Thursday, May 17, 2012
By AVA TURNQUEST
Tribune Staff Reporter
aturnquest@tribunemedia.net
FORMER state minister for Finance Zhivargo Laing yesterday labelled the government's proposed mortgage relief plan as "political pandering" after the proposal was blasted by an international credit rating agency.
While admitting that he had not yet read Moody's report, Mr Laing said the PLP's proposal was "impractical" and could not be executed in a meaningful way.
He said: "The reality is it relies on the level of forgiveness of interest arrears and the like that I don't think any sensible business is going to be able to do. You'd like to be able to relieve persons holding mortgages who have the difficulty of those arrears but it is a very difficult business proposition for the bank and if the government is going to bail them out then that is going to be a cost to the country."
The plan seeks to strike an agreement with banks and institutional lenders to write off unpaid interest and fees for homeowners facing foreclosure in return for government guaranteed interest payments for five years, 2017. The proposal also includes working with banks and lenders to implement a 120-day moratorium on foreclosures and extend the loan repayment period under defaulting mortgages.
The leading Wall Street firm said the plan undermined efforts to rein in the $4.356 billion national debt, and warned that the scheme will likely cost Bahamian taxpayers $250 million to implement.
In an investors note on the general election outcome's implications, it was also warned that the PLP's mortgage plans created "moral hazard" that could increase Bahamian mortgage delinquencies, and would cost the Government a sum equivalent to 3.1 per cent of GDP spread over five years.
Pointing to the fact that the PLP now posed to make the same fiscal decisions it was previously critical of, Mr Laing maintained that the only way the government could access funds was through taxation or borrowing.
"The PLP was complaining in the first instance that we have too much debt and too much borrowing and you then have to turn around and borrow for that purpose then that creates an enormous challenge for them."
He added: "It also creates a challenge to the extent that all of the other persons who have been faithful in paying their debt obligations have to ask the question 'why should I continue to do so?'"
Moody's described the proposed mortgage relief plan as "a credit negative", implying that its implementation could lead to it further cutting (downgrading) this nation's sovereign credit rating, something that could scare away foreign investors and increase the Bahamas' borrowing/debt servicing costs in the international capital markets.
Referring to the country's rating downgrade by Moody's under the FNM administration, Mr Laing explained that the global financial and economic crisis necessitated increased borrowing and that the downgrade also reflected changes to the rating system.
The Moody's data also showed how many Bahamians were mortgaged to the hilt on consumer loans. With total bank lending standing at $7.1 billion or 87 per cent of Bahamian GDP, consumer credit totalled $5.2 billion or 63.6 per cent of GDP.
Responding to the government's admission that some initiatives will have to be scaled back due to fiscal limitations, Mr Laing said that it was up to the public and media to hold the current administration accountable.
He said: "My response would be 'here we go again', that's what they did the last time around. That's the recklessness of an opposition hell bent on winning, you go out there, you promise the country the moon and probably knew that it was impossible in the first instance to deliver, and now you find yourself backtracking."
Comments
TalRussell says...
Again, the man who was to be King is at it again. Comrade Zhivargo the PLP government's proposed mortgage relief plan is exactly that, a proposal that is yet to be fine-tuned, so by then Moody's will come around. This is the complete opposite of what they didn't just say, but did, when they lowered Bahamaland's credit rating not once but twice in less than 12 months when you and Hubert were in charge of the natives finances? Are you now suggesting in any form or fashion that the international credited reporting agency has in fact lowered Bahamaland's credit ready over something still in the being talk about stages? You get a F grade on this one.
Posted 17 May 2012, 2:07 p.m. Suggest removal
concernedcitizen says...
ohh we sacred we sacred the plp are here the plp are here ,talrussel you made a few comments when you were challenged without the words native or Hubert,,happy to see your back to your old self its so much more intertaining Cromrade...now get with ,more pics of Idi amin and little kittens please
Posted 17 May 2012, 4:10 p.m. Suggest removal
TalRussell says...
It must embarrass the hell out of the rejected Comrade Zhivargo that the natives were all smiles as they cast their votes for the firing of him and fellow Comrades, Hubert, Carl, Dion and Tommy. Still he has the balls to appear here on full bloggers screen to ignore the brutal Decision Day 2012. Comrade Zhivargo it was there for all to see as your firings unfolded right in front of the thousands watching on the TV and computer screens. Proof that the native’s snatched back what was left of our tiny, much beloved Bahamaland’s democracy from under the flames of the once brightly burning FNM torch, intent on cremating the very pillars which held our democracy together.
