several Commonwealth Caribbean countries as well as the United States provide for multiple and dual citizenship.  Moreover, The Bahamas tacitly recognizes dual citizenship of its citizens, as is evidenced by Article 8 where a person born outside of The Bahamas to a Bahamian father becomes a Bahamian citizen at birth and in the note contained in the Bahamian passport, which states that: “Citizens of The Bahamas who are also nationals of another country cannot avail themselves of the protection of the representatives of The Bahamas against the authorities of that country, and are not exempt, by reason of possessing Bahamian citizenship, from any obligation (such as military service) to which they may be liable under the law of that country.”

5. Section 16 of the Bahamas Nationality Act says the minister “shall not be required to assign any reason for the grant or refusal of any application or the making of any order under this act the decision upon which is at his discretion; and the decision of the minister on any such application or order shall not be subject to appeal or review in any court”.  This ouster clause does not mean that the minister should not act in accordance with the rules of natural justice.  Given the fundamental importance of decisions relating to nationality, the discretion of the minister responsible for nationality and citizenship relating the determination of applications for registration or naturalization should be subject to judicial review and no person should be deprived of her/his citizenship without due process of law.

5. Finally, Chapter 2 of the constitution dealing with citizenship should be expressed in more readily understandable form and the language and structure should be simplified.

 

• Alfred Sears is an attorney, a former member of Parliament and a former attorney general of The Bahamas.

Sep 13, 2012

thenassauguardian

NO to oil drilling in Bahamian waters...

Caution needed on the oil drilling issue

Dear Editor,

With the recent announcement that Bahamas Petroleum Company has been granted a three-year license extension, it seems as if this government is moving full steam ahead with plans to facilitate a referendum which, if passed, will allow oil drilling in our waters.

I sincerely hope that if this happens, we will not allow the possible financial gains to cloud our judgment.  When making decisions, the wise thing to do would be to look at the risks versus the rewards.  In this case, I think the risks far outweigh the rewards.

Not so long ago, we witnessed first-hand the worst oil spill in history in the Gulf of Mexico and saw the catastrophic results it has brought on the environment.  Here are some horrifying facts to think about:

1. It is estimated (conservatively) that between 17 and 29 million gallons of oil spilled into the Gulf.

2. The National Wildlife Federation reports that already more than 150 threatened or endangered sea turtles are dead, and 316 sea birds, mostly brown pelicans and northern gannets, have been found dead along the Gulf Coast as a result of the spreading oil.

3. As much as we’d like to forget it, we live in a hurricane zone, and if a storm blows in, the result could be devastating.  The presence of oil could lead to a more powerful hurricane because crude accumulating at the surface could be raising the temperature of the surrounding water.

4. Approximately 70 cents of every dollar we spend is derived from tourism.  If we were to have an oil spill in our waters, this would devastate the tourism industry.

5. The great United States of America with all the technology and resources available to it could not contain this oil spill for months.  Could you imagine what would happen in our case, with little to no resources to deal with this kind of catastrophe?

With this knowledge, it is mind-boggling that any Bahamian government would even consider this undertaking.  I understand that this administration is under tremendous pressure to create jobs, but please don’t allow the greedy oil companies to destroy this country.  Future generations are depending on you, Mr. Prime Minister to make the right call on this one.

 

– Ervin Missick

Sep 12, 2012

thenassauguardian

Official Opposition Leader - Dr. Hubert Minnis called on Prime Minister Perry Christie to find the “testicular fortitude” ...and make a decision with regards to the licensing of offshore oil drilling ...without having to “pass the buck” to the Bahamian people via a national referendum

Minnis Puts Ball In Plp Court Over Oil


By Tribune242


WITH the Bahamas Petroleum Company fulfilling all its required licence and regulatory obligations for another three year licence, FNM Leader Dr Hubert Minnis called on Prime Minister Perry Christie yesterday to find the “testicular fortitude” and make a decision with regards to the licensing of offshore oil drilling without having to “pass the buck” to the Bahamian people via a national referendum.

