Submitted by Barbara Delores Knight
Committee on Finance
Legislature of the Virgin Islands
Great Hall at
The University of the Virgin Islands, Albert Sheen Campus on St. Croix US Virgin Islands 10:00 AM
March 13, 2018
TESTIMONY RELATED TO INSURANCE AND BANKING, MARCH 13, 2018 LEGISLATIVE COMMITTEE ON FINANCE Bill No. 32-0078
I bid you all a good day,
Though I have my own doubts about the credibility of the federal deposit insurance corporation. I am in support of the legislation. Some form of legislative action is better than none at all for the good of the people It will serve as an advantage to the people of the Virgin Islands who have had varying issues with banks.
Recently a class action suit was filed against Scotiabank regarding its failure to file claims of borrowers’ whose insurance was forced-placed and who as a result have not been able to do home repairs caused by disaster and for which Scotiabank refused to file and process claims’. This in itself should cause more than eye-brows to raise concerning the compromising position the people of these islands face.
I ask, What protection is provided as a safeguard against these claims of the people? I ask this legislative body which of you are doing the checks and balances in order to protect your constituents interests? When I inquired of the lieutenant’s governments office if Scotiabank’s deposits were insured by FDIC, counsel said no, but there were other safeguards. When I asked if I could have access to what those might be, and could they be emailed I received an email record referencing the vi code lexis/nexis link, that me an inexperienced novice legal researcher was unable to make any heads or tails of. I did not even find the code and chapter referred.
I researched some of Scotia’s on-line documents and uncovered that there is an FDIC notice posted on one of their documents indicating that there was expiration of temporary full FDIC insurance since 2013. However, they deceptively announce that accounts will be insured at a depository insured institution. The FDIC logo is deceptively inscribed on its website giving the impression of its affiliation with FDIC. The CDIC is Canadian Deposit Insurance Corporation and no known borrower in the United States is covered by them. You can only be covered if your assets are held in Canadian dollars at a CDIC member institution. The FDIC or federal deposit insurance corporation, guarantees up to 250,000 to customers if FDIC insured banks or savings associations fails. The coverage is automatic and backed by the full faith and credit of the US government. It covers single, joint , retirement, corporation, trusts, partnership or unincorporated accounts. I suppose this is motivation for the sponsoring of this bill. According to analysts to analysts and economic leaders on banking, the FDIC is not guaranteed to cover any loss borrowers suffers through a bank. They remind us of when in March 2013, the banks in Cyrus Greece not only refused to give people back their money, but actually began seizing money from the accounts of people with fairly large savings to pay its own debts. The question is asked, whose money is it in the bank? If there were a big financial crash, would ordinary people and small investors be able to get their money back? In normal times, banks have no problem refunding cash to their depositors on a reasonable request. But technically, when people deposit money into a bank they are turning over their property to that institution in return for a debt claim. The money is no longer theirs. It belongs to the bank. They become an unsecured creditor holding an IOU. This means that banks ca legally refuse to return someone’s money on the spot, at least until the conditions of their agreement(that fine print when you open an account)have been completed. The CDIC corporation, in Canada, stands ready to claim 604 billion in deposits. For this gargantuan task it has in assets only $2.2 billion -- a minuscule 0.36 per cent of the total potential claim, states analyst Chris Ferreira. So not only for their own Canadian borrowers are they able to guarantee a return on any losses. Any surprise that there isn’t FDIC coverage here in the territory and we are not a privileged borrower community that they respect to cover us with even their Canadian dollars. Lastly, I would like to refer each legislator to the testimony of Michael J. Calhoun, March 28, 2017 who spoke before the U.S. House committee on Financial Services, topic, The State of Bank Lending in America. In that document, it may offer a place to segue as to how to approach the affairs of banking in the territory. He is the CEO for Center of Responsible Lending. He addresses the current state of bank lending and the need to ensure that all financial institutions are subjected to responsible, reasonable regulatory oversight that maintains sensible consumer protections.