February 20th, 2009
02:33 PM GMT
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I had a late night phone call from a friend in the Caribbean. He had money on deposit at Stanford Bank in Antigua - not a fortune, just his savings in a certificate of deposit. Money he can no longer access.

Customers queue outside the Stanford Group-owned Bank of Antigua in St. John's.
Customers queue outside the Stanford Group-owned Bank of Antigua in St. John's.

Worse - his Stanford credit card no longer works since Visa has suspended all Stanford plastic. That has ramifications for things like telephone bills which are paid directly using the cards.

In short, he is facing the complete collapse of his financial affairs. My friend is one of many tens of thousands who have been affected by this case. Some savers in the U.S. will be covered by government deposit insurance. Those in the Caribbean and Central America will be less fortunate.

These are not the wealthy victims of Bernie Madoff. Mostly these are working people who used Stanford as their local bank, for everyday transactions like checking, certificates of deposits and small loans.

The employees in the Caribbean were bank tellers and administrators, not the hedge fund masters found elsewhere. Sure, Stanford was an "offshore" bank - but it was responsible for some very onshore duties.

Some years ago, when living outside Britain, I actually thought about opening an account with Stanford. The only reason I didn't was because of the time and trouble of changing direct payments from my existing bank.

I slept well last night. My friend did not.

Have you ever been affected by a bank failure ? How did you cope ? Did your family have to lend you money ? Join this discussion so we can understand what it's really like.



soundoff (22 Responses)
  1. Michael C. McHugh

    I think my distrust of free market capitalism results in part from a story my grandparents told me about the Great Depression, when the largest bank in my hometown failed and thousands of people were just left standing around outside with their life savings gone forever. That has an effect on their entire generation, to the point where they never trusted banks, stock markets and easy credit again.

    We have forgotten all those hard earned lessons, though, and over the past 30 years have repeated all of the mistakes of the 1920s, and then added some new ones of our own. That's why I know we'll be a very long time digging out of these abyss, if it can be done at all.

    Stanford is just a symptom of the rot at the heart of our system, and it's a safe bet that there are many more where he came from. We can bank on it, to coin a phrase. For the last 30 years, I've been watching with dismay as all kinds of awe, deference, praise and glory has been heaped on Lifestyles of the Rich and Famous types like Stanford, and now I have to own up to a certain amount of glee and even schadenfreude as their whole universe collapses around them in a Big Crunch.

    February 20, 2009 at 3:03 pm |
  2. David Savard

    I have not been touched by a failure, knock on wood. However, I think we have all been derelict in our duty to monitor our own banks. I have checked regularly at my bank to ensure their money management techniques are acceptable. They were pretty much the only big US bank who did NOT play the CDO/CDS/securitization game and are now in good shape, but don't we all have a responsibility to watch the people who control our money? Also, I think a useful reform of the system would be an easy to read, one page sheet explaining the risk profile of the bank and how far outside they are from government guidelines.

    Just a thought.

    February 20, 2009 at 4:02 pm |
  3. Faris Sahawneh

    Hello Richard,

    Have you heard the latest news. After dropping below 7200, it has been decided to change it's name to Down Jones.

    Cheers

    February 20, 2009 at 4:35 pm |
  4. Hilton Barlach

    In this case the failure is of the local Central Bank or the local banking supervision authority. Even if the bank is foreign owned it should comply with local regulations and have local deposits insurance.

    February 20, 2009 at 4:41 pm |
  5. Mehmet Kurtkaya

    I am just very frustrated that the governments do not let other banks collapse. If governments had left them to the markets they would have gone all bust. That's what I hate most about free market lie.

    That is very unfortunate as a few decades down the road free market hype may reign the world once more, bringing the world back to where we are know.

    There is only one way people will learn their lesson when it comes to vote or talk politics or economy: face the truth unplugged ! So I wish all of these banks would go down and along with them all the people who have put their faith in this gigantic pyramid scheme, also known as free markets!

    February 20, 2009 at 5:16 pm |
  6. Anthony

    Hi Richard,

    Quite frankly your program is very informative and amusing – your style is unique. Keep it up.