Highlighting that nearly 75 per cent of the Bahamian workforce is related to Tourism, Dr Minnis said that his party remains concerned about the prospects of BPC and the possible impact a spill in Bahamian waters would have on the nation’s number one industry.

“We have serious concerns about the environment and where are the regulations that would protect us if an accident were to occur. Where are the regulations with respect to how any proceeds from this venture would be handled? And what are we going to do with the money? That money, and that oil belongs to the people. It should be protected for future generations. And the people should have a say in what is done with it,” Dr Minnis said.

The Free National Movement’s leader also questioned whether or not Mr Christie ever returned the consultancy fees that he admitted receiving from BPC.

“We demand that the Government immediately disclose whether or not the law firm of Davis & Co. or any other law firm owned by a PLP cabinet minister or parliamentarian (still) acts on behalf of BPC.

“We remind Mr Christie that the most precious resources we have, apart from our people, are marine, touristic and fisheries resources. They should not be recklessly endangered, and the FNM will not permit potentially compromised decision-making, and lax regulatory oversight of oil drilling to compromise and endanger the well-being of Bahamian fishermen, hoteliers and communities,” Dr Minnis said.

With regards to the upcoming referendum on oil drilling, Dr Minnis challenged the Prime Minister to make up his own mind on the issue and act – and not pass the buck to the Bahamian public, as he, and his PLP party were elected to govern.

“Christie is revoking his responsibility to govern and is passing the buck. You were voted in to make a decision. So make a decision. You are vicitimizing people left, right and centre. You didn’t ask me about that. You can’t be a government of referendum. Being in government means you have to make decisions. He is copping out. I wonder if he has the testicular fortitude to make tough decisions,” he asked.

In fact, the FNM said that if Mr Christie and his government were so “frightened to lead” that they should hold a referendum on their governance thus far and allow the Bahamian people to vote on that.

“Have a referendum on whether or not we made a mistake in putting you there. If we vote ‘Yes’, then go,” he exclaimed.

September 11, 2012

Tribune 242

Caribbean Blog International

...major uncertainties remain concerning oil drilling in The Bahamas

IMF: Bahamas faces ‘not just an oil find’

By Jeffrey Todd
Guardian Business Editor
jeffrey@nasguard.com

The International Monetary Fund (IMF) says the size of any oil deposit lurking beneath Bahamian waters is essential to any decision on whether to commence commercial drilling.

Gene Leon, mission chief to The Bahamas, felt there were myriad factors and concerns for this potentially billion-dollar question. How much is there, and how long the benefit will last, must be taken into account and weighed against the possibility of any detrimental impact on the country's coveted natural environment.

"There are clearly environmental concerns, and the flip side to an oil find is the tourism industry," he explained. "You don't want to be marred should a problem arise. There is always the question of how much, how long the benefit lasts, how to use those resources, and how to mitigate any environmental issues. These are big issues, and one must look at it in a holistic way. This is not just an oil find."

The comments by the IMF mission chief came at last week's conference in Trinidad and Tobago concerning rising Caribbean debt and limited prospects for growth. In The Bahamas, oil exploration has been a major revenue option burning a hole in the country's back pocket.

According to a report this summer by the United States Geological Survey (USGS), there is approximately a 50 percent chance it has 1.59 billion barrels of recoverable oil. It further determined there is a five percent chance it has 4.3 billion barrels, and a 95 percent chance of at least 554 million barrels.

Even if the find is on the lower end, the IMF mission chief noted that The Bahamas could consider using the resources just for “self sufficiency". Leon told Guardian Business that Barbados implemented a similar approach.

"It would certainly help. It (oil) is a fairly sizable chunk of your import bill," he added.

Of course, Bahamas Petroleum Company (BPC), along with its shareholders on the London Stock Exchange (LSE), hope any find spills into the billions, rather than millions.

BPC has invested seven figures over the past few years on seismic testing, staffing and expertise ahead of an exploratory drill south of Andros, near the Cuban border.

