Speaking for the first time on the issue of structured products and the losses of investors who invested in them, Prime Minister Lee Hsien Loong said: “The government is not in a position to guarantee what is safe and what is not safe.”
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haha CPF money also not safe la, used by GIC to invest elsewhere but won’t disclose. Anyway, CPF is structured so that we can’t take out one whole sum at one go, thus there’s no “run in the CPF”, gahment not worried that CPF losses will be exposed la. By 3-5 years, the losses will be recovered & everything still function as normal mah.
What the PM failed to explain are the following
a) the failure of MAS in its regulatory role in the financial, banking and stock markets just as Alan Greenspan has admitted recently on the collapse of Wall Street, sub-primes and ABCP and the whole American financial and banking systems.
b) what percentage has the government invested taxpayers’ funds/money in these public and private or quasi government financial institutions?
c) how many of these institutions’ board members are MPs or government apoiinted key players or PAP associates or next-of-kin of PAP?
d) how many of these institutions have Lee & Lee as legal advisors?
e) he hasn’t got the guts to admit the failure and/or incompetence of his A Team in these institutions in the eyes of world leaders in Beijing.
It’ll be interesting if some academics could do a research in these areas.
I wonder why PM Lee said “The government is not in a position to guarantee what is safe and what is not safe.”
Who asked the government to guarantee what is safe?
The issue is MAS failed to oversee the financial products and respective promotion materials are fairly packaged in plain English that is easy to understand and that it failed to react to mis-selling tactics used by bank staff.
Now MAS is talking about all these improvements that it is looking into. These “improvements” are actually the “shortcomings” it failed to address for quite some time.
The Function and Role of Government in any country are invariably the same, that is, Government is the Master Regulator, it keeps justice, peace and happiness for their countrymen.
No country is without Laws and Regulations as freedom tends to be badly abused by the unscrupulous in any society. High calibres and if possible the best are elected and picked to run a nation, these calibres are to be able to pre-empt whatever foreseeable contrivement and scheme. They are tasked, by nature of their appointments(parliamentary), to look into every injustice, solve them and cover every loophole arising from any incident, it is a duty they have to fulfill to the maximun. Every society is latent with frauds and felonies, the REASON FOR GOVERNMENT IN THE FIRST PLACE.
What we Singaporeans are witnessing in our country is that our parliamentarians are involved in running PRIVATISED STATE ENTERPRISES IN INVESTMENT AND BANKING(financial), ESSENTIAL GOODS AND SERVICES, HEALTHCARES, TRANSPORTATIONS, EDUCATIONAL AND EVEN FUNERAL SERVICES. Of course conflicts of interests are everywhere, an aspect of governance where all RULERS ARE DUTY BOUND TO ERADICATE AND IF NOT, ENSURE THAT THEY BE AT THE LEAST DAMAGING.
Poster Anon(#89) has succinctly described the wish and expectation of the investing public and it simply means an effective and efficient regulator. A regulator that is impartial, neutral with wisdom in dispensing justice.
Over the years, our Government has evolved into the largest, strongest and most aggressive entrepreneur within the confine of our geographical boundary. It is a giant cartel in everything edible, useable and MOST IMPORTANTLY ESSENTIAL.
Pardon me for the digression.
Food manufacturers have to ensure the safeties of their products, failing which they are liable to answer to the Laws or a regulator as an intermediator between both. A regulator, as can be seen here, is neither the manufacturer non the Laws(Government/Judiciary) so the role of a regulator is like that of the police in modern day administrations. The Police is not only to enforce Laws and Orders and to bring law breakers to justice, on top of this specific duty, the POLICE IS DOING CRIME PREVENTION.
PREVENTION OF FLAWS, FOULS AND UNDESIRABLE DEEDS(MISDEEDS) IS CLEARLY THE LEGISLATED DUTY AND FUNCTION OF ANY REGULATOR. A regulator that fails to fulfill its’ duty is liable to negligent or failure of duty, it could also be failure of diligence and competency. Here we are talking about an agency made up of professionals and not an individual with definite power and wisdom.
There are much heat, anger and coarseness in the discussions in this thread and elsewhere. May I join jemami in calling for more constructive and less personal confrontational discussions and debates.
“94) sobri on October 28th, 2008 9.33 am
Having said that, can we really justified a ban on such products, when even NUS Dean bought Lehman-related investments? What about the Town Council as stated in a comment in TKL’s blog? What if Lehman did not collapse and the investments were carried to full maturity? ”
If it is not fit for consumption (very high risk products in this context) for most people, it just means that it is not fit for consumption. If the queen wants to buy it, it just means the queen wants to buy it. Period. Do not impute more than that.
