The recent collapse of Lehman Brothers and the subsequent
financial crisis has had far reaching consequences for many
organisations and government bodies worldwide. Australian local
government bodies, many of whom were encouraged to invest in
collateralised debt obligations (CDOs) which were
often promoted as having little financial risk, have not escaped
these consequences.
The US government's recent Emergency Economic
Stabilisation Act 2008 (Rescue Package) could
potentially increase the value of Lehman sponsored CDOs. This
E-Alert looks at the Rescue Package and what it may mean for
Councils who have invested in Lehman sponsored CDOs.
The Rescue Package provides the US Treasury Secretary with up to
US$700 billion to buy illiquid or troubled assets from financial
institutions. Broadly, the Rescue Package aims to restore
liquidity, stability and confidence in the financial system, to
decrease uncertainty, and to reduce the amount of financial loss
that would
