Lawrence DupreyWilliams blamed “excessive related-party transactions”, the fall in methanol prices and real estate for CLF’s woes. He stated that since four of CLF’s finacial companies manage over $38 billion in assets–which is more than 25% of T&T’s GDP, the government acted to maintain confidence in T&T’s financial sector. The CBTT acted under section 44D of the CBTT Act.
The bailout will see the government offering funding to CLF in exchange for collateral and equity in CLICO. Clico Investment Bank will be wound up. CIB currently has approximately 100 employees, according to Duprey.
Four of CLF’s subsidiaries will be affected: Clico Investment, British American Insurance, CLICO and Caribbean Money Market Brokers.
Howai explained that FCB was invited to participate, based on their strong balance sheet and experience with such matters. He asked affected depositors to avoid going into the FCB branches seeking answers.
Finance Minister, Karen Nunez-Tesheira, who only a few short months ago boasted that the global financial crisis will not negatively affect T&T came directly from a Cabinet meeting to the media conference. She stressed the cooperation between the various teams working on the bailout, but would not give a figure to journalists. She agreed there were opportunities for sensationalism, but asked the media reps to be responsible in their reports.
This bailout comes at a time when we can least afford it. The government has had to recalculate the budget twice and oil has dropped from over $150 to less than $50 per barrel. The budget has gone from $50B to $44B with a planned deficit.
Time to prep people. It’s getting serious.
For those who haven’t started, now is the time to get your beans, bullets and band-aids stockpiled. It’s better than insurance, it’s assurance.
- Trini Funshooter
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With such high payout rates on their short-term instruments in a depressed interest rate environment, one wondered how were they able to sustain these rates. The answer has finally been delivered courtesy CBTT!!!
ReplyDeleteIt makes you contemplate how certain money market funds are able to sustain payout rates of over 6.00% given the current financial environment?