Now a lot of financial institutions in the world are now beginning or have already begun to relook into all these instruments. Perhaps, we are still adopting a wait and see attitude and just tag along at the end of the end.
“If Lehman did not collapse and the investments were carried to full maturity”, it just means that some people just got lucky without knowing that it is high risk all this while and still think that it is safe. That’s all.
Mr. PM Lee,
We also cannot guarantee whether you will get to keep your world class salary at the next elections since you cannot even bother to help your citizens but has time to attend tea party at Mercy Relief.
In the first place if MAS had conducted due diligence or had smart people from NUS like professor Yueng, these product would not have passed through the smart rigorous check. Unfortunately ,we had Harvard grad who led them through the kelong .
We ask the PM to guarantee that we don’t have such people again manning the regulatory system.Once we have this guarantee it is as good as guaranteeing that we won’t lose in structured products or products that will guarantee our loss. GIC is so smart to see the toxicity The people there saw it without the aid of glasses it.Don’t understand why they didn’t tip off MAS..
I wonder Alan Greenspan would be interested to apply his theory of non interference here? I am sure he can teach MAS one or two about non regulation of the market and let the FIs do whatever they like. Did you know Alan Greenspan was asked to helm Fed by his good friend when he was just embarking on his PhD? He was from Harvard. No wonder.
“We also cannot guarantee whether you will get to keep your world class salary at the next elections”
since when the citizen determine these gahmens’ astronomical pay, let alone guarantee their pay ? These gahmen guarantee their own pay and is their own guarantor and boss themselves. They are the one who determine their own performance rating and give themselves Hi-Five.
“attend tea party at Mercy Relief.”
Look like hip-hoping went out of fashion, now tea party is the trend !
The good thing that is coming out of this would be that more singaporeans understand that they cannot trust the government any more.
The government we have is ornamental, they can’t guarantee shit.
However, looking at all the developments, I don’t think the investors will get a fair resolution nor in good time.
I don’t think the banks will go unscathed even if they need not compensate. Consumer confidence will take a beating. Here, we are not talking about the penny savers but those with means of at least a hundred thousand.
Overall, it’s going to be a lose lose for all.
But in terms of crisis management, I think the banks could have done better. MAS shud at least look into this area?
if government cannot do this and do that, why set up so many department or create so many posts?
just close down mas and sack the staffs.
just have ministry of finance can already.
Given what is said, I think only the investors themselves, oh i dont mean us the cpf investors, have only themselves to ‘guarantee’ themselves now.
What we have gathered so far is
1) A lot of people (including retirees) were asked to invest in these products when renewing their fixed deposits.
2) Marketing brochure did not state the full risk – but prospectus did. If the procedure is to sell investors a product based on market brochure and only give the investor a prospectus as an after thought, there is some wrong. Question I also want to ask is whether the marketing brochure states that the investor could lose everything if anyone of the 6 or 7 banks collaspe. If not, there may be an intention to hide.
3) Mis-representation of product. It is called a mini-bond but is actually more than that.
From the above, I feel there is a case against the banks for either un-ethical mis-selling or not knowing the product they are selling well enough. Due to point 3 alone, I feel all investors should be compensated. It is either a bond or not a bond. Don’t confuse and mislead.
Response from authority
1) M$MIW (million $ men in white) appoints independent parties to investigate and to work out a solution betw banks and investors. So far, banks have agreed to compensate retirees above a certain age and will investigate all cases. Maybe all will get money back, maybe only some will get money back.
Nothing wrong with that except it appears that Singapore is 1 step behind HK. Government don’t seem to be doing much until citizens protest. Bad PR.
My view
1) I agree that govenment is not in position to guarantee what is safe and not safe. We are a free market, and you are free to invest in what you like. Probably the only thing that MAS can fully control is what is considered “safe” for CPF investment. Key word is “guarantee”.
2) MAS as I understand has a policy that only sofisicate (and rich) investor can invest in hedge funds because they are complex and entails high risk that is not suitable for normal folks. I think this policy needs to be tweaked to include some of these high risk notes and bonds.
3) Regulation can be strenghtened to enure that marketing brochure for investment product must include key investment risk.
4) If it has been found that wrong selling is isolated and not wide-spread, banks should punish the errant RM. If it is widespread, MAS should punish the banks.
Whatever the case, it seems like MAS is not doing a good enough job regulating what can be sold in banks. Don’t let the problem blow up in your face before solving them. Otherwise, you will never get a grade that is above C.
Just reading the remark by the PM says it all. It has happened and we the citizens are never told through any transparent and independent sources.Hi Yo Silver.