McPherse Thompson, Staff Reporter
JAMAICA has so far collected "a very small percentage" of the number of bad debts it acquired from the Financial Sector Adjustment Company (FINSAC) just over two months ago, said the company's president, Dennis Joslin.
About 20 per cent of the dollar amount of the approximately US$393 million debt has already been collected, Mr. Joslin said. Interest on the loans stands at about US$300 million.
Referring to the number of loans that have been settled since they took over the portfolio, Mr. Joslin said that "as a businessman, I am not happy with that, but you can only push so hard."
He was speaking at the American Chamber of Commerce of Jamaica (AMCHAM) sponsored 'Speakers Forum Luncheon' at the Terra Nova Hotel, St. Andrew on Friday.
Mr. Joslin said the general complaint about the debt and one that he shared with most people was that "the interest rates" charged by the various lending institutions "were stupid."
Addressing a number of corporate leaders, he prefaced his statement by noting that "if there's a banker in here and I'm stepping on your toes forgive me. But when interest rates are 168 per cent it is stupid. You can't grow marijuana, harvest cocaine and pay 168 per cent interest, ... 168 per cent interest is just plain stupid."
However, he said people who deposited their money in the banks before the financial sector meltdown of the 1990s and expected to get between 50 and 55 per cent interest "are just as guilty as the people that charge 168 per cent."
Mr. Joslin said it was unrealistic to believe that one could deposit money in the world economy today "and draw 50 per cent interest on your savings," and that banks could in turn loan the money without sustaining any kind of bad debt loss.
Those who believed that "need a new lesson in economics," he said. "It won't work and it didn't work."
He cited an example in which he invested in bonds issued by a bank in Maryland, United States in the 1980s, on which they were paying him 18 per cent interest, tax-free. That was part of the reason, he said, that "our banks went straight down the tubes in the '80s just like Jamaica did. You cannot expect to receive (that) huge interest income," he said.
To deal with the FINSAC bad debt fortfolio, Dennis Joslin Jamaica in most cases has been able to re-examine the agreements with the debtors "to come to a real number that they should owe."
Timetable
Asked if he had a timetable to complete the process, Mr. Joslin said: "approximately 22 years from today. We have restructured loans with 20 years amortisation."
Some people do not have the ability to go out and borrow the money to pay off their commitments, "no matter what number I put on it," Mr. Joslin said. As such, for the next 22 years "we will still have a presence in Jamaica."
Earlier, he told the forum that the first 60 days of Dennis Joslin's operation in Jamaica "were used to settle the single family housing which I was obligated to do by contract."
He said they have allowed owners of about 50 "single family housing" units, with loans of under $US100,000, to pay 80 per cent of their principal and have forgiven the interest.
"We are talking about somebody that is living in a US$20,000 something house told that they suddenly owe US$60,000 on. It really becomes a very hard problem. So we try to stay away from those. The deal that we struck was actually a relief for my conscience," he said.
He was referring to the agreement between FINSAC and the United States-based Beal Bank, on whose behalf Dennis Joslin Jamaica is collecting the bad debts, to allow persons with loans of $5 million or less, whose owner-occupied residences were used as security for their loans, to pay 80 per cent of the principal outstanding within 120 days.
Mr. Joslin said they have so far met with most of the debtors, including those who objected to the sale of the bad debt portfolio, "and they all, I think, left with the feeling that we will be fair."
He said the debtors would probably not be given everything they wanted, but the debt collectors would be fair.
"You are going to be hardpressed, I think, to find many people that won't say that we didn't sit down and deal with them one on one, straight up, and fair," he said.