    On a light note – have noticed recently that the CNN anchors tend to stand more often. Are you'll hit by the crisis as well ;-)

    Cheers

    February 20, 2009 at 6:14 pm |
  7. cogie

    So Richard, you slept well last night. Good for you. Unfortunately I don't take news of my friends' misfortunes so easily. I don't sleep too soundly when I think of their bad luck. I would lie awake thinking of ways to help them.

    I trust you'll have another good night tonight.

    Kind regards
    Tim

    February 20, 2009 at 6:32 pm |
  8. John Elkass

    I have not lost any of my money yet; however, I am very skeptical of the banking industry and sometimes I do wake up in the morning with my hand on my heart as I fear that all the bankers are a bunch of crooks whose main concern is to take all the hefty bonuses based on fake profits they declared in their past financial statements. As a Certified Public Accountant, I had been into so many jobs from a partner in 3 of the four major audit firms and CFO of an existing company. These audit firms are a joke. They ration on staff, on training, and never do their job properly. They are the ones to blame for these calamities not only the bank managers. SEC is also to blame for all these Ponzi schemes that were never detected. The accounting oversight board is also to blame for all this mess that they left behind. I am very disappointed from all the control mechanisms in place which resulted in nothing more than a total catastrophe. God help us from the worse that is yet to come. I am very pessimistic about the coming 3 years. I thing we ought to revamp the existing capitalism and the control system we have. Most of all, we should close the 4 largest audit firms and sack them to their homes for good.

    February 20, 2009 at 6:52 pm |
  9. zuwxiv

    I'm only 19, and I may have only a very small amount saved up, but I'm still worried about the current economic situation. At one point a few months back, I considered putting $1,000 into silver when it was $8 an oz – quite a large investment by my meager standards.

    I decided against it – the joke's on me, silver today is $14.50+ an oz.

    Not that I would have necessarily sold anything – the reason for the crazy price increases of gold, silver, and other precious metals is precisely because people do not trust banks. In an uncertain climate, there's nothing safer than precious metals in hand – they'll never just fail, they'll never become worthless, and they'll always be available – even if they aren't as liquid as cash.

    It should be very interesting to watch how everything to play out – at the very least, we're going to learn some hard lessons by the time we have 'recovered' from this current situation. It might be worthwhile to look at global reactions and learn from each other's mistakes and successes; I'm abroad right now and can see different strategies in the face of these challenges.

    February 20, 2009 at 7:20 pm |
  10. Johann Roux

    People should not jump to the conclusion that the free market / capitalism system failed.

    In fact it did not – capitalism is designed to allow the clever to exploit the less clever and in doing so get rich quick.

    The system did not fail – the wealthy got wealthier and the poor are now footing the bill. They were dumb enough to trust the clever ones.

    Viva socialism viva!!!

    February 20, 2009 at 7:25 pm |
  11. Aleksandar

    small financial markets go up and small business

    February 20, 2009 at 7:57 pm |
  12. Dave Weilacher

    Michael;
    Do you find it strange that the Federal reserve act of 1913 was already in place giving us effectively one federal central bank?

    This federal central bank is charged with the responsibility of controlling inflation.

    Do you find it strange that we have federal legal tender laws that require us to only use federal paper money and must denominate all transactions in terms of it?

    Do you find it strange that we have a huge federal govt that is charged with regulating, controlling, and protecting us from the very failures that we are having?

    Do you find it strange that every time there is a failure of one of these regulating agencies, their response is, they could have done the job if they only had, more funding, more people, and more power?

    I'm pretty sure we haven't had anything remotely resembling capitalism in over 100 years.

    February 20, 2009 at 10:37 pm |
  13. maurice breuer

    it is no big surprise that the unlimmited and uncontrolled greed of the wall street mafia has repercusions all acros the globe it is just sad that it is always the small working class citizens all over the world that have to deal with the results and the big cats being able to slip thru the crack s of the legal system. when a normal citizen steals a few thousand from a company register he gets send to jail to await his trail when u steal over a million u get send to the ritz .

    if the us justice department realy is worthy of that name it should not let those so called white collar criminals await there court date in freedom waisting all the money they still have in there cash reserves on caviar and champain. let them be placed in custody among the normal inmates so they learn something from there crimes.

