THE NATION WEDNESDAY, MARCH 21, 2012
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EDITORIAL/OPINION EDITORIAL FROM OTHER LAND
COMMENT
The Banks Win, Again
Fuel price revenge? •How come pro-subsidy states are suffering from pre-strike prices?
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FTER the surreptitious removal of fuel subsidy in the early hours of January 1, Nigerians went wild because it took them by surprise. So successful were the protests that the Federal Government was forced to reduce the pump price from N141 to N97, even if without the consent of the labour unions and the civil society organisations that led the protests. Nonetheless, transportation costs and prices of food and other essential commodities that had gone up never came down. Also, petroleum products became scarce in some parts of the country. Indeed, as of today, motorists in some places in the South-East and South-
‘The question that is being raised now is: How come it was the areas which hardly participated in the protests against the hike in fuel price that now suffer either from fuel scarcity or astronomical price of fuel? Is it that these areas could more easily be ignored than those states and cities that raised the blood pressure of the Federal Government up to a boiling point?’
South and some parts of the North still buy fuel at between N125 and N250, instead of N97 per litre. This situation calls for a thorough examination and reflection because in these areas, people were largely not seen to have protested against subsidy removal in January. In the East, and in Enugu especially, protesters were muzzled by the governor who, like many other governors in the zone, wanted more money from the hike in fuel price. In the North, especially in Abuja, Kano and some cities, the impact of the mass protests was felt. Historically, Lagos, the commercial capital of Nigeria and one of the most sophisticated states in the South West, has always been the centre of activities. Observers would wonder why the protest should be the most severe in Lagos, followed by Abuja and Kano, Ilorin, Kaduna, Akure, Benin, Osogbo, Ado-Ekiti but very little, if at all, in the South East and South South. One of the reasons for the success of the protests may be the cosmopolitan nature of these cities, especially Lagos. Abuja is the nation’s capital and seat of government; yet it staged protests second only to that in Lagos. Protests in Kano were sporadic, and people were confused whether the Boko Haram had aided the protests there. Throughout the period of protests, these were the states that gave the Federal Government headache, as those in the South-East and South-South literally went to sleep. As of today, some parts of the country, especially in the South-East and South-
South and parts of the North, have started to experience fuel scarcity and astronomical increase in fuel price. The question that is being raised now is: How come it was the areas which hardly participated in the protests against the hike in fuel price that now suffer either from fuel scarcity or astronomical price of fuel? Is it that these areas could more easily be ignored than those states and cities that raised the blood pressure of the Federal Government up to a boiling point? Now, there is a looming disaster as the government may be hell bent to return fuel price to N141. So, the divide-and-rule strategy that leaves fuel price at the official N97 per litre in some places and far higher in other places, coupled with the crippling scarcity of the products in some places could be a way of preparing the minds of Nigerians for what the government has seen as the inevitable. We, however, hope not. For now, it appears that people will have to be satisfied with whatever hardship they get from fuel scarcity and exorbitant price of fuel in those areas that went to sleep when other concerned citizens rushed to town to join the protests, in spite of the impediments put in their way by security men, especially the police and the army. Perhaps, Mother Nature has reckoned that those who were indifferent to the mass protests against the removal of oil subsidy should not benefit from its partial or total reversal and so should continue to suffer in silence.
Cheap publicity •Jonathan’s amazing disclosures on Boko Haram to the foreign press
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AST week, a Canadian newspaper, Toronto Star, published an article by one Jonathan Power, who was described as “an international affairs writer.” The piece, with the headline, “Terrorism casts pall over Nigeria’s progress”, said the country’s fight against terrorism may not be under control as the government is claiming. The article was prompted by the recent killing of two foreign hostages in Sokoto in northwestern Nigeria by suspected terrorists. According to the writer, “President Goodluck Jonathan, in a rare one-hour interview before the hostages were killed, told me Boko Haram still has plenty of destructive power. ‘Who is to know if they have infiltrated major institutions, even here in the presidential compound? It might be a cook, a cleaner or a driver, waiting for their moment to explode a bomb.” It was the most graphic and intimate statement so far by the country’s President on the Boko Haram menace. It revealed the kind of paranoia that pervades government circles as the Islamic fundamentalist terrorist group remains a thorn in the flesh. In a sense, the President’s suggestiveness was a breach of security. The import of his words also showed that the president feels helpless in the face of persistent attacks by the group. According to President Jonathan, “It is not the same as the civil war. We knew the enemy and where he was. Now we don’t.” The extremist Boko Haram movement continues to operate like a faceless
group, and defeating it appears a tricky business. Violent tactics have not paid off in dealing with the problem, and the article considered the possibility of buying off the terrorists as it was done in the country’s Niger Delta where, until recently, fighters terrified the people, including expatriate oil workers kidnapped for ransom. President Jonathan argued that “The Delta militants had to be part compensated for the large amounts they were making from oil bunkering.” To go by this statement, “buying off” will not be used with Boko Haram. Power’s interview with the president showed how easily foreign journalists have access to our leaders. Many of them would rather speak to the outsider than to our own journalists. It is an age-old complex that afflicts those at the helm of affairs in the country. They believe in the power of foreign media, while underrating the local ones. Usually, the objective is image laundering, which they may not readily get from the local media. For example, in the article by Power, he said: “It will take years to defeat Boko Haram, just as it did to defeat the insurgency of the delta. The country is already judging Jonathan by his ability (lack of it, critics say) to get on top of the situation. It will certainly test the mettle of the President who otherwise is making great strides with his domestic economic and social policies.” Imagine! See who is saying that President Jonathan is doing well economically and socially. It is a clever
way of selling the president. Nigerians do not feel the same way. The economic and social policies of the government cannot be praised in the light of the pervasive hardship in the country. Poverty is high, standard of living is low, and no one is secure in the country. What is the profile of Toronto Star? Let us reverse the situation. How easily can a Nigerian journalist get to interview the head of government in Canada? Granting such an interview to Power amounted to a putdown of the local media. Top government officials should not only be willing but eager to talk to the local media on matters of importance to the country rather than seeking cheap publicity through the foreign media.
