The CNMI’s scarlet letter

In Nathaniel Hawthorne’s classic tale, The Scarlet Letter, Hester Prynne is forced by the Puritan community to wear a badge with the scarlet letter “A” on the breast of her clothing as a symbol for her sin—adultery. Even though she could leave, Hester decides to stay in the Massachusetts Bay Colony, where she is being humiliated for her transgression. Her unwillingness to leave the town is puzzling to the New England community. When she is told that the town fathers are considering letting her remove the letter, Hester reacts with dismay. She desires to be responsible for her actions and is determined to find her own identity rather than allow others to remake it for her.

For the past few weeks, some of the island’s fathers (CNMI legislators) tried to remove the “A”, representing “Accountability,” from delinquent CDA debtors through a credit relief bill. Rather than remain accountable for their obligations, these individuals would be released by a wave of the magic legislative wand from their legally binding contracts to repay the interest on their loans.

Some say this affair between CDA and the borrowers was not legitimate and that it was CDA’s fault to have taken advantage of individuals who where not worthy of the credit given them. Creditors, after all, are interested in both interest and principal when an individual or organization repays their debt at appropriate times. Perhaps CDA should have exercised greater care screening those with which they developed relationships.

Another argument presented by concerned lawmakers is that CDA was at fault for allowing individuals to fall so far behind in their payments. If a borrower can’t make timely payments, is it CDA’s responsibility to provide technical and financial assistance? Who’s fault is it anyway—the lender, borrower, or should one just blame it on the pernicious economy? Any excuse is good enough for those who want to shed themselves of the “A” badge of Accountability.

The lack of accountability is a scourge that allows irresponsible individuals to rid themselves of their obligations. If a critical mass of individuals is allowed to void their commitments and responsibilities for which they are accountable, it will create far greater problems than any good intended by Senate Bill 14-48. The “can of worms” this bill would open to benefit the “private wealth” of a few could eventually wreak havoc on the “common wealth” of the Northern Mariana Islands.

Imagine potential investors watching the outcome of these political maneuvers with bated breath and wondering if any of their future contracts would also be brushed aside with similar gay abandon.

Imagine federal institutions, and others working with CDA to lend money, hesitating to want to continue their association in a no-win venture. Unfortunately, in order to get a loan, a person must first prove that one is not needed. Many deserving business owners who could not qualify for a loan from banks would be denied the opportunity to borrow funds to grow their business. This would hamper future economic growth and punish creditworthy borrowers.

Imagine current borrowers who have made timely payments, and their frustration witnessing the ease with which delinquent individuals can remove their “scarlet letter.” In an effort to reach equity, these individuals would decide to default on their loans, and also blame it on the economy. To be fair, if you do it for one group, you must also do it for others—right?

Imagine all the lawsuits that would erupt from this volcanic scenario as borrowers cry foul if they are denied the same privilege. CDA or any other institution that would rise from the ashes would be severely crippled by future litigation.

President John F. Kennedy said in a 1963 speech: “Our privileges can be no greater than our obligations. The protection of our rights can endure no longer than the performance of our responsibilities.”

It is with relief that acting Governor Benavente vetoed Senate Bill 14-48. However, some are determined to put more effort into a bill that benefits a few rather than push through other important bills that would contribute to the future prosperity of the islands (i.e., the bill to create Limited Liability Companies has been stuck in passing for several years now).

Hester Prynne decided that she would turn her scarlet letter “A” into a symbol of her accountability for her past actions. Pretending that it never happened would be denying a part of herself and what dignity she had remaining. If the CNMI pursues a course to remove the “A” from delinquent borrowers, it will pay a far greater price in its economic future than can be now realized. “Our privileges can be no greater than our obligations.”

(Rik is a business instructor at NMC and Janel is the owner of Positively Outrageous Results. They have consulted with over 400 businesses in 40 different industries. For better business results go to BizResults.biz to read previous articles.)