On the other side, a Russian drilling company is set to drill just 100km from this proposed site later this year.

While that might be  perceived as good news, major uncertainties remain concerning oil drilling in The Bahamas. The previous government suspended BPC's licenses back in May during the throws of the national election.

Guardian Business understands a statement is expected to be released by BPC today, however, indicating that the government will find them in full compliance. If so, that could mean renewed confidence for investors.

This uncertainty has been reflected in the share price of BPC in recent weeks. Trading on Friday saw share price dip below 6 pence per share for the first time since December 2011.

Shares managed to rally at the end of trading, however, finishing off the day at 6.50 pence. That compares with more than 24 pence per share early last year.

Sep 10, 2012

thenassauguardian

Caribbean Blog International

...whatever they called him during his 15 years as prime minister ...Hubert Ingraham did much for this country - The Bahamas ...and for all Bahamians... ...He should be a true inspiration to Bahamian youth who now know that regardless of their backgrounds ...they can also aspire to great heights

A Tribute To Hubert Alexander Ingraham

Tribune 242 Editorial




IF from a log cabin in the backwoods of Kentucky the sixteenth president of the United States could step forth, there was no reason why 203 years later Cooper’s Town, Abaco, could not produce from similar circumstances the second prime minister of the Bahamas.

 

The two men had much in common. “I walk slowly,” said Abraham Lincoln, “but I never walk backwards.”

 

Hubert Alexander Ingraham, born in Pine Ridge Grand Bahama, in 1947, could have said the same.

 

Both men had much in common. Lincoln’s parents were illiterate. His mother died when he was nine, and his stepmother took him under her wing and encouraged him to read. Reading material was scarce and Lincoln walked for miles just to borrow a book.

 

Hubert Ingraham, was left with his grandparents in Abaco when he was a toddler, while his mother found work in Nassau. He grew up in a four-room wooden house with his grandparents and an uncle, and slept on a pallet on the floor with his two cousins. He got his first pair of shoes when he was 10 and didn’t learn how to use a knife and fork until he was 17. His grandfather taught him how to fish, his grandmother insisted on education — and every bit of learning he could get he got at the sleepy little town’s all-age school, where he became a monitor at 12 and a pupil teacher at 14.

 

When at 17 she felt he was ready to go to town to further his education, he wanted to become a teacher, she determined that he was to be a lawyer and a lawyer he became. Lincoln, who with his backwoods accent, made his living by manual labour and – like Hubert Ingraham – had to acquire social skills as he went along, also became a lawyer.

 

His grandmother instilled in him his courage and determination, she crafted his principles, taught him to raise his gaze above the horizon — believing that if he aimed for the stars, he might reach the tree tops. He did not let “Mama Lizzie” down. He was her boy and between his love and respect for her and his mother “Dama” he was determined to raise the lot of women in our society.

 

The UBP gave women the vote in 1962. When in 1992 Hubert Ingraham went to the polls to remove his mentor, Sir Lynden Pindling, from the seat of power, women started to come into their own.

 

During his administration, Mrs Janet Bostwick, a former minister in his government, states in an article in a special supplement in today’s Tribune:

 

“And, he is an FNM hero because he brought women front and centre in each government which he led, paying attention to all the issues that concern Bahamian women most especially health, education, social development and equality before the law.”

 

He placed women to head important ministries in his government — Attorney General, Health, Education, Foreign Affairs, Social Development, Transport, Public Service, and Immigration. During his administration Dame Ivy Dumont became the first woman Governor General, and Dame Joan Sawyer, was the first woman Chief Justice of the Supreme Court.

 

He believed deeply in democracy — and for democracy to be equally enjoyed by all Bahamians. He was criticised by his own party for his refusal to discriminate against Bahamians who were not FNM. There are still those in his party who do not understand that all the spoils should not go to the victor. At least Hubert Alexander Ingraham did not believe in the victor walking away with everything — nor did old Abe Lincoln.

