DOC issues "position statement" on ASG owned Territorial Bank
From an “economic development perspective”, Commerce Department, through its director Keniseli Lafaele, yesterday issued a “position statement” on the ASG owned Territorial Bank of American Samoa, which is slated to open the first week of October this year.
“Money lending is the lifeblood of an industrial‐technological society. Most importantly, it allows those without wealth access to acquire capital and resources to achieve economic independence,” the statement says.
“Without it, the rich get richer while the poor get poorer,” the statement says. “Without a bank that lends money, those in need of it are beholden to the interest rates, rules, and penalties, of whatever a non‐regulated entity thinks they can coerce from their customers.”
With the discontinuance of the Bank of Hawaii’s lending practice, Lafaele says DOC “has not seen meaningful new business creation, development or growth.”
“Equally concerning is the inability for existing businesses to expand their operations — to meet the ever-growing consumer and market demands,” he said. “But most worrisome is the definite vacuum of financial services and money lending security in order to provide the youth, investors, and existing businesspersons with the spirit of competition, innovation, and the ability to realize the infinite possibilities in our Territory.”
While the local economy grew slightly two years in a row — 2014 and 2015, Lafaele said, it “remains very fragile and is sustained mainly by the two pillars” — the government and the fishery industry.
Therefore, “there is an absolute need to diversify and strengthen our economic base; and it is for this reason we strongly supported the American Samoa Economic Authority (ASEDA) bond issuance as a means to strengthen our Territorial infrastructure,” the DOC position statement says.
Additionally, DOC “strongly supports the formation of the Territorial Bank of American Samoa in order to provide money lending and banking services to the Territory.”
On the issue of TBAS not being insured by the Federal Deposit Insurance Corporation (FDIC), DOC says it “absolutely supports FDIC insurance and will do everything possible to assist the bank in obtaining it.”
“That being said, it is important to note exactly what FDIC insurance is and is not,” DOC said and explained that FDIC insurance is designed to protect depositors in the event of bank failure.
“Even then, it is only limited to $250,000. It is not, however, insurance against robberies, embezzlement, fire, natural disasters, and other causes of disappearing funds,” it says.
DOC made clear that for FDIC insurance to be applicable, the bank needs to fail as a bank — that is, make loans to people who either refuse, or are unable, to pay them off.
“As the Territorial Bank is being formed primarily to lend to the citizens or residents of American Samoa, it is the citizens or residents of American Samoa, given competent management and oversight of the bank, who will determine its success or failure,” DOC said in their statement.
“We are truly thankful that our bondholders believe we will be successful,” it concluded, adding, “Therefore, please join us in supporting the creation of the Territorial Bank as we simply cannot let fear of failure paralyze our economy. If we do not affirm that we believe in ourselves now, who will believe in us ever again?”
For more information on FDIC insurance see: