Taking Care of the Elderly: Why should we do it- Part 2

I write the 2nd part in response to the recent minibonds debacle by Lehman Brothers and DBS, both in Singapore and in HK. I heard that many retirees and housewives got burned in the minibonds debacle, and they had lost a sizeable sum of money, much of it either retirement savings or carefully cultivated family accounts for say, the education for their children, living expenses and others.

I spoke to a friend, whom I will call Jim earlier today, as we were discussing this before the start of worship, and I pretty much stated the point about why these people should have their concerns addressed, and why the banks have to be regulated.

My points were simply this: I believe that retirees and housewives may or may not have the understanding of the markets. Much of them invested in such bonds simply because they thought they could earn money, and because friends recommended them to. But because they didn't understand that Lehman was in trouble in the US because of the sub-prime crisis, the bank didn't inform them that there was a risk and that the bank should be obligated to inform them of the risks, and to fully brief them before any investment is made.

Because they invested in the minibonds, most retirees based it on friends' recommendations, and the bank's reputation. But business also means one has to look into the form(current state) of the bank as well. And because they were not as knowledgable, their ignorance, and the bank's silence were the main reasons on why they had invested their entire retirement savings/family savings into something that isn't guaranteed.

Therefore, I believe that in order to recify this: firstly, the government should now regulate these banks. I do believe the banking sector has unofficially went the de-regulation route locally, and that's why the lack of transparency and accountability has led to banks like Lehman Brothers, and DBS to seek cheap money from retirees, without fully informing these small-time investors of the risks involved. Second, the government should also force these companies to return the money even though Lehman has now filed for Chapter 11(bankruptcy) in the US. They should impose quick regulations to force compensation, and to push Lehman and DBS to negotiate in good faith to return most of their money to these burned investors.

Thirdly, we must ensure that whenever retiree investors put it their money, that hopefully, the law may require that retirees do inform their grown-up children or get an adviser from the government or private sources to advise them about the risks involved, and generally to inform them about their options, so that they would be more knowledgeable about their money and where to invest, and how to invest.

We probably can't stop every finger from being burnt in the future, but as long as we reduce ignorance through openness, transparency and honesty, and get in some more regulations, we can help retirees and housewives secure more of their retirement/family savings for their future use.