 

He also believed in freedom of speech. And one of the first things that he did on becoming prime minister of the Bahamas was to open the airwaves to the private sector. The Tribune was given the first private radio licence for 100 JAMZ. Since then there have been many private radio licences and many talk shows, where Bahamians can express their opinions, no matter how wise or foolish.

 

No longer do Bahamians, like Fred Mitchell, have to fly to Miami to buy air time to get their views across to the Bahamian public. Today they have many outlets right here at home and they certainly use them.

 

Mr Ingraham has been the brunt of much of their criticism — but this is the price of free speech. We are certain that he does not like it. We are also certain that untruths make him squirm — in fact send him into a boiling temper — but we are also certain that he would never be vindictive, or retaliate by denying work permits to newspapers. He would probably agree with Winston Churchill who said: “I am always in favour of the free press but sometimes they say quite nasty things.” As for Abe Lincoln, he felt it important “to let the people know the facts, and the country will be safe.”

 

They laughed at his accent, they called him the “Delivery Boy,” his nickname was Hughbiggity – Sir Lynden dismissed him as a one-term prime minister – but whatever they called him during his 15 years as prime minister he did much for this country and for all Bahamians. He should be a true inspiration to Bahamian youth who now know that regardless of their backgrounds they can also aspire to great heights.

 

September 07, 2012

 

Tribune242 Editorial

 

Caribbean Blog International

 

The saga of illicit trading in The Bahamas began well before narcotics trafficking ...with bootlegging and piracy... ...So entwined is Bahamian history with smuggling and outrunning the law, it permeates Bahamian culture... ...The Bahamas cannot afford to lose investor confidence with the country’s governing stability marred by increased criminal activity

Drug trafficking via The Bahamas

The Old Bahamian Culture of Illicit Trading in The Bahamas

With over 700 islands spread across thousands of miles of water, The Bahamas’ coastline provides innumerable opportunities to smuggle drugs, weapons and humans.  There are simply too many places to hide, stash, and transit illegal goods and too few resources to track, locate, and arrest perpetrators.

The Bahamas has the uncanny ability to attract so-called dubious individuals – from financiers avoiding extradition or taxes, to drug and human traffickers.  Our island nation of some 350,000 does little to halt the perception that participation in illegal activities is welcomed here.

Drug trafficking is alive and well in The Bahamas as evidenced by the stash of 345 pounds of cocaine worth $2.5 million found at North West Cay, off Great Inagua.  The joint operation between the Royal Bahamas Police Force (RBPF) and the U.S. Drug Enforcement Administration (DEA) attests to the crucial coordination between The Bahamas and U.S. governments to thwart drug smuggling.

The Bahamas has a partner with vast resources to help combat narcotics trafficking, but unless Bahamians make a commitment to prosecute and incarcerate dealers in a timely manner, drug trafficking will continue to proliferate across the islands.  The Bahamas must also commit to harsher sentences for those caught smuggling large amounts of narcotics.

As vast as the waters of The Bahamas are, the airways are not immune to drug transit.  In just two months, police have reported the confiscation of over 50 pounds of cocaine at Lynden Pindling International Airport (LPIA).  In August police allege an individual upon arrival to customs was found with four and a half pounds of cocaine; in mid-July police allege an individual with over seven pounds of cocaine was discovered; and in early July over 40 pounds of cocaine was found on a commercial airline after police acted on information from U.S. Customs & Border Protection personnel.

The Bahamas must press forward in the fight to combat the trafficking of drugs through our country.  Though it may never cease completely, we cannot ignore the affiliation of drug trafficking to other crimes being committed.  We only need to look at Mexico.

The saga of illicit trading in The Bahamas began well before narcotics trafficking with bootlegging and piracy.  So entwined is Bahamian history with smuggling and outrunning the law, it permeates Bahamian culture.  But set now in the global age, The Bahamas cannot afford to lose investor confidence with the country’s governing stability marred by increased criminal activity.

Sep 06, 2012

thenassauguardian editorial