Trust funds freeze withdrawals as investors panic
ON TUESDAY, nervous investors were lined up outside the East Coast Mortgage Trust branch in Carrington Street, Lismore.
They were trying to withdraw their money before the local financial institution announced it would not be letting investors make any more withdrawals for up to 90 days.
After the Federal Government announced last week it would guarantee all bank deposits, many investors started moving their money out of trust funds and into banks across Australia.
Neil Short, of Lismore, is calling on Prime Minister Kevin Rudd to guarantee his savings, which are invested with East Coast Mortgage Trust.
Mr Short said Mr Rudd should act to end the panic.
“Mr Rudd could end it all in two minutes by guaranteeing our deposits,” he said.
Mr Short said he had invested his superannuation in the trust and it was a 'reasonable' amount of money.
“I have been with East Coast Mortgage Trust for 30 years and I trust them,” he said.
Mr Short said while other trust customers were trying to get their money out on Tuesday, he made a deposit.
“It's just panic,” Mr Short said. “I believe the board's decision (to freeze withdrawals) was sensible.”
East Coast Mortgage Trust chief executive Scott Collis said the trust had taken the difficult decision to defer its redemption requests to protect investors.
Mr Collis said the Government's decision to exclude mortgage trusts from the deposit guarantee was to blame for the rush on funds.
“It's a pity the Federal Government ignored the Reserve Bank's advice on this, as the situation could have been easily avoided,” he said.
“Our Trust's position is strong and investors will continue to earn interest on their investments.”