CL Financial bailout – A Matter of Interest

CL Financial bailout – A Matter of Interest

The matter of interest is at the very centre of the collapse of CL Financial and the subsequent $25 Billion bailout, which has been conducted on terms deeply inimical to the Public Interest.

clf-bailout

The mis-match between the high cost of CLF’s borrowings and the low return on its varied investments caused that group’s collapse. The bailout was agreed to commit an undefined quantity of scarce Public Money to rescue those investors at the riskiest end of the financial market, most of whom had invested in short-term Annuities. Of course the Executive Flexible Premium Annuity (EFPA) was an insurance product approved as required by law, it would be untrue to attach any other meaning to those investments which we now know to have totalled about $11 Billion. I have always thought of Annuities as long-term investment products in the 15-20 year range, but CLF redefined terms we had thought were settled.

But the bailout itself, apart from refunding the capital of those riskiest of investors, went several steps further – Continue reading “CL Financial bailout – A Matter of Interest”

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CL Financial bailout – the EFPA details part two

CL Financial bailout – the EFPA details part two

One of the more interesting issues emerging from these EFPA details is the extent to which companies invested in what was approved as an individual investment instrument.

In the previous article, I detailed the significant investments made by State Enterprises, which prompted questions on the governance arrangements applicable to those companies. We know that companies made the investments in the names of individuals, that much was clear from the JSC’s 5th June 2015 Report on the EMBD. Continue reading “CL Financial bailout – the EFPA details part two”