‘Power’s interview with the president showed how easily foreign journalists have access to our leaders. Many of them would rather speak to the outsider than to our own journalists. It is an age-old complex that afflicts those at the helm of affairs in the country. They believe in the power of foreign media, while underrating the local ones. Usually, the objective is image laundering, which they may not readily get from the local media’
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AST week was a big one for the banks. On Monday, the foreclosure settlement between the big banks and federal and state officials was filed in federal court, and it is now awaiting a judge’s all-but-certain approval. On Tuesday, the Federal Reserve announced the much-anticipated results of the latest round of bank stress tests. How did the banks do on both? Pretty well, thank you — and better than homeowners and American taxpayers. That is not only unfair, given banks’ huge culpability in the mortgage bubble and financial meltdown. It also means that homeowners and the economy still need more relief, and that the banks, without more meaningful punishment, will not be deterred from the next round of misbehavior. Under the terms of the settlement, the banks will provide $26 billion worth of relief to borrowers and aid to states for antiforeclosure efforts. In exchange, they will get immunity from government civil lawsuits for a litany of alleged abuses, including wrongful denial of loan modifications and wrongful foreclosures. That $26 billion is paltry compared with the scale of wrongdoing and ensuing damage, including 4 million homeowners who have lost their homes, 3.3 million others who are in or near foreclosure, and more than 11 million borrowers who are underwater by $700 billion. The settlement could also end up doing more to clean up the banks’ books than to help homeowners. Banks will be required to provide at least $17 billion worth of principal-reduction loan modifications and other relief, like forbearance for unemployed homeowners. Compelling the banks to do principal write-downs is an undeniable accomplishment of the settlement. But the amount of relief is still tiny compared with the problem. And the banks also get credit toward their share of the settlement for other actions that should be required, not rewarded. For instance, they will receive 50 cents in credit for every dollar they write down on second liens that are 90 to 179 days past due, and 10 cents in credit for every dollar they write down on second liens that are 180 days or more overdue. At those stages of delinquency, the write-downs bring no relief to borrowers who have long since defaulted. Rather than subsidizing the banks’ costs to write down hopelessly delinquent loans, regulators should be demanding that banks write them off and take the loss — and bring some much needed transparency to the question of whether the banks properly value their assets. The settlement’s complex formulas for delivering relief also give the banks too much discretion to decide who gets help, what kind of help, and how much. The result could be that fewer borrowers get help, because banks will be able to structure the relief in ways that are more advantageous for them than for borrowers. The Obama administration has said the settlement will provide about one million borrowers with loan write-downs, but private analysts have put the number at 500,000 to 700,000 over the next three years. The settlement’s go-easy-on-the-banks approach might be understandable if the banks were still hunkered down. But most of the banks — which still benefit from crisis-era support in the form of federally backed debt and near zero interest rates — passed the recent stress tests, paving the way for Fed approval to increase dividends and share buybacks, if not immediately, then as soon as possible. When it comes to helping homeowners, banks are treated as if they still need to be protected from drains on their capital. But when it comes to rewarding executives and other bank shareholders, paying out capital is the name of the game. And at a time of economic weakness, using bank capital for investor payouts leaves the banks more exposed to shocks. So homeowners are still bearing the brunt of the mortgage debacle. Taxpayers are still supporting too-big-to-fail banks. And banks are still not being held accountable. – New York Times
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