The Government has expressed its intention to initiate an enquiry into FINSAC. It has not yet identified what aspect of FINSAC's work it wishes to focus on.

It is important that the Government stop being imprecise and provide details of what it wishes this enquiry to accomplish. We can think of three possible terms of reference for such an enquiry.

The first is to review, in hindsight, whether the government of the day should have used substantial resources to bail out the depositors of these troubled institutions.

It is often forgotten that the persons who benefited from these bailouts were the depositors in these institutions. Who should get their money back in full other than the borrowers? There are probably 30 to 50 depositors who benefited from the bailout for every delinquent borrower.

Matter of corruption

The second is the question of corruption. Was there any corruption in the operations of FINSAC? This is an appropriate matter to look at and we fully support such an enquiry, provided that there are some grounds to suggest that corruption occurred.

We believe, however, that the administrative control of FINSAC was held by people of high integrity, namely Hugh Bonnick, Shirley Tyndall and Patrick Hylton. To date, there has been no suggestion of impropriety in relation to these persons.

The third reason is whether the delinquent borrowers, whose loans were sold to FINSAC because they were delinquent, were treated fairly.

It is obvious that it is these persons and their failure to honour their obligations to the failed institutions who were major contributors to the banking crisis.

Of course, there will be those who argue that the policies of the government of the day were not insignificant contributors to the fall-out.

Be that as it may, in trying to liquidate a bad loan portfolio, it is quite impossible for every borrower to be treated in exactly the same manner. Some borrowers will be able to collaterise their loans and some loans will be better secured than others. For every loan, there are multiple variations that would impact on any rational liquidation of the loan.

Sale of loan portfolio

Within this third category is also the question as to whether the parties that bought the loans have benefited unduly from their liquidation.

At the time that its loan portfolio was sold by FINSAC, there were efforts made to solicit proposals from both local as well as international institutions. To the best of our knowledge, the group making the most attractive proposal to FINSAC was chosen. After that, it was up to that institution to do the best it could to recover what it could from these borrowers.

Which of these objectives does the Government wish the enquiry to follow?

By being indecisive and unclear, the Government holds itself open to the accusation that it does not know what it wants to do.

While they are considering this, the Government should also evaluate whether the proposed increase in National Housing Trust mortgages is likely to create a 'sub prime' crisis in Jamaica.