Bond Sale To Fund Am. Samoa Bank Going Slowly

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Delay due to ‘bad publicity’ according to ASPA CEO

By Joyetter Feagaimaalii-Luamanu

PAGO PAGO, American Samoa (The Samoa News, Sept. 9, 2015) – The delay in selling the bonds (or series B) — which amount to $20 million, with the majority of the money allocated to establishment of the Charter bank is due to the "bad publicity" seen by the outside world, says American Samoa Economic Development Authority (ASEDA) Vice Chairman, Utu Abe Malae who’s also the ASPA CEO. The announcement was made at the Governor’s cabinet meeting held yesterday at the ASCC lecture hall.

He pointed out they will know by this week if the bond (series B) of $20 million has been sold or not. He made it clear there is a plan B if things do not work out and while he did not elaborate on the back-up plan, Utu explained that $15 million is allocated for the Charter bank that will be modeled after the Bank of North Dakota. It is the only state-owned bank in the nation, and they act as a funding resource in partnership with other financial institutions, economic development groups and guaranty agencies. They have four established business areas: Student Loans, Lending Services, Treasury Services and Banking Services.

According to Utu this funding will also establish the Office of Financial Institutions (OFI) to regulate the Charter bank. He went to say that the intention they have in the long run is for this bank to be a member of the Federal Deposit Insurance Corporation (FDIC) a United States government corporation operating as an independent agency, which provides deposit insurance guaranteeing the safety of a depositor’s accounts in member banks up to $250,000. It also examines and supervises certain financial institutions for safety and soundness, perform certain consumer-protection functions, and manages banks in receivership (failed banks).

Utu also pointed out that with the series B, they are trying to pay off litigation against the government, which is owed to the people, i.e. malpractice and other cases "where the government owes money to these people for how many years." The vice-chair of ASEDA said the government needs to pay their debts, and it’s only fair.

As the government takes care of people who are owed, that will make up the $20 million for series B. He pointed out the interest rate is 8% however they are hoping for a discount to 7%.

He noted that the reason for the delay in the selling of series B is the negative publicity. "Nowadays there is internet, once you say something it goes in the paper, or if you send out an email, within seconds the entire world knows."

"We need to put forward a positive effort and try and sell these bonds. Also, we need to solve our problems locally and not publicize them, because that is the difficulty we are facing," Utu said. "We need a positive credible position so we can sell it. It’s unfortunate — but we should try and fix it."

Utu pointed out that in all his years of experience, he has never worked on such a complex and difficult project as this one, and noted how cabinet members worked tirelessly side by side. "I really appreciate my team of directors and through my years of experience of 30 years it’s very unusual for directors to work together, and I want to thank my fellow colleagues."

Two weeks ago the Lolo and Lemanu Administration along with the Fono leaders celebrated the selling of the series bonds A & C, totalling $55.2 million, which was deposited into a New York bank, according to Gov. Lolo M. Moliga.

According to a statement issued by the governor’s office, the A & C bond proceeds are slated to refinance two loans and "to make better use of funds and stimulate our economy" (Samoa News should point out that the statement does not specifically identify the two refinanced loans).

Proceeds are also to fund the remaining portion of the Manu’a Vessel; to relocate fuel tanks at the airport, which will open up tens of millions of dollars of Federal Aviation Administration funds to make needed improvements to airport services; to fund four new renewable energy development projects, including projects on Tutuila and the Manu’a Islands; to purchase scanning technology for the Port, which will be used to scan all incoming and outgoing containers; to fund a critical update to the government’s core financial software to ensure fiscal stability and accuracy, combined with other improvements to the financial procedures; and, to fund design work for a new Fono building to house the legislative branch of government.

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