...Williams moves on with changing of guard
For the past ten years, outgoing Central Bank Governor Ewart Williams has guarded his job jealously.
He has cautioned governments on inflation and the slippery slope, warned about hidden unemployment, expressed concern about wage negotiations and the country's declining energy sector, navigated the bank after the insurance company CLICO collapsed under his watch and spent the last three years trying not to say the 'r' word (recession)with regard to the local economy.
From the high-spending Patrick Manning administration to the deficit-digging People's Partnership Government, Williams' pronouncements on the economy's health, couched in statistical data and independent of political preachiness, generally had a sobering effect.
He has not bothered that his projections on the economy were often tangential to that of the political directorship.
While he believes there could be greater co-ordination between the country's monetary and fiscal policy, there's nothing wrong with the Central Bank and the Ministry of Finance having different perspectives.
"I think what's dangerous is when the differences in the points of view creates the confusion in the minds of the private sector and it inhibits confidence and inhibits investment. I think that's dangerous. But all the Central Bank can do is call it as it sees it," said Williams during his exit interview last Friday at the Central Bank tower at Independence Square, Port of Spain.
Williams, whose intent is to now spend time with his three grandchildren, said he hoped the Bank continued to assess data based on the best available information and "say what they feel".
Appointed as governor out of the International Monetary Fund (IMF) since 2002, his second term of office ends on July 16.
He headed a team of deputy governors which include Dr Shelton Nicholls, Joan John and chief economist Alvin Hilaire.
While he won't identify his most significant achievement during his ten-year tenure—content to confine it to a more confident "can-do" Central Bank—the collapse of CLICO remains his dark night.
He admitted that with CLICO, "there's enough blame to go around".
In January 2009, when CLICO's funds dried up and businessman Lawrence Duprey approached the then PNM Government cap-in-hand for a bailout, sharp focus was placed on regulators of the insurance company, in particular the Central Bank.
Williams bore the brunt of criticism for the bank's failure to properly regulate CLICO, despite the fact that it only fell under the Central Bank's umbrella in 2004 and archaic 1966 legislation existed to govern the insurance sector.
Cognizant of the ongoing enquiry into the collapse of CLICO, with the Central Bank scheduled to be appear before Sir Anthony Colman's commission in September, Williams was careful on commenting on CLICO.
"In the CLICO matter, there's enough blame to go around. That's one thing. You can interpret that. The second thing, the Central Bank has taken action to charge certain players with fraud on the public," he said.
"We are taking the position that CLICO was a massive fraud on the public and that's our position," he added.
Following CLICO's collapse, he noted, the bank sought to tighten its regulatory infrastructure "at all stages" working on legislation and "we have significant work improving our supervisory practices".
"Does it (CLICO) personally bother you though?" the Sunday Express asked.
"Yes, I've lost a lot of sleep. It does simply because it doesn't put the Central Bank in the best light. People lost money. Whenever any regulator presides over a situation where there is disruption and financial instability, where depositors and policyholders lose their savings and have reason to question the stability of the system, the regulator must be concerned. I am sure that all the members of my regulatory staff lost a lot of sleep on this."
Was CLICO an outlier or can it happen again?
"We think it was an outlier. In every financial stability report that we have published we show very carefully the strength of our financial system," he said.
The Governor's of the firm view that the onus remains on the government to bail out banks if it becomes necessary.
"Banking is part of the political economy and political economy has to do with people and it has to do with ensuring the survival of the economy as a whole. No government would sit by and allow the failure of a financial institution to have a systemic impact whereby the whole economy will be seriously affected. No government," he affirmed.
Should CLICO have been allowed to fail?
"Clearly, that is a simplistic argument. You have to recognise the potential that a CLICO failure had for having systemic negative consequences on the economy as a whole. CLICO, or the CL Financial group held a shareholding of 52 per cent in the largest commercial bank (Republic). Among their major depositors were the Unit Trust, the NIB, the NGC. CLICO had the largest portfolio of pension funds, credit union deposits. CLICO, in one way or the other, was tied in to such a significant part of economic activity in the country that there was no way in which any Central Bank or any government would have let CLICO fail without trying to minimise the impact," he argued.
Was CLICO, then, too big to fail?
"It's a characterisation that economists and central bankers don't like but it's the hard fact of life. You couldn't let an institution which had such a massive impact on the economy fail. You just couldn't. You couldn't have a disorderly break-up of an institution that large," he said.