Economists put regulators on the rack

Star (January 24, 2011)

The stockmarket could have avoided the recent debacle if the 1996 scammers had been punished, economists said yesterday. They also questioned the regulators' roles in handling the current situation.

The views came from a discussion organised by Economic Reporters' Forum (ERF) at the National Press Club in Dhaka.

Chairman of Palli Karma Shahayak Foundation Qazi Kholiquzzaman Ahmad, former central bank governor Salehuddin Ahmed and Bangladesh Krishi Bank Chairman Khondkar Ibrahim Khaled voiced serious concern over the stockmarket crash.

The discussion was intended to focus on the monetary policy management by Bangladesh Bank, but the stockmarket shifted into focus as the hot-button issue for the speakers.

ERF President Monoar Hossain chaired the discussion.

“If the culprits are not punished, it may happen again,” Kholiquzzaman said, referring to the 1996 scam that left thousands of retail investors with nothing.

“The latest debacle was created; it was not a normal happening,” he alleged.

Salehuddin echoed Kholiquzzaman and blamed the government for not following up on the 1996 scam.

The former governor said he was surprised to hear the finance minister “admitting mistakes” about the stockmarket.

“If there was any mistake, it was by the regulator (SEC),” Salehuddin said. It is not too difficult to find out the culprits behind the market collapse, as the transaction is computerised, he added.

He also criticised the central bank for taking some mistimed decisions, such as a hike in CRR (cash reserve requirement). He also came down on the Securities and Exchange Commission (SEC) for frequent and whimsical changes, especially in share credit rules.

Salehuddin said the central bank and the SEC should work in close collaboration to ensure a stable economy.

“Collapse of the capital market may affect the financial sector and the real economy as well,” he said.

Ibrahim Khaled, also a former BB deputy governor, blamed the central bank for being lenient to the banks that have 'violated all norms and rules' about their stockmarket exposure.

“Bangladesh Bank should have taken stern actions against those banks and made it public,” Khaled said.