"You recover before you collapse." That was the criticism from Professor of Financial Economics at the University of Ghana Business School, as he criticised the Akufo-Addo government's handling of the banking sector cleanup.
Lord Mensah, speaking on PM Express on JoyNews, Wednesday, July 30, argued that the foundational principles of banking were ignored in a process that ultimately cost taxpayers over ¢21 billion. "In banking, there's what we call minimising the loss and then maximising the recovery.
And for me, this is a principle that's a baseline for banking activities, be it at the central bank level or the lower bank level," he explained.
But to him, those principles were set aside in the rush to collapse struggling financial institutions. "These principles were not applied earlier on, when we had the banking crisis." He pointed to the widely accepted banking concept of "too big to fail" to underline how deeply embedded banks become in the economy beyond just their shareholders. "The existence of a bank takes several dimensions.
