Experts (wall street journal) say the stimulus programs undertaken by the Obama administration are helping fuel economic recovery. Some economists argue that efforts such as the Federal Reserve’s aggressive buying of Treasury debt and mortgage-backed securities, as well as government efforts to shore up banks, are helping The U.S. economy toward signs of improvement. The Governor of Central Bank of Nigeria , CBN, Mallam Sanusi Lamido Sanusi said yesterday that it would have no option than to print naira to save more ailing banks in the country.
Defending the injection of N420billion to save the banks, Sanusi noted that what the apex bank did was not a bailout, but liquidity support and financial intervention to bring them back to a position where they would then be able to provide their contractual obligations to their customers, adding that much of the money borrowed out by the banks will not come back.
The CBN governor who reiterated that on-going debt recovery efforts in these banks were to ensure that depositors and the banking industry were strengthened and not endangered, said that at the end of the day if any of the remaining eleven audited banks were found to be defective, the CBN will print naira to bail them out.
“We are going to create money, we will increase money supply to provide financial intervention to bail out any of the banks in the recently concluded auditing for the next batch of eleven banks,” he said.
When Obama announced the $787 billion stimulus package, not a few Americans were aghast at the widening budget deficit.
Dave Anderson, chief financial officer of Honeywell International Inc., said the stimulus package actually froze business activity at first as firms tried to figure out how they could benefit from the government spending. The $787 billion package “created actually a slowdown in order activity in terms of the flow that we would normally have anticipated.”
But today, “Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter — something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.
“For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. ‘Without that extra stimulus, we would be somewhere around zero,’ said Jan Hatzius, chief U.S. economist for Goldman.”
Lamido Sanusi the CBN governor has come under the hammer as his shock-and-awe approach has reverberative consequences for the health and stability of the nation’s economy at large.
Moreover, however well-meaning the intentions of the CBN are, it must not fail to address raging speculations as to its ultimate goal in sanitising the banking industry.
Since last week, the media have been abuzz with a rendition of a scoop published in March, this year, by Vanguard newspaper. Many have questioned why the CBN Governor is in a hurry to sell the five banks, using the subterfuge of the entry of foreign investors after injecting N420 billion bailout money into the 5 banks without appropriation by the National Assembly.
The National President, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, the CBN governor has lost focus, stating that all his actions, utterances and activities since he was appointed, are targeted at destroying the nation’s banking system.
Okezie maintained that the London road show was a big shame since the CBN’s sole aim was to go and hawk the five troubled banks on the streets of London, adding that the shareholders are ready to resist him and his secret agenda which he has refused to unfold to Nigerians.
He condemned the ‘know-all’ approach of the CBN governor in addressing pertinent issues in the banking sector, citing the case of the N420 billion injected into the five troubled banks where he never sought any approval from the lawmakers.
He further said while most of the banks were owned by foreigners prior to government’s indigenisation policy, they should not be returned to them since the country had capable hands to return the banks to profitability.All eyes are on Sanusi; does he know what he is doing? Does he have a secret agenda? Just like Obama, Will he be proved right in the end?
Only time will tell.