CBN Governor Sanusi Lamido Sanusi is right to be concerned about the deleterious effects of a failed bank on depositors and the financial system. No matter who you talk to, there's a consensus that the banking industry - just like virtually every other sector in Nigeria, including governance - is bedeviled by many problems. The disagreement seems to center around the most appropriate methods for overcoming existing challenges.

"Experience has two things to teach," French painter Delacroix once opined, "the first is that we must correct a great deal; the second is that we must not correct too much." Not unexpectedly, two schools of thought have evolved on the best way of achieving results. There are those who believe that nothing short of ruthless measures would suffice. There are equally those who prefer a gradualist approach. Those in the first school contend, just like Syrian-American mystic and poet Kahlil Gibran did, that "In battling evil, excess is good."

"One cannot tame a tiger into a kitten by stroking it," averred 32nd U.S. President Franklin Delano Roosevelt (FDR); "There can be no appeasement with ruthlessness. There can be no reasoning with an incendiary bomb." As far as Sanusi is concerned, all the chief executives he summarily dismissed for mismanaging their banks are metaphorical kegs of dry gunpowder waiting to blow the entire banking sector and the national economy into smithereens at the slightest opportunity. He implied as much when he suggested that "rogue CEOs" ought to be dispatched to the underworld by firing squads.

On the other hand, the opposing school of thought posits, just like 19th Century German philosopher Friedrich Nietzsche, that "Whoever fights monsters should see to it that in the process he does not morph into a megalomaniac." This school accuses Sanusi of "poor sequencing" by not allowing one action to 'bed down' before introducing another one, and further contend that his overarching desire is to settle personal scores with former colleagues under the guise of a banking reform.

I certainly do not subscribe to the acerbic style of criticism that aims at personalities rather than issues. Be that as it may, there isn't a scintilla of doubt in my mind that Sanusi needs to revisit his reform agenda. No human being is beyond making mistakes. My fear is that scurrilous attacks by groups like "Renaissance Professionals" are goading Sanusi into digging in his heels and that some of his actions may indeed be reactions to issues raised by opposition groups or pre-emptive moves to prevent them from gaining a powerful influence on public opinion.

The two biggest challenges facing the banking industry are 'cooking' of books by banks and failure of supervision. CBN officials must constantly ask themselves how their intended courses of action would help solve both jigsaw puzzles. CBN recently issued some guidelines that in my book do very little to resolve these lingering problems. Firstly, I don't think the apex bank has any business limiting the tenure of any bank chief executive. It is CBN's responsibility in the first place to ensure that aspiring CEOs fulfill all eligibility requirements before being appointed. If occasion later warrants that a chief executive be removed for gross misconduct, the relevant evidence should be made available to the bank's board for necessary action. To further compound matters, the apex bank says its approval of a five-year second term for CEOs - after spending five years in the first instance - would be based on a "satisfactory review of their performance" by it. Just where are the shareholders in all of this? The CBN must be extremely wary of conveying the impression that private property ownership rights are non-existent in Nigeria as it is most likely to serve as a disincentive to potential core investors.

If anything, limited tenure, as proposed by the apex bank, would exacerbate - not ameliorate - the problem of falsified data as CEOs strive to get all they could within the limited timeframe. Laws currently exist that seek to stop CEOs and other directors from "personalizing" their banks, including a capping of the percentage of shares that they can own. But the observance of this guideline has been more in the breach than compliance, with the apex bank seemingly unable to check the abuse.

Besides, no empirical evidence exists for believing that poor corporate governance is directly correlated with tenure. And what would happen where the exiting CEOs still own a clear majority of their banks' voting shares? Is the CBN prepared to condone management by proxy? Or, is it thinking of giving a 'golden share' to each succeeding CEO? Won't this change of musical chairs engender a vicious cycle of needless recapitalizations, with each new CEO seeking to dilute the share-ownership of exiting directors and scheming to acquire a critical mass of shares to become a key player in the new dispensation?

I'm equally at a loss as to why the CBN is planning to unnecessarily dissipate energies by setting examinations for the CEOs of microfinance institutions. The apex bank is better off concentrating on its core supervisory and regulatory responsibilities, while encouraging finance-related professional bodies to become strong Self-Regulating Organizations (SROs) that can more appropriately handle such industry-specific human development tasks.

It has become obvious that the CBN embarked on a program of rescuing the ailing banks without formulating a clear-cut exit strategy. This explains the flip-flops that have bedeviled the reform programme. For example, it is still not clear whether Government has assumed ownership of the rescued banks or if the bailout funds are mere loans. From barring foreign banks from bidding for the ailing banks, the policy seems to have shifted to preferring them because of the "appropriate technology and value-adding capacity they would bring to the banks." Mixed signals apart, I strongly believe that the CBN is wrong to sell these banks to foreigners, especially South African banks.

The South African environment has been particularly hostile to Nigerian businesses trying to establish there, despite our massive role in that nation's liberation struggle. Why are we always in a haste to shortchange ourselves in the name of seeking foreign investors? When you consider the contributions Nigerian-owned banks, including the rescued ones, have made to the society by way of corporate social responsibility and branch networking, you'll realize they are a class above their foreign counterparts. As Africa's largest exporter of crude oil and its second largest economy, Nigeria doesn't fall into the category of beggars without choice. I don't think it is in the nation's best interests to handover major banks to foreign entities.

The CBN's primary goal must be to deal with the adverse feedback loop that exists between disruptions to financial market stability and the real economy. "Every abuse," 18th Century French satirist and essayist 'Voltaire' once stated, "ought to be reformed, unless the reform is more dangerous than the abuse itself." The real challenge for the CBN is ensuring that its reform agenda not only sanitizes the banking industry but that it also stimulates lending activities to help spur economic growth. Unrelenting speculations about the 'poor' state of health of the banking sector not only stall bank intermediation activities, they also fuel inflationary concerns and weaken the naira. Sanusi's reform agenda mustn't be allowed to unravel else the banking industry and the economy would be the worse for it.