Fears held for $7.4m invested in failed bank
LISMORE City Council still has no idea what has happened to the $7.4 million it invested through Lehman Brothers, a 158-year-old investment bank in the United States that filed for bankruptcy protection last week.
Council finance manager Rino Santin said he was waiting to hear from Lehman Brothers and the council's independent financial advisors.
Mr Santin acknowledged concern about the council's involvement with the investment bank and said it was waiting on an official assessment. But he said any on-the-spot assessment he made now 'may not be worth the paper it's written on tomorrow'.
Lismore's investments with Lehman Brothers were complex and part of a broader portfolio, he said.
The council has its own independent advisor, Grove Research & Advisory in Sydney, which will report back once it receives an official assessment.
“We can't assess the impact yet, but when the information is received there will be a report prepared and it will be published in the council's business paper,” Mr Santin said.
Lismore mayor Jenny Dowell wants all councillors to understand the implications of council's exposure to Lehman Brothers and has asked senior staff to make it a priority at the first meeting of the new council next month.
Neighbouring Richmond Valley Council also has investments with the collapsed Lehman Brothers. Financial services manager James Brickley classified the investments as a 'paper loss'.
“When Lehman's collapsed, the stock market went into free-fall. But only one of our four investments has direct exposure to Lehman's and that investment has a capital guarantee, which means if we hold it to maturity we get all our money back,” he said.
Richmond Valley Mayor Col Sullivan was confident about the council's financial status.
“I appreciate ratepayers concerns, but I can assure them that the Richmond Valley Council is in a good position with very little loss, if any. We are watching it,” he said.