A member of the Building & Loan Association (BLA) Shareholders Committee has warned against stringent qualifications for members to become directors of the association.
The Financial Services Authority (FSA), which has been managing the BLA since February, has outlined qualifications for directors, saying they must be university graduates or professionals in the finance field or businesspeople (owner or manager).
However, Sunil Fraser, who is also a lawyer, speaking at a BLA members meeting on Thursday, pointed to Rule 36 of the BLA, which speaks to qualifications.
She said that according to the BLA’s rules, in order to become a director, a member must be a holder of no fewer than five, advanced ordinary subscription shares in one’s own right.
“When you start defining, is when you start confining. And the more you try to define to say you are going to expand, what you actually keep doing is narrowing that group that you are trying to expand.
“To my mind, this was established in 1941. We didn’t have all these great minds running around to sit on the boards. It was the ordinary members,” she said of the 72-year-old building society.
Fraser, using law as an example, said that sometimes, person who are not trained in law can better understand and articulate it.
“We have very efficient businesspeople in our community who have never been to any university and have no degree. But they have the business acumen. … I think that you need a cross-section of persons. And it should not be curtailed by people having all these degrees,” she further said, and urged balance.
Fraser compared the old rule of the BLA to the new one, which says only persons who have been members for two years or more can make nominations or vote.
And while some other members of the BLA questioned the legitimacy of the FSA’s action, Fraser said she thinks that in justifying its actions, the FSA would quote the section of the FSA Act that say it can “take any other necessary action for the purpose of protecting the interest of customers of financial entities or registered entities, as well as creditors and the public…”
She, however, said that to the best of her knowledge, the rules of the FSA has not been suspended, repealed, amended, or revoked.
“So the question is, therefore, if these rules state one thing, and the FSA, having the authority to take any other action, has not suspended these rules — at least they haven’t told us that, we haven’t seen it written anywhere — and they come up with these rules, requiring you to fulfil all of these requirements here to be able to sit on a board, then the question is, is there a piece of legislation somewhere that provides these criteria that overrules the rules?
“Where does the FSA get the authority? Because, although the Act says they can take any other action, they have not really and have not truly said to us that they have amended these rules, because there is a procedure for amending these rules as well,” she said.
“It worries me, it bothers me as a member of this organisation. I am wondering, is all of this absolutely necessary and is it quote on quote, and don’t quote me, legal?”
Nominations for BLA board members end this week, ahead of an annual meeting on Aug. 29, when the board of directors will be elected.
Everytime i read an article about this company i am more convinced that it should be left to close down. I cant understand how big people with common sense and higher level education making these foolish remarks.
If wasnt for the efforts of the FSA though it appears to be draconian to some extent we would be going throught he remains of the company now. I encouraged and convinced my siblings to keep their $ in the institution because in local language “it safe” which they did. But now i am on a constant campaign to encourage all of them now to apply to get all of their monies back because i dont know what will become of this company when all of these loonies want to take control now.
I wish the B&L all the success but at some point this madness needs to stop.
What Ms Fraser is pointing out, a point I have made before, is that you do not necessarily have to have a degree in order to run a company – and as she says, we need a balance of the kind of people who should sit on the board. As I pointed out before, it was people with financial degrees, economics degrees, MBAs, maths and statistics degrees, the brightest of the bright picked from the top Universities in the US & Europe, who led us all into the recent financial meltdown. They concocted various financial instruments like Collateralized Debt Obligations, or CDO, which in the language that you and I understand were bundles of mortgages, which were then sliced into tranches that they traded. And the trades were in turn insured, and it was all supposed to be so perfect that the top tranches were accorded AAA ratings. When I first read about these new financial instruments about 4 years ago in The Economist, without any financial trading (my degrees are in History and Sociology) I could not see that hey were any more safe than the underlying mortgages. And since the mortgage market was going wild, selling “Sub Prime” mortgages (read mortgages sold to people who really did not have the wherewithal to service those mortgages) I assumed the whole house of cards would collapse some day. And it did. So why could I see that and all the financial wizards could not? Well, they were making a whole lot of money in bonuses from the exercise. So what was the use of their grand degrees if they were blinded by money? As I said before, a degree is no guarantee that you have (a) commonsense or (b) integrity – and those are qualities we need to look for in board members. We also of course need a membership who have the guts to hold the Board and the CEO to account when they do something stupid (Sub Prime mortgages perhaps? The former head – who has a University degree – of RBS in the UK had his knighthood withdrawn, but that was after the Bank, under his stewardship, had invested heavily in those “safe” American Sub-Prime CDOs). This reverence for University qualifications tends to blind us to the fact no University has ever offered a cast iron guarantee that their graduates are all honest and of the highest integrity as citizens, nor even that they have basic commonsense. All Universities can do is withdraw their qualifications when it is proved that a graduate has been egregiously dishonest – and they do that more often when the dishonesty directly affects the University’s credibility, as when a graduate has been found to have plagiarized a thesis. That does not help us much when it comes to running a financial institution
Sadly, some members of BLA (including those on the “Shareholders Committee”) seem intent on destroying the institution by their ignorance and lack of tact. It also appears to me that the membership is too large to effect meaningful change. Thank God that I am not a member but I do have an interest in the health of the financial system in St. Vincent and the Grenadines.
I agree with what you wrote – we don’t need persons with university degree to sit on a board – we have capable person with common sense – BLA better clean up their act – I had my daughter’s collge money there – now I have to go seek student loan – not fair when you have your own hard money that you would have worked for and one cant get it –