If sanusi's agenda was a good one he would have taken mass sack into consideration, If you push so many people who know too much about how to move money in the street you will have so much bank related fraud in the coming years

BIGER BOY:

I agree some post in this room is baseless or of target, But let me try to clarify what this tread is about,

1 I and any sane person dont argue that soludo did a good job by facilitating the ban consolidation

2 Just because we hold him accountable does not mean he is a criminal or he did something fundementally wrong, No, but he was at the helm and should explain how things got so out of control

3 Even those citing the American example should note that Greenspan (the head of the Feds who made rates extaordinarily low creating the current asset buble) tenure saw an increadible rallying of the markets and economic growth, but he had to face the US senate to explain why rates were so low durring his tenure, and nontheless he is still accused in the US as the architect of the global crisis.


The people who hold the opinion that Greenspan is the architect of the global crisis are his critics, who never saw anything good in what he did to expand the economy and these people are in the minority of the consensus. The asset bubble was not caused only by the Feds low rate rather it was a combination of factors that crystallized at the same time including the US Govt amendment of Community Reinvestment Act (CRA) forcing banks to make mortgage loans to low-income people otherwise would not have approved for such mortgages, the excessive greed of the banks which led to irrational lending even when there are overwhelming evidence that borrowers cannot sustain those mortgages and then turn back to securitize the assets and sold them off and homeowners who were buying mortgages with fictitious financial papers, unsustainable means of livelihood, etc. The other factor was mark to market rule which eventually forced the banks to go down. The blame is shared across many actors, otherwise called layered responsibility.

4 Was the lack of oversight by the Feds in d US (same thing CBN or SOLUDO is accused of) worth it? It depends on who u ask, The banks engaged in huge gambling causing some of them to fail, housing market collapsed, the stock market lost more than half its value, Jobs were lost, and not to speak of the damages this caused to other economies in the world.


The lack of oversight by the Fed did not cause the crisis. That is an oversimplification of an issue that had myriad factors contributing to it, some of which i have mentioned above. Would you mind giving me one or two examples of the CBN lack of oversight in specific terms?

5 In Nija today these banks were fat and sick, thats why some people r worried that the current cbn policy caused all this. U ve got banks with negative working capital (neva mind their fiticious profits), granting unsecured loans, paying huge bonuses, even if money was water it will some day run out.


Do you know any bank that does not cook or massage its book? This has been going since the inception of financial reporting. What Central Bank authorities do worldwide is to institute controls to drastically reduce the 'cooking' but not to eliminate it. It is not a Nigerian thing.
Most of the loans were not unsecured as you thought. They were collateralized but the collaterals were impaired and have drastically lost value. That is different from unsecured. But the loans the CEOs gave themselves were generally unsecured as you mentioned.

6 what the cbn did was to save these banks by injecting money and knocking some senses into them. b4 they collapse and then we would not be talking of downsizing but collapse of banks, and not only jobs will be lost but also depositors monies like mine i have in one of these banks.

The banks were already saved when the previous CBN Governor created the EDW window. That was an adapted measure similar to TARP program in US and UK. It was an intervention meant to allow the banks weather the storm without creating public panic. Contrary to some opinions, the previous CBN Governor understood the position the banks got themselves into and initiated efforts to sustain and probably avoid higher unemployment. he subsequently launched special audit (stress test) into the initial 10 banks. The special audit report was only actioned by the current CBN Governor. If the previous Governor didn't think the banks were being disingenuous, why did he launch the special audit? The only difference was that he laid down a different route for the recovery of the banks to the President and the Economic team and they did not approve it. If you go back and listen to the President's speech after the sacking of the initial CEOs, you will clearly see that he wanted a new CBN Governor to action the report. The preliminary report was already submitted to the Presidency with the recommendation.

So, i do not understand what else the previous CBN Governor could have done that he didn't do or attempted to do. Clearly you can question if he should have moved faster, that's a legitimate debate but to suggest he did nothing to regulate the banks is inaccurate.

In retrospect, what the previous CBN Governor got wrong was not seeing the banks will act against their self-interest with the decision makers in these banks refusing to pursue rational, sustainable course of actions.


do u realy think if he did not have good intention he will save the banks, in fact he could just wait and as soon as one bank fails the domino effect begins on the others, but he did not.


He did not save the banks. The banks were already saved (through EDW) and that was how he saw the banks that they depended on EDW to weather the storm and he axed them. He actually exacerbated a bad situation. I do agree with you that he may have had good intentions but i believe the policy was badly timed and managed. You only need to look at his subsequent remarks and statements to know he did not realize the powerful position he was holding. He didn't seem to appreciate initially his words based on his powerful are almost like 'law' in the market. But i think he is doing better now and seems to be more tactful in his statements.

