Madoff Scam | Local Banks
With the bankruptcy of Lehman Brothers still affecting some of our local bank's balance sheets, here is something to watch out for. The former chairman of the Nasdaq stock market, Bernard Madoff has been arrested and charged with securities fraud for running a hedge fund business that bore his name which recently was revealed to be nothing more than an elaborate ponzi scheme started way back in 1960, constantly paying investors resulting in a staggering loss of 50 billion dollars thereby exacerbating the global economic crisis.
Already, major international banks and financial institutions like HSBC has admitted to having billions of dollars exposed in one of the biggest investment fraud in history and made millionaires who invested with them virtually penniless overnight. While is still remains to be seen if some of our local banks made any investments directly with Madoff, indirectly, they might be affected because of investments made to big international banks who are exposed and now a couple billion dollars short. While I doubt that this will have any significant effect on our banking sector as a whole, the BSP should also take further steps to strengthen our financial institutions. Better regulation will help ensure that our banks are in a healthy position to withstand the current worldwide financial storm and come out even stronger.