PORT OF SPAIN — For the first time since the Government intervened in the bailout of collapsed insurance giant CLICO more than three years ago, Central Bank Governor Jwala Rambarran yesterday admitted that, as a supervisory body, there was a perception that the Bank “faltered”.
He said the Central Bank had performed quite well in carrying out its responsibility for financial stability.
But he added: “We cannot ignore the public perception – which is usually as important as reality – that the Bank faltered in relation to the failure of CLICO, CLICO Investment Bank and (insurance company) British American.”
Rambarran was speaking on the topic, “Strengthening Financial Stability in Trinidad and Tobago: Staying Ahead of the Curve”, at a breakfast seminar hosted by the Chartered Financial Accountants (CFA) Society of Trinidad and Tobago at Hyatt Regency (Trinidad) hotel, Port of Spain, yesterday.
“Apart from balance sheet scars, the CLICO crisis may have left psychological scars on the population of Trinidad and Tobago. For many, memories of this failure are still fresh, causing an overestimation of the probability of a repeat disaster – the fear of fear itself,” he said.
Rambarran noted that for the first time in its 48-year history, the Central Bank, through the Commission of Enquiry into these failed financial institutions, would be subject to public scrutiny about its regulation of the financial system.
“At the Commission of Enquiry, the Bank will be transparent in accounting for its regulatory and supervisory actions in respect to these institutions,” he said.
The former PNM government intervened in CLICO and CIB in January 2009 after former chairman Lawrence Duprey sought assistance for his failed company to pay back creditors whose policies had matured and who were owed hundreds of millions of dollars.
The Central Bank has several times attributed failure to properly regulate CLICO to inadequate and archaic financial legislation.
When it came into power in May 2010, the People’s Partnership Government continued to assist in rebuilding CLICO and has spent more than $10 billion to repay policyholders and keep the insurance company afloat.
Rambarran said yesterday a new insurance bill has been drafted and will be laid in Parliament when the new term opens later this month. (Express)