The Tribune

YOUR SAY By John Tomlinson WHEN a lender and a borrower agree a loan, they each agree that the borrower will be able to service and repay the loan. Thus, when a borrower finds himself unable to service or repay the money lent, they have each made an error in judgment. So, I must enquire: why do they not each bear the burden of their own error in judgment? Why should the contract be enforceable either way? If the borrower is honest, honourable and forthright and circumstances beyond his control have rendered him temporarily unable to pay, the lender ought simply to wait until circumstances change and the borrower is once again able to resume payment - which, because he is honest, honourable and forthright, he will. If, on the other hand, the borrower is not honest, honourable and forthright, the lender should never have made the loan in the first place. Surely, under these circumstances, the lender must bear the full cost of any failed loan. There is no question in my mind that, when an economy turns downward, and people are losing their jobs through no fault of their own, there should be no question of further financial pressure being brought to bear on an already difficult time for them. They should remain in their homes without fear of it being taken away. The lender must wait. After all, he didn't see the downturn coming either. However, our current system doesn't work that way. If we want to make a real contribution to the Bahamian economy, we should be working to change the system - not to ask the taxpayer and the depositor to pay for the errors made. They weren't party to any of these agreements. Why should those on fixed incomes have either their income or their capital, which is earning them income, diminished? If either interest rates were reduced or the size of loans were to be reduced, it would be savers who would be punished. It seems to me that this is not only patently unfair but also counterproductive to any economic recovery. Further, if the system were changed to embrace the changes I propose, two additional benefits would arise. First, banks would not be able to lend depositors' funds with any certainty of return in time to meet a withdrawal. Second, the character traits of honest, honourable and forthright behaviour would once more be required in any business transaction. Today, it seems, it doesn't matter the character of any party entering and agreement so long as each has a good lawyer. * John Tomlinson, a former stock broker with Thomson and McKinnon and a merchant banker with Ord-BT in Sydney, Australia, used to run Union Dock in Nassau and is well known by many of the older generation of Bahamians. His family have been resident here since 1963.