23 October 2008

Aftermath Of The Minibomb Blast

Yes, finally we see the wheels starting to turn as far as cleaning up of the Minibomb mess is concerned.

The first thing that came to my mind when this thing first surfaced was the silent stance taken by the Gahmen. On second thought, perhaps the Gahmen would prefer to let the involved financial institutions to settle this on their own? If you look at this from another angle, this is an issue involving about 10,000 people. Does it qualify as a crisis of a national scale?

Still, I still find it rather unforgiveable that the Gahmen kept so quiet about this whole ordeal until recently. Wouldn't hurt for them to show a little bit of concerned for the investors and promised to oversee and monitor the various banks' resolution closely. No?

SM Goh Chok Tong's "Otherwise, leave your money in your CPF" was nothing short of an orbi-goot slap in the face. Can anyone be anymore insensitive??!!

Perhaps, it was this nonchalant attitude that signals to us that the Gahmen didn't think this was important enough for them to even sit up and pay attention. So perhaps if the Gahmen don't care, the banks could perhaps care even less?

Fortunately for the foreign media and the new media, there was just no way to sweep this under the carpet. Not even with (alleged) news blackouts.

Perhaps after realising the mounting pressure from more and more people (even starting to include those who are not affected), the Gahmen finally got off their elite uncaring asses and started to do something about it. Now that the sleeping Gahmen has woken up, the banks finally realised that they no longer able to "buah bodoh" their way out of this.

Next, we see banks offering resolution but with conditions. Hong Leong says that they will buy back the investments from people who were 62 years old and above during which the investment was made and that the investor must not have higher than a primary school education.

Question: What about the rest of the folks who fall outside this criteria? What about the 61 year-old uncle? Or the 62 year-old Auntie who has the modern day equivalent of an O-Level certificate?

I really hope what Hong Leong really meant was that since there are many cases that needed to be handled one at a time, this said condition is so that this segment of the investors be served first and that the rest of the folks will follow later on.

Also, I hope that the banks will come up with a target goal of when they aim to resolve this entire issue. It is one thing to tell everybody that you are going to resolve this issue but it is another issue when you drag your feet till the cows come home.

The above $traits Times article said:

"Then DBS Group Holdings stated that it has found 'a number of cases did not meet the standards DBS upholds and the bank will be compensating these customers' with effect from Thursday.
It said the move could involve paying out $70 to $80 million."

My question that as it is estimated that a total of over $500 million was sunk into these notes, where is the remaining $420 million?

I hope that since many banks and FIs are involved in selling these minibombs, this $70 to $80 million figure is just DBS's share. And that when all the other involved banks and FIs, should they take similar action, are counted, the sum will be at the very least close to the original $500 million.

I won't expect a full recovery of the $500 million though as some losses must be taken into account.

Image Credit:
- Voxeros

1. ahtiong73 left...
Friday, 24 October 2008 2:36 pm ::
best thing to invest in now is a keg and some fine whisky, I say...

2. JayWalk left...
Friday, 24 October 2008 3:00 pm :: 
ahtiong73: Well, that is assuming there is money left to invest in the keg and whisky. Haiz...

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