And note if Lamido should also falter we will call him out,

bidemi12:

@ cool G Sometimes i believe that when people post longer than normal postings, the attempt is to confuse us from the path of logic. Time and time again soludo gave Nigerians confidence that there was nothing wrong with our banking sector and that we should sleep soundly. Answer me this; were you not shocked at the massive fraud that was exposed shortly after soludo was removed as cbn chairman? I still cannot understand why people cannot comprehend simple things. You have been trusted with watching and protecting our money and under your watch our money was mismanaged and stolen and you wonder why we are blaming you. you should be thankful that we are not holding you liable legaly for negligence of duty and sue the bleep out of you.

coolG:

[color=#006600][/color]

Really? Path of logic? You are only expressing your view and that is called opinion. I disagreed with your opinion and a few others and hence i took time respectfully to adduce the reasons for my opinion. Are you calling your opinions 'path of logic'? I expect you to do so but that does not mean i consider it so. What is important is to respect you opinion while i express mine. Now to more substantial issues;

CBN Governor (or soludo as you called him) is not entrusted to watch and protect your money. If this is your comprehension of the job of CBN Governor, then you are wrong. So the issue of mismanaging your money is misnomer for the issue at stake. The banks are managing your money and i do not know any depositor who has lost his/her deposit with any of the banks in the current situation. If you know, please advise me. However if you are referring to investors, let me know and i will explain to you the responsibility of an investor.

You mentioned that the former CBN Governor said all was with the banking sector. He was fulfilling the responsibility of his office because he has appreciation of the powerful position he held. It was not because he did not know at that time things were not right. Most market knew he would not have created EDW if he thinks things were right. He is entrusted to provide confidence to the market as long as necessary to avoid collapse of the market. You might disagree with that but that what CBN Governors do.

You mentioned the fraud was unearthed after he was removed. That in itself is inaccurate. The special audit was initiated by the former CBN Governor a few months after his intervention with EDW. The report which was presented to the presidency by the former CBN Governor contained all the misappropriations of the CEOs. So, the information you have that the massive fraud was discovered after he was 'removed' (he served out his term, if i remember) is not accurate. If you are in doubt, go back and listen to Mr. president remarks after the CEOs were sacked. He made it clear he had the report much earlier but wanted another person to execute it. If you are still in doubt, look for a couple of interviews where the current CBN Governor also said the special audit was conducted for the initial 10 banks by the former CBN Governor.

I believe i have addressed all the substantial issues you have raised. I do not expect to change your opinion but to appreciate the issue is not as simple as you seem to think.

Lastly, your last statement is amusing and childish, with all due respect. The notion that people who disagree with your opinion do not comprehend simple things is usually, though not always thrown around around when people do not want to debate issues on substance. If you go back and look at most of your responses to people with different opinions, you will see they are aggressive and disrespectful. Some of the people who agree with you express their opinions without making derogatory remarks as if they have monopoly of knowledge. I only say this as an advise. I am willing to debate any substantial issues you might want to raise and also accept mistakes when i write something that's inaccurate. That's my idea of exchanging views with a fellow countryman.

coolG:

[color=#006600][/color]

That is what i expected from you. I was not disappointed. It is good that other people read your response to being challenged on your opinion and decide if your opinion is the path of logic as you said or full of hot air!

BIGER BOY:

I agree some post in this room is baseless or of target, But let me try to clarify what this tread is about,

1 I and any sane person dont argue that soludo did a good job by facilitating the ban consolidation

2 Just because we hold him accountable does not mean he is a criminal or he did something fundementally wrong, No, but he was at the helm and should explain how things got so out of control

3 Even those citing the American example should note that Greenspan (the head of the Feds who made rates extaordinarily low creating the current asset buble) tenure saw an increadible rallying of the markets and economic growth, but he had to face the US senate to explain why rates were so low durring his tenure, and nontheless he is still accused in the US as the architect of the global crisis.

4 Was the lack of oversight by the Feds in d US (same thing CBN or SOLUDO is accused of) worth it? It depends on who u ask, The banks engaged in huge gambling causing some of them to fail, housing market collapsed, the stock market lost more than half its value, Jobs were lost, and not to speak of the damages this caused to other economies in the world.

5 In Nija today these banks were fat and sick, thats why some people r worried that the current cbn policy caused all this. U ve got banks with negative working capital (neva mind their fiticious profits), granting unsecured loans, paying huge bonuses, even if money was water it will some day run out.

