Sen. Manglona explains why he voted for SB14-48

I would like to clarify the record concerning my vote on S.B. 14-48 HS1, and go on to discuss my reasons for voting for it.

At the outset, I must unequivocally state that, contrary to the reports in the press, my personal CDA loan is not in default. Not, to my knowledge, do my parents have a loan in default. I assume they were named because they are guarantors of a loan. If that is the case, it is inappropriate, and libelous, to insinuate that they do not pay their loans. I must now publicly apologize to my parents since their good names have been attacked solely because their son is a senator who voted on a bill.

I have been attacked in the print media and on the radio. But I am not angry with the press, for I feel the media has been misled by shameless politicking of the worst kind, perpetrated by CDA. I have read the press release sent out by CDA and am upset, for it appears that it was written in such a way as to mislead the press, and therefore the public, into thinking that my loan was in default. I have contacted CDA to have them send proof of my timely payment. CDA has yet to respond. It surprises me that CDA can so quickly release misleading information, but it is so derelict in providing the truth when it’s requested by someone they wrongly accused.

I am shocked that CDA would engage in such blatant political activity. I cannot imagine any government agency anywhere using such tactics in an effort to sway the legislative process. I have tried to think of other instances of such conduct, but am at a loss. I checked CDA’s enabling statute, and nowhere does it say that CDA, its board, or executive director may mislead the press in an effort to derail legislation.

I appreciate the opportunity to explain why I voted for S.B. 14-48 HS1. A change in the Commonwealth Code was necessary, as it was no secret that CDA’s own mismanagement screamed for some sort of legislation. Even in his veto message, the acting governor noted that CDA has $8 million dollars in defaulted loans. CDA had to suspend its lending and even noted that “CDA has been extremely lenient with borrowers for many years.”

As it was originally proposed by the Senate President, S.B. 14-48 gave CDA the flexibility to find ways to keep everyone current. It reads that CDA was “authorized to extend to qualified borrowers under the Economic Development Loan Program such relief as deemed necessary to ensure continuity of borrowers’ ability to repay.” The bill then went to the House, and it should be noted that CDA did not communicate with the House; the House subsequently passed the substitute S.B. 14-48 HS1, which subsequently passed the Senate.

Furthermore, it saddens me to read that many feel this was some election year attempt to curry favor with the electorate. Nothing could be further from the truth. My concern with CDA and the economic development of the Commonwealth has been longstanding.

For example, as far back as 1990, I introduced Senate Bill 7-4, which would require CDA to open its records and make public the names of borrowers, the projects to be funded, and the size of the loan requested. CDA opposed the bill. I was told BY CDA ITSELF that this could not be done. I wonder what has changed, now that CDA appears to be providing that very information when it suits its political needs (although the fact that the information it does provide to the press is misleading may be why it feels it can release it).

On March 23, 2004, the Senate adopted a resolution requesting the governor to separate CDA from the Northern Marianas Housing Corp., thereby allowing CDA to devote all its efforts into identifying, formulating, initiating, stimulating, and facilitating business and commercial enterprises, as well as resolving this current repayment crisis.

Further, I have been studying various scenarios whereby countries stimulate their economies, and I was impressed with the Japanese government’s concept of an “economic revitalization committee.” This committee is tasked with helping companies which are having difficulty managing debt and repaying loans. One month prior to the vote, I gave a copy of this information to a CDA board member. I had this in mind when I voted on the bill.

I am sensitive to those who, like myself, are current on their CDA loans. I understand how they feel put upon. After all, they paid and continue to pay, their loans. Of course, they should be commended. And it is certainly not the answer to say that those who are current enjoy the benefit of knowing that their efforts were successful due to their hard work, skill, and good fortune, so they should be happy to pay while others do not.

I will not apologize for my belief that the Commonwealth government should not force its own citizens into bankruptcy. After all, when that happens, the bank gets the business and it will end up sold to some foreign entity. Sadly, I could give numerous examples of this happening. But, I admit that more thought should be given to those who remain current, so there is no incentive to stop repaying their loan. For, when people repay their loans, more opportunities open for new borrowers and new business.

I understand completely the Senate President’s desire to help those who are experiencing rough times. He should be commended. We must enact legislation that is lawful and economically feasible and allows for some relief to the numerous individuals, families, and businesses that are struggling to meet their obligations to CDA.

I have, however, decided that an override on this bill is not the correct course at this time. More thought must be given to those who remain current, and certainly the past mismanagement of CDA must be studied in depth to determine which is the best way to fix this problem, so that it never happens again. There is no doubt that the Legislature has the authority to amend the CDA Act to address these important issues. I encourage my colleagues in the Legislature to continue to work on this issue with CDA, for the betterment of all in the Commonwealth.

Sen. Paul A. Manglona
Capitol Hill