Home' Trinidad and Tobago Guardian : January 1st 2015 Contents BG10 FEEDBACK
BUSINESS GUARDIAN www.guardian.co.tt JANUARY 2015 • WEEK ONE
On December 24, 2014
the Bankers Associa-
tion of T&T (BATT)
took out a full-page
advertisement in the
Trinidad Guardian to
Anthony Carmona s
observations on the need to:
a) strengthen the banking laws
b) examine exorbitant bank charges,
c) treat customers fairly
d) stop harmful practice and ensure that
foreign exchange is not used for illegal activ-
These are not unreasonable requests at the
best of times so I was a bit concerned that
the BATT spent money to attempt to discredit
the comments made by the President.
BATT reminded the public that it was in
the forefront of implementing modern, sophis-
ticated anti-money laundering software and
processes to detect and report suspicious trans-
actions. In addition, they reminded the public
that commercial banks were the most heavily
regulated/supervised industry in T&T.
They further emphasised that the commer-
cial banks take very seriously their role as cus-
todians of the public s savings and investments.
To end, BATT reminded the public that they
take very seriously their social responsibility
as corporate citizens of T&T.
Let me address the points made by BATT
and then revert to the comments made by the
Modern and sophisticated software:
This in no guarantee that money laundering
would not occur. Any such investment would
not be successful if the banks employees do
not have the necessary training and dedication
to duty. The sophistication of criminals has
not stood still over the years and one wonders
which camp has developed the more advanced
systems and practices to either prevent criminal
activities or to conduct criminal activities.
To tell the public that banks have modern
and sophisticated software does not give com-
fort. If so, can BATT let us know if criminal
activities are on the decline? Can they report
on a regular monthly basis the number of such
illegal activities that they encounter and how
many convictions actually took place?
Most heavily and regulated and super-
vised industry: Being the most heavily reg-
ulated and supervised industry is no guarantee
that customers are not being deceived and
cheated by banks. One can say the same for
the banking industry in the developed capital
markets including the US.
In the US, there have been several cases of
banking schemes and corrupt practices includ-
ing downright fraud and criminal transactions.
As an example; the fixing of LIBOR (London
Interbank Offered Rate) among the major
banks who were fined several billion dollars.
In the case of Bank of America, they were
fined in excess of US$91 billion from 2008
to 2014 for a series of banking malpractices
as shown below.
See Complete List: Bank of America's Legal
Fines and Settlements Since 2008
The other major banks such as Citibank
and JP Morgan were all subject to massive
The financial crash of 2008 was as a result
of banking malpractice on a grand scale. The
packaging of sub-prime mortgages was pri-
marily based on a conspiracy among the major
banks, rating agencies and insurance compa-
nies to facilitate the packaging of rotten mort-
gages along with phantom mortgages to sell
to unsuspecting investors.
The New York banks, as we speak, are pack-
aging high-risk auto loans and selling to global
investors. Another bubble in the making.
In our own back yard the regulated insur-
ance industry did not guarantee a compliant
Clico. Having laws, good laws or even deficient
laws, must be complimented by strong reg-
ulators. There is no question regulators
slipped in allowing Clico to do what they did.
The important point to note is that having
the most regulated and supervised industry
is no guarantee for compliant bank behav-
Take seriously, the banks role as a custodian
of the public s savings and investments: This
As a custodian, an institution acts as a safe
keeper and charges a fee for providing a cus-
todial service. If that is their interpretation
then that accounts for the non-payment of
interest on savings accounts. Hopefully the
banks are not charging a fee for keeping depos-
itors funds. BATT should know that custodial
banking is very different from commercial
banking and any reference to the banks being
custodians is incorrect.
Take seriously the banks social responsi-
bility as corporate citizens of T&T: If that
were the case why did BATT allow one of
their members to overcharge the Government
in excess of $300 million in 2010 for arranging
a simple bond Issue amounting to net $1 bil-
Ripping off the Government and the citizens
of the country by one of BATT members and
other members knowing about the transaction
and remaining silent is perhaps not the best
example of being good corporate citizens. I
had written about the details of this transaction
which were published in one of the dailies in
The President s comments on the need for
new legislation are absolutely valid. There are
additional laws that need to be enacted to
protect the consumers if we are to pull our-
selves into the 21st century. I would name a
few (Just a few):
Truth in lending act. This would make
it an unlawful act for the banks to
make misrepresentations in their deal-
ings with customers and in their advertise-
ments. No more add-on rates. Are the readers
aware that a bank is still fooling its clients
with the add on rate?
Anti-extortionate collection practices
act. This would ensure the banks
and their agents to act in a civilised
manner when engaged in collections. No more
harassment of customers. Just recently a cus-
tomer of the Bank of America was awarded
over US$1 million for harassment by the bank.
Disclosure of Annual Percentage Rate
(APR) calculations act. This is nec-
essary so that there is full disclosure
of the cost of financing which would allow
customers to compare offers from several banks
and other mortgage institutions.
Transferability of Mortgage Act.
This act would allow the customers
to transfer their mortgages at the
banks expense. This would dissuade them
from playing poker with customers.
I am sure that BATT could add several more
to the above list so that the regulatory frame-
work could be strengthened to ensure the
BATT must heed President's advice
Continued on Page 11
A major area of unfair treatment is the pricing of loans. Small, well behaved and quiet customers are
usually taken advantaged of and they receive the brunt of overpricing, while large and loud customers are
subsidised. This raises the purpose of the prime lending rate.
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