6 what the cbn did was to save these banks by injecting money and knocking some senses into them. b4 they collapse and then we would not be talking of downsizing but collapse of banks, and not only jobs will be lost but also depositors monies like mine i have in one of these banks

do u realy think if he did not have good intention he will save the banks, in fact he could just wait and as soon as one bank fails the domino effect begins on the others, but he did not.

And note if Lamido should also falter we will call him out,

He did not save the banks. The banks were already saved (through EDW) and that was how he saw the banks that they depended on EDW to weather the storm and he axed them. He actually exacerbated a bad situation. I do agree with you that he may have had good intentions but i believe the policy was badly timed and managed. You only need to look at his subsequent remarks and statements to know he did not realize the powerful position he was holding. He didn't seem to appreciate initially his words based on his powerful are almost like 'law' in the market. But i think he is doing better now and seems to be more tactful in his statements.

And note if Lamido should also falter we will call him out,

Bokoharam:



Bigger Boy,
U really undstnd what is happening. Leave those who do not undstnd, until when their eyes are clear.

I have said it time without number that Soludo got it right at the beginning, but lost it somewhere in between. The truth is bitter! He missed the point and his watchdog fxn when he became corrupt and started compromising. The corrupt CEOs bought him over. He spear-headed the attempted, fraudulent takeover of SPRING BANK by PHB; he caused many banks their woes. He is costing people their jobs today.

Soludo's pacifying function was merely a time-bomb waiting to explode. It wouldn't have been long for the whole banking system to collapse, if Sanusi had followed Soludo's steps. Sanusi saved the economy from a total banmk collapse, where, like u said, a combination of banks' capital, depositors' funds, and staff would have all suffered. It was a matter of time for that to manifest. Sanusi is a wonderful RISK MANAGER; I think I give it him.


@COOLG
I hope you know what the EDW was meant to do. I hope u know that it was to be a short-term wondow and a perpetual line, which most of these stressed banks converted it to. As good intentioned as EDW was, all those were small matters compared to the ATTITUDE of the then CBN pilot (Soludo). He was not policing the sytem enough.

Soludo, no doubts is a renonwed academic. I give academics and paper-work to him; but HE HAS INTEGRITY ISSUES. Take it or leave it! He probably also did not understand how to control banks or he chose to look the other way.

Ndeewonu:


Corrected:

@COOLG
I hope you know what the EDW was meant to do. I hope u know that it was to be a short-term window and NOT a perpetual line, which most of these stressed banks converted it to. As good intentioned as EDW was, all those were small matters compared to the ATTITUDE of the then CBN pilot (Soludo). He was not policing the system enough..

stealth01:

Compliments of the season to everyone. I want to appreciate the detailed and informed contributions of Nairalanders to this thread. It really goes to show how enlightened the participants are and where their interest lies. The objective views being contributed from both sides of the issue gives me joy that there’s still hope for this country
My intentions for starting this thread (as some are yet to realize) is for the purpose of social accounting – analysis of an economy that takes into account the social effects of policies
We need to take stock of past and present events in other to make informed decisions about our future. The dreams of today are the realities of tomorrow

There’s no doubt that the much touted consolidation of the industry into the 25 banks by supporters of Soludo’s era was indeed a plus for his administration but how big of a plus was it?
Before the consolidation no Nigerian bank was listed amongst the largest 1000 in the world in terms of Capital and Asset base barely a year after the reform a least 5 Nigerian banks were ranked amongst the biggest 500 in the world
However, as every good macroeconomist knows the success of every economic policy is measured by how much it impacts positively on the economy and ultimately in the lives of the citizens

My question is how this consolidation program translated into the betterment of the life of the average Nigerian.
Banks became bigger, no doubt ,
the industry needed to employ more hands in the short run, no doubt,
but
Did the real sector of the Economy grow? The major challenge of the consolidation was that it eventually did not serve its purpose. It was meant to promote real sector growth as the banks as at then lacked the financial capacity to undergo any major investment in the country. However, Soludo was greedy and the bribes he got from top shots in our banks made him loose focus and moreso weakened him when he knew banks were not doing well. Majority of us were aware of how Intercontinental and Oceanic kept borrowing funds from CBN. To make matas worst, they kept on opening branches as though that was the solution in the name of mobilising cheap funds which was not sufficient to cover the overhead involved.
Did the cost of acquiring the much needed capital (int rates) for SMEs go down? The fact was the money was too much and the best they could do was to beg top HNIs to come collect facilities to trade margin trading which led to our stocks being overvalued.
Where loans more affordable and accessible to the average Nigerian entrepreneur? No the loans were available to HNIs who never needed it and some other businessmen who knew how to rub the palms of their greedy account officers. Although, the banks also pushed some people into this mess as the targets were highly unrealistic and people had to just do anything to meet targets.
Did inflation rate decline? Never on the increase in real terms of money although the various CBN releases then claimed they were in units based on their nominal rates n not real rates.
What about the unemployment rate? (that stands between 10-90% depending on whom you ask)
Please do not get me wrong I am in support of the consolidation of the banks as it was obvious that most of the banks were taking on risks far larger than their Capital could carry this was contrary to the Global standard of the Basel II accord.

