LB-BK-MA, PDE & FORWARD THINKING

LB-BK-MA
What do you recognize from the symbols above?

Well, this represents the relationship on some of the products

• sold by banks in HK, which are supervised by the Monetary Authority,
• but issued by Lehman Bros or guaranteed by it.

Some of these products don't even mention LB and it had been marketed like high grade bonds, but they are like CDOs or investments in SIV. HSBC had to take on board its balance sheet two SIV when it knows they will fail so as not to let down investors of the two, then why would banks be marketing these products?

There is a lot of victims who have invested knowingly or unknowingly of the risks involved in these packaged products now that LB is bankrupt, therefore we are seeing a lot of grievances from these depositors [now named as investors]. Finger pointing on whose responsibility should it be for such high risk investments as the subprime crisis had been known since early 2007.

We heard a lot of arguments in the media or from the government but without real common sense.

I must emphasize here that this is linked to the next section which you, after reading, would have no more illusion on whose responsibilty it is.

PDE & FORWARD THINKING
You heard of PDF, but what is PDE - PayDayExecutive.

We have too many PDEs at our government as the only thing they look forward is their payday. The reason - because their pay is exorbitant and their post loaded with perks. In many developed countries [we are a very developed city], compensation for political appointments are minimal, just look at Fed chairman's pay vs our head at HKMA, any head of state's pay in Europe. Here in HK, political appointees have pay well in excess of what they are receiving in the private sector before joining the government though a few who are linked to their family business may be paid above their compensation in govt and only a rare few does have compensation above their govt pay.

You can imagine that every day passed by means payday is one day nearer, thus the pressure to think forward on policies benefiting the public is not high on their agenda as their positions bring in not only excessive pay but also unlimited perks like vip channel at the airport, travel by limo with chauffeur, entertainment budget, personal assitants and secretary etc

CONCLUSION
There is no doubt that HKMA should be highly responsible as the memorandum between SFC and HKMA earlier segregates the responsibility of SFC/HKMA that SFC is not responsible to monitor products sold by banks since HKMA would then be responsible. With these Lehman products, did HKMA warn the banks of their responsibilty when selling these products? Probably yes, but the monitoring is not adequate since the subprime crisis surfaces long ago. They have let greedy i-banks packaged low grade products to sell to the HK public. Common sense has been ignored in its supervision.

Did they ever ask a question or issue a guideline like this? - Sell/market only products you are willing to lend a loan with these products as collateral without recourse for low risk profile customers.

SOLUTION - HKMA should pursue legally against these banks on their sales tactics and misrepresentations on behalf of those whose investment behavior in the past have been mainly bank deposits unless they agree to compensate 30-50% of the amount invested of these victims.