    February 20, 2009 at 11:34 pm |
  14. Mr Mama

    THIS PLANET EARTH IS TURNING INTO HELL!!

    OUR FREN MR J. said it right from the book, corruption and human sin
    is all true....looks who is actually suffering now!! We, the people, the poor fellarrr..., the unfortunate people like us, who going to help us, who will
    hear us, why human have to be like that??

    Is this really human nature?? As greedy get greedier?? Do they not scare of burning into torment when the times comes??

    February 21, 2009 at 2:03 am |
  15. Simon Purser

    Re: Michael McHugh's comments, the problem is that many of the architects of these financial disasters will STILL HAVE their "Rich and Famous" lifestyles. They've looked after themselves at the expense of their depositors and shareholders: as witness the huge bonuses paid by Wall Street bankers to themselves with bailout money, despite their mismanagement of the banks they govern. Sure they're down a million or ten, but still much richer than the rest of us.

    February 21, 2009 at 11:31 am |
  16. Onno Frowein

    I wish the banks would have gone belly up. Their arrogance increased with the size and arrogance they displayed. Their umbralla strategy only put people into more problems. Subprime mortgages was an easy way to make more money and left people holding the bag. Go back to small regional banks where the community still has an influence on the banks and where bankers still live amongst the people and did not make excessive salaries and bonuses. The reputation of bankers is down the drain and beats a used car salesman. At least when a used car dealer sells too many bad cars he goes bankrupt so why not these large banks managed by incompetent, money hungry ego-maniacs.

    Onno Frowein, The Netherlands

    February 23, 2009 at 8:00 am |
  17. Peter Kellogg

    My experience with Citibank has been totally negative. Once when I was seriously ill and deeply in debt on 32 credit cards, all the other banks were willing to negotiate lower interest rates to help me pay off the loans.
    But NOT CITIBANK. They are PREDATORS in my opinion. So I paid them off and I canceled all my Citibank accounts and will never do business with them again.
    Although I detest nationalization, I think Citibank should be broken up and nationalized and the entire management fired down to the first level supervisor.

    February 23, 2009 at 5:31 pm |
  18. Uma in Liverpool, UK

    Does nobody actually read the article, before posting?

    The Stanford tragedy does not only affect people who used the bank. Stanford was also the biggest employer in Antigua.

    This man is a much lower life-form than Madoff. Yes, Madoff robbed Foundations, which is shocking and appalling.

    Stanford robbed poor people who had no recourse. His kind are reincarnated as something that lives in the lower intestine of a rat.

    February 25, 2009 at 8:26 am |
  19. tihich

    Hi friends. I am from Europe. Every way of living has a price. USA citizens want to spend more money than they earn. So now somebody has to pay the price. Sorry.

    February 26, 2009 at 10:20 am |
  20. Ram

    There are over 2 billion people in this world who live on less than one meal a day, have no access to primary health, education and primary basics. On the other hand, we have over a billion people who have everything for the next few generations. The current economic tgurmoil, is about these haves than about the have nots. Let the world take the noble cause of addressing these imbalances, the result will be survival of all those who are crying foul. With a globalised economy, human and other resources should move freely, providing goods and services where needed. Providing employment at all levels where needed with a caring attitude and compassion, will see the world coming out of this rut. UK and USA can be pumping in billions in to the ones who firstly stole telling lies all the way, it will only increase the pain and agony. Instead, move on to countries with your idle resources and start providing education, health care and other infrasturcture by employing your own people and goods. There will be a turnaround and this will elevate the levels of over 2 billion people. Even GM may come out of the rut!

    March 8, 2009 at 6:50 pm |
  21. Stone Frederick

    To Johann Roux, you are right, but if I am one of the poor and now wiser, do I have to continue being stupid? Another rule of the free market system is that when you are bankrup, your business fails. So, why bail out the banks?

    March 22, 2009 at 5:17 pm |
  22. Kevin Gray

    Just think whats going to happen to the trilions of dollars that are hidding in off shore bank accounts and avoidding Taxes back home. Dose anyone really think that the developed nations are going to just look the other way .A little place like the BVI brags that they have over 600.000 offshore companies in thier 20.000 people islands. They spend nearly $300m. a year on god nows what.

    March 24, 2009 at 9:52 pm |

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