On the one hand, the consolidation process itself was tainted with a lot of lapses and shady dealings. Soludo started failing since the consolidation process.
During an acquisition deal between 2 banks that did not pass the second phase of the recent CBN audit it was revealed that the 5 banks that came together to form the smaller bank did not have up to half the minimum N25 billion requirement and the merger was approved and granted license to operate under a new name
If due-diligence was carried out by Mr. Soludo and his examination team while in office that kind of bank should not be in existence today? Talk about selective justice
Soludo knew there was something wrong with the whole industry that was why he created the EDW only that he is not man enough to admit his mistakes

On the other hand, his successor is currently doing the right thing in a wrong way (probably seeking personal glory). As we all know that Banking thrives on information and arguably one of the industries with the largest systemic risk usually triggered or averted by public confidence in the system
Because the situation was not well managed in terms of Public relations these sick banks now became more affected while the banks rationalization/restructuring was made worse by not involving the unions as I mentioned earlier in the thread

But I tell you this, if the reforms were not implemented then, the consequences of non- action (that Soludo preferred) would have been far more grievous in the future most especially to innocent depositors
The origin of the whole calamity that we are witnessing now started when Mr. Soludo was in office and he was in a far much better position to have corrected the ills he discovered being the Industry watchdog. Some bank executives may have fraudulent tendencies but it is the core responsibility of regulators like CBN and NDIC to ensure that stakeholders faith in the system is preserved through adequate supervision

The recent Human Development Index Report shows that Nigeria is one of the worst countries to live in the world. The UN laments that while there’s sufficient information to show that the GDP of the nation had been on the increase the standard of living of the Nigerian people has been on the decline
Now in simple Economics it does not make sense but there are possible answers

First, it could be that the government is toying with data and giving a false representation of the actual variables in the computation of the Nation’s GDP over the years. This could only have been facilitated via the help of the custodians of the Nation’s statistical and Economic data e.g. the CBN, Finance Ministry, the almost moribund Federal office of Statistics and Federal and State ministries/parastatals planning research and statistics units
Second, it could be that the wealth created is only in the hands of a few Nigerians hence the gap between the poor and the rich has definitely widened but of course this can only thrive in markets where there’s unfair competition and policies of government e.g. Importation licenses and permits, Tax/Trade concessions e.t.c. tend to favour only a certain group of individuals or family owned businesses with the right connections to the people in office

Anyhow, one or combination of these or other reasons may be why Nigeria is where it is today. What am saying is that the policies of government should reflect positively in the lives of the people.

If not that we live in a society where visions of our leaders are myopic and memories of the followers are also short-lived we tend to forget quickly the wrongs of our office holders and continue to support their self-driven political ambitions even when they refuse to own up and proffer ways to move the country out of the mess they got us into. In developed worlds, people like Soludo would not even dream of becoming a member of any political party talk less of seeking public office
This message also goes out to all those that may be seeking public offices come 2011 or 2010 as the case may be.
It is our duty to examine the character of the people that we want to lead us, what values are they bringing to the table, what do they stand for and what do they have to offer the average Nigerian, what is their level of sincerity evidenced with a good track record in leadership, public office and corporate governance?
Someone said a people deserve the kind of leaders it gets. Nigerians are good people why can’t we have good leaders?

LET’S NOT KEEP QUIET. LET US SPEAK OUT!

God bless Nigeria.

jcross22:

LETS PUT SENTIMENT ASIDE AND REASON WITHING OUR MIND , SOLUDO KNEW WHAT WAS GOING ON IN THE BANK SECTORS BUT HAD NO POWER TO REVOKE THEM SIMPLY B,COS THOSE INVOLVED WERE POLITICIANS TYCOON WHO AIDED MR PRESIDENT DURING THE CAMPAIGN . A GOVERNMENT OF PADDY PADDY WHAT DO YOU EXPECT BUT IT GOT TO AN EXTENT C.B.N COULD NOT WITHSTAND IT ANYMORE THAT WAS WHY THEY VOICE OUT . LETS FORGET ABOUT SANUSI OR SOLUDO BUT FACE THE FACTS, SOLUDO CAN'T DO ANYTHING WITHOUT THE ORDER FROM ABOVE LIKEWISE SANUSI .