Thursday, October 23, 2008

A False Dawn

After a month of crying and pleading, there is finally hope for the investors. Two rays of hope in fact for the investors of Lehman Minibonds,

1) The Monetary Authority of Singapore (MAS) says two international financial institutions licensed to operate in Singapore have submitted proposals to restructure the Lehman minibonds notes so that they can run till maturity.

2) Hong Leong Finance is proposing to buy back Lehman Minibond Programme notes from some of its customers.
Don’t get your hope too high because Hong Leong Finance proposal comes with 2 conditions. The account holder must be at least 62 years old, with only primary school education.

I think we can safely say that Hong Leong’s proposal is due to criticisms that banks are taking advantage of their elderly and less well-educated customers. However I disagree with their proposal.

Most people who have read my blog knows that I am not for the banks returning the money when it’s hardly their fault Lehman Brothers collapse, however I have no problem if they want to buyback the minibonds. Thing is, Hong Leong need to either buy back all the minibonds, or you don’t buy back any. You cannot pick and choose who to pay back.

Of the 8,000+ investors that have sunk money into the minibonds, this ray of hope is more like a false dawn than anything else. I mean just how many of them are above 62 years old with only primary school education? What about the others investors? Nothing for them?

That I don’t agree with. Buyback all the minibonds, or don’t. You cannot pick and choose.


PanzerGrenadier said...

The banks can do anything they want within the laws.

Remember the main law = caveat emptor?

If you or above 62 years in age, have less than primary 6 education and no-speak engrish, you are deemed to be less savvy than english university educated investor below 62.

Lovely to know that being less educated doth hath its privileges.

Ghost said...

I agree that age and eduaction should have nothing to do with it. The banks should pay back all, or pay back nothing. Picking and choosing is just wrong.

Anonymous said...

Investors who invest in products irrespective are responsible for their own actions. No one can force anyone to invest in a financial product unwillingly. Several factors induce investors to invest, greed being one of them. If the product is not paying more, why invest. Higher risks are generally associated with products with higher returns.
Since such investments involve substantial amounts of monies, people who are not familiar with such instruments should beware and not invest foolishly or because the bank manager is asking you to do so.

Ghost said...

My point exactly. No one forced investors to buy these products but they are all in the same boat. So the banks should pay back all of them, or pay back nothing to no one. What does age and eduaction has anything to do with anything?

Anonymous said...

It is divide and conquer tactics, pure and simple.

Everyone united pose a formidable threat, to the FIs, to MAS.