The recent sub-prime mortgage debacle and ensuing bailout by the taxpayers of the United States is eerily similar to Jamaica's taxpayers' bailout of our banking and insurance sector approximately ten years ago.

The bailout, which was spear-headed by the Financial Sector Adjustment Company (FINSAC), was a source of controversy in many quarters. Some of the vitriol stemmed from the Government's failure to fully inform the people of the grave problems facing the country at the time.

In 1997 our banking and insu-rance sector faced a crushing liquidity and solvency crisis. FINSAC was formed by the Government to stabilise the financial sector and restore confidence in our financial institutions. Patrick Hylton, in an address to a Jamaican Think Tank on October 30, 1998, provided a vague blueprint for FINSAC's stabilisation and recovery programme.

Corruption

Approximately $77 billion was invested by the People's National Party (PNP) government to bail out troubled financial institutions. Approximately $20 billion was invested to purchase assets backing non-performing loans. Efforts were made to mitigate taxpayers' exposure through loan collections, and sale of fixed assets.

Concerns regarding the FINSAC bailout were fuelled by suspicions that the disposal of assets was tainted by corruption. These allegations are now under investigation. In any event, the decision by the then finance minister, Omar Davis to rescue our financial sector proved to be a sound one. However, because of his monetary and fiscal policies preceding the crisis, he should bear some of the blame.

I am,etc.,

R. OSCAR LOFTERS

lofters1@aol.com

Kingston 8