Posted 17 May 2012, 4:51 p.m. Suggest removal
concernedcitizen says...
ahh come on bro/sis more pics of that dashing fellow Idi Amin please, got any of him frolicking poolside
Posted 17 May 2012, 5:04 p.m. Suggest removal
notsogullible says...
To the intelligent persons writing on these blogs: I'd recommend we not acknowledge TalRussell. The PLP hate and ignorance spewing from this coward is now becoming a shameful disgrace. We can keep the conversation going outside of the comments made by Tal. To respond to this hateful ignorance is really spoiling otherwise intelligent conversation.
Posted 17 May 2012, 7 p.m. Suggest removal
concernedcitizen says...
i know i know ,but its so much fun ,these are serious times and sometimes a little levaity is needed.....
Posted 17 May 2012, 7:11 p.m. Suggest removal
TalRussell says...
Hay Comrade notsoguillible I am ready to wave the white flag and concede that only your FNM brand of intelligence was raised on such deep-rooted FNM mean spiritedness. I always thought really intelligent people discuss ideas, not other people. But who am I to suggest that bloggers gossip is all that bad. But then again your name handle points to you being an easy mark for Hubert’s lies against PM Christie which even you should know that they defy common sense and decency. Truth is even with “Decision 2102” in the can Hubert hasn’t stopped his lies against his former friend and trusted law partner of 18 years.
Posted 18 May 2012, 10:05 a.m. Suggest removal
MartGM says...
Well Lady/Mr Russell if you measure intelligence by discussing ideas and not people...I mean no disrespect but you must be far from Intelligent. All you ever discuss is HAI or someone from his former administration.
Posted 18 May 2012, 10:51 a.m. Suggest removal
concernedcitizen says...
i too was into replying to talrussell ,but its useless ,i think the best course of action is to iignore him/her altogeather ,maybe he /she will go blog on bahamas journal ,,if there still printing or have a blog ,,,boycott him/her don,t read them and don,t reply,,any TR post if we must reply ..reply with didn,t read it /don,t care
Posted 18 May 2012, 12:23 p.m. Suggest removal
newcomer2012 says...
While I must admit I am not familiar with the details of the PLP plan one thing I do know is no matter which party was elected, ANY type of mortgage relief would have been costly as stated by the former Prime Minister himself. See link: http://www.tribune242.com/news/2012/apr…
There, he says ".....the FNM will put forward a plan - it will be a costly plan but a workable plan that will bring relief to many, many people." Everyone knows that it will be costly its the nature of it. The US is having the same problem with mortgages and the same challenge of fixing it ie. it costs money to assist the citizens however there is no money in the kitty. BTW I can't find exactly what the FNM was going to do for motgage relief, can someone tell me?
Posted 18 May 2012, 2:49 p.m. Suggest removal
concernedcitizen says...
during the campaign the FNM talked about something but i never saw a plan..i am not againts helping the most needy.. i live on a small family island where we see all of each others habits ..many of the same people crying about hard times and falling behind on their mortgages didn,t change there habits . i would see them walking on the street by 2 on friday afternoon swinging a beer ,or congrating outside the numbers houses ,i cut back and would swing by fish fry for 1drink on friday night and there they would be big ole plates of food in front of them ,drinks all over the tables ,beeging gals and we all know thats not free ...add it up how many mortgages did the numbers man get 5 and 10 dollars at a time..our we going to reward bad habits ,is the goverment going to post the names of all the people that got help ,,yeah when the devil goes snowboarding
Posted 18 May 2012, 3:19 p.m. Suggest removal
newcomer2012 says...
True, there are definitely some bad apples in the bunch. I agree with you whole heartedly. The point I am trying to make is the Moody's report was going to come no matter who is in charge ..... the downgrade itself by Moody is far more serious than a warning report they gave. In any event it all leads to the same problem. The govt is not collecting enough money to tend to the needs of the people. If we had money coming in from various stable sources there would be no Moody's downgrade or report.
Posted 18 May 2012, 5:21 p.m. Suggest removal
concernedcitizen says...
that is also true ,but the PLP doesn,t have to go ahead with the plan....theres an old saying in politics "the people vote for a goverment that feels most like themselves" i e their morals ,their wants etc etc ,,so go figure
Posted 18 May 2012, 6:17 p.m. Suggest removal
concernedcitizen says...
not true this moodys report came out only talking about what they thought of the PLPS plan ..the FNM is not the gov ,therefore moodys has no plan by them to evaluate ..unless the FNM wants to submit one to moodys ,which wouldn,t make sense because their not the gov and couldn,t impliment it any way
Posted 18 May 2012, 6:51 p.m. Suggest removal
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