S.B. 14-48 should not become law

Senate Bill 14-48 would either reduce the interest rates or “forgive” some of the loans of the Commonwealth Development Authority’s delinquent borrowers. This is a structurally unsound and financially imprudent measure. The bill is proposing a bad public policy. Its enactment, according to the CDA itself, would result in a financial disaster for the agency and the CNMI government.

Whenever we change significant rules midstream, we are telling our people, our business community, and any prospective investor out there that they cannot rely on the stability and enforceability of our laws. That our laws, in fact, can be changed easily again and again. Without the stability of laws, businesses could not make plans for the future. Whatever investment decisions they make today could be worth nothing once lawmakers change the laws again in the future.

There is no rule of law when laws are changed repeatedly and impulsively. But in order to prosper, a modern democracy must have rule of law. Walter E. Williams, an economics professor, author, and a syndicated columnist, noted recently that “Where there’s rule of law, human initiative flourishes. Rule of law refers to freedom of contract and enforcement of contracts, protection of private property, stability of laws, a requirement that all persons, private individuals and government officials are subject to the same laws…”

It is true that CDA collections have been slow, but this is due to the sluggish economy of the past six or so years. Yet despite economic hardship, some CDA clients are still paying their loans. To pass Senate Bill 14-48 is to tell these clients, “Your diligence doesn’t matter.” According to he CDA, the bill is “condoning inefficiency, unfairness, and absolute neglect of one’s financial responsibility. This bill is baseless and totally useless.” I agree. And what about CDA’s delinquent clients who had to file for bankruptcy? What happens to them? To quote CDA again, government officials have a responsibility “to all people, not just to a few people.”

Senate Bill 14-48 should not become law.

The CNMI government should consider other ways to help CDA and its delinquent clients. One of the ways to do this is to ensure that the Northern Marianas is a business-friendly jurisdiction with stable laws that reward talent, initiative, enterprise, vision, and diligence.

Juan S. Tenorio