Heinz chides economic naysayers

House Speaker Heinz S. Hofschneider admonished government leaders and officials to be cautious and prudent when issuing remarks that could possibly send the wrong signals and create panic in the community.

The Speaker was prompted to issue the comment after several officials and community leaders were quoted in the media as saying that the economy could get worse, in the wake of troubles plaguing the Bank of Saipan and the impending closure of the Hong Kong and Shanghai Bank Corporation.

“CNMI leaders should be very careful in using such words because you create unnecessary panic for depositors and for people who do business with respective banks in the Commonwealth,” he said.

Hofschneider stressed that, whether or not other banks have similar circumstances with the BoS, the fact remains that if the leaders of the CNMI begin to subscribe to sending out notoriously and politically motivated statements, “then we are not being responsible as leaders of the Commonwealth.”

“So, I give caution to all leaders and officials to refrain from making either categorical and absolute messages of catastrophe or doom and gloom. I think that, before we do that, let’s try and understand the situation first,” he added.

The House Speaker stressed that it is the job of leaders to calm society and deliver a sense of confidence, particularly since nobody wants the existing sense of paranoia of spreading into solvent and well-managed banks.

“For God’s sake, you don’t want people to start going to other FDIC banks and start withdrawing their money out of fear—unnecessary fear. Leaders have to realize that the community looks up to them for guidance and for a sense of security and of confidence,” he stressed.

Hofschneider said this is particularly applicable if the negativism emanates from the top. “In that case, the obvious is going to happen, and that is, paranoia will follow. It affects not only the financial welfare of individual families but it affects the businesses, too. If people begin to start a rumor and it’s running like a wildfire with no basis on facts, it will be believed by businesses that the situation in Saipan is quite bad. And we know that it’s far from the truth.”

Hofschneider said his message to other leaders is “calm down, there’s nothing to fear. The judicial system, the Attorney General’s Office and the Legislature are on top of things and we shouldn’t create a sense of panic. That’s the least of our concern, to try and undo some hasty remarks that have prompted fear in people.”

Hofschneider conceded that the CNMI economy is not immune to the global economic decline and the situation in the CNMI is not unique in itself, with the exception of the circumstances surrounding the BoS.

“But I firmly believe that with prudent oversight—such as what is happening right now with the CNMI Superior Court overseeing the conducts and activities of the bank—I think that the BoS can be expediently brought back to normal level of operations,” he said.

As for the other aspect of the issues surrounding the BoS—the fraudulent bid to take over the bank by an outside group—Hofschneider said this has to be dealt with separately and appropriately with respective federal and CNMI agencies “and that is being done.”