Given the most recent news coverage on the lehman brothers minbonds, no one on the street is not aware of the impact of lehman brothers bankruptcy last month it had on its minbond. Battle cry of 'mis-selling' becomes one of the many topics that investors at least in Singapore are crying over and how MAS will handle this outcry.
Afterall, there is one investor (in her 70s) who are so naive to put in S$800,000 worth of lehman brothers minbond without knowing that her risk level is so low that the money is better off placed in a depoists, at least up to S$20,000 is insuranced by SG govt. I suspect she and many others are blinded by the fact it (minbond) gives out 10% interest annually which is under normal conditions, a very high interest compare to our savings of less than 1%. Greed and fear are and continue to be one of the driving force in markets.
I also took some time to read on lehman brothers and found a very interesting history point which many including the buyers/ sellers of the minbond are either truly not aware or purposefully keep the info hided. Lehman brothers is not a 158-year-old firm, its in actual fact a 14-year-old firm with a 158-year-old name. The current Lehman brothers is founded in 1994 after Amercian Express which took over the old Lehman brothers in 1984, decided to give up its 'financial supermarket' strategy. Its CEO at the time until most recent is Dick Fuld, a former trader. With such a short history, people should be more careful as they may not survive downturns which clearly illustrate the point.
Whether if more regulations will help, it has yet to see. But one thing is for sure, as long as Greed and frear runs wall street, the main street and the world will continue to be at risk.
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