Unconvincing central banker of the day, Qadir Fitrat edition

By Felix Salmon
September 14, 2010
Winston Wolfe. They're professional, they're reassuring, they solve problems, they always know exactly what to do. These are the people you want staffing a bank regulator when there's a banking crisis.

And then there's Afghan central bank governor Qadir Fitrat:

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Some people are like Winston Wolfe. They’re professional, they’re reassuring, they solve problems, they always know exactly what to do. These are the people you want staffing a bank regulator when there’s a banking crisis.

And then there’s Afghan central bank governor Qadir Fitrat:

Afghanistan’s central bank has stepped in to take control of the troubled Kabulbank, its governor said on Tuesday…

Fitrat told Reuters investigations had also started into the dealings of the bank’s top two directors and shareholders, who were told to resign…

The central bank had previously maintained that Kabulbank had not been taken over, despite a central bank official being appointed as chief executive officer…

Fitrat had described reports in The Washington Post and New York Times newspapers and other U.S. media of possible graft at the bank as “baseless information and rumors.”

However, on Tuesday Fitrat said Farnood, Fruzi and Fahim’s brother, Mohammad Haseen, were now under investigation for suspected irregularities, among other shareholders…

“We conduct our own investigation (and) once we see that there are elements of criminality involved, then we submit those cases to the attorney general’s office,” Fitrat said of the investigation process…

Fitrat insisted Kabulbank was still solvent and that its troubles would not spread to Afghanistan’s other private lenders.

“Fortunately, in other banks, mostly professionals are in charge. The good thing is that the other banks follow the rules.”

None of this, it hardly needs be said, is the kind of stuff which calms a restive population and reassures both local and foreign observers that everything is under control. We will probably never know the true state of Kabulbank’s balance sheet, or how much Afghan and US money is going to be needed to get it back on its feet. And there’s no chance that anybody is going to be successfully prosecuted.

In a failed state like Afghanistan, a strong independent bank, plugged in to a reliable international network, can actually be safer than a huge bank taken over in a chaotic fashion by a central bank governor with precious little credibility. The nationalization of Kabulbank does not mean that the bank is now safe, or that the black hole in its balance sheet is going to start getting smaller rather than larger. It’s still a major risk to national security in Afghanistan, and I hope that some US technocrats are being parachuted in somehow to help patch it up as much as possible.

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