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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Is the Macquarie Bank Model dead? Writers in 2007 warned of the Model.......then Allan jumped ship with $100 million

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Time to focus on the warnings of yesteryear according to our intrepid researcher Gladys, which obviously shows Mackers was headed by the blokes at the top on a cut and run mission.  Millionaires Factory? Yes indeed,  low doc loan (toxic sub prime) customers and retiree investors lose all capital, income and homes....we know many of them!  One investor rang me in 2008 to lament Mackers had lost him 70% capital on one investment!  "ASIC was useless" he said......well we all know that has been the a situation "normal" with the regulator for 14 years.  Even the Ombudsman said they were extremely difficult to deal with along with their mates/partners like FIRSTMAC (ex TONTO) and Kim Cannon who charges $100 for poverty stricken loan victims to recover 11 pages of their file!!!!  

I digress.

American managers have been calling me for some years and one said in 2010: "we would not allow Macquarie into the country."  Another caller said: "I have travelled to Australia three times in two years - you guys are doing the same as us, (in sub prime lending) but we cannot figure how you continue to hide that fact and keep going after the GFC."  No idea if those statements are true, the callers were legit, but macker chiefs may have wanted to enter the US market a decade ago and were knocked back and if true, there is an irony there.   This email address is being protected from spambots. You need JavaScript enabled to view it.

This Model was similar to Lehmans, Merrills and Goldmans according to experts and here is the guff of how this heist was pulled off according to The Monthly:

http://www.themonthly.com.au/issue/2007/july/1240964771/gideon-haigh/who-s-afraid-macquarie-bank

 Who’s Afraid of Macquarie Bank?

 The story of the millionaire’s factory  by Gideon Haigh    -  

July 2007

The 2007 annual report of Macquarie Bank runs to 120 compendious pages, its uncompromising inkiness broken only by a few small photos, pie charts and graphs. The text is unsigned, and there is not a single image of anyone at the bank, even its managing director, Allan Moss. Curious: Macquarie Bank used to be known for attractive, even imaginative annual reports. There was one that had peepholes in the pages; another had arty metaphorical images that paralleled aspects of investment banking with other occupations. But Australia's most admired corporation does nothing without a reason. It's almost as though the more successful it becomes, the more it aspires to impersonal, monolithic status.....................

 

On 15 May, Macquarie announced a record annual profit of $1.4 billion: a 60% increase on the previous corresponding period. For the first time, too, more than half its income came from offshore, and it would have been higher but for the strength of the Australian dollar. It looked like the crossing of an earnings Rubicon. Allan Moss was anxious to assure Australians that Macquarie would keep its headquarters here, where 6500 of its personnel are based. But it sounded a little like an ambitious son assuring an elderly parent that he wouldn't lose touch. Nor is it surprising that the bank's admirers can scarce forbear to cheer. Macquarie is a success story - perhaps the Australian business success story of the past decade.

 

Macquarie opened in Sydney in 1969 as Hill Samuel Australia, an outstation of the tweedy UK merchant bank Hill Samuel. Foreign financiers were then swarming all over Sydney, enticed by the chimeric nickel boom. But Hill Samuel Australia was a stayer, cultivating a reputation for diligence, discretion and, above all, excellent connections. Two of its stalwarts, David Clarke, now Macquarie's chairman, and Mark Johnson, now its deputy chairman, joined from the pioneering merchant bank Darling & Co in 1971, where they had trained under the future World Bank president Jim Wolfensohn. They did their first deal for White River Industries, owned by a wealthy family whose scion had been their MBA classmate at Harvard: Nick Greiner....................

 

The ‘Macquarie Model' is begun when the bank buys all or part of a business, whether it be road or bridge, airport or utility. After a period of ingestion, the investment is passed on to one or more of its specialist funds, crystallising a profit, usually modest. But these funds not only pay Macquarie for management; they also pay fees for advice, underwriting and refinancing, as well as bonuses for outperformance of market indicators. In conjunction with rapid growth, Macquarie's fee structure sometimes produces bizarre excesses: in the three years from June 2002, for example, the rake-off from the Macquarie Infrastructure Group was 54% of cash flow................But Macquarie developed a taste for and an aptitude in handling big infrastructure assets, while its executive director, Nicholas Moore, also identified a secular shift. Governments were not just stinting on infrastructure but exiting what they had: there was money to be made in the shift of public-sector assets into private hands, and in the provision of amenities and facilities on behalf of the state. Over the last decade, this initial jeu d'esprit has evolved into the ‘Macquarie Model': the closest thing in Australian finance to a perpetual-motion machine....................

 

Like Chanos and Chancellor, Johnson is not enamoured of the financial models that Macquarie uses to value assets. These, he points out, are easily skewed by their underlying assumptions:

 

I just think the fundamental logic behind them is flawed. They're buying assets like the 407 International in Toronto where they're assuming it's going to grow by 5% for the next 99 years, then they're using a discount rate to bring that back of 7%. If you fiddle around with just those two variables, you get massive changes in valuation, because you've got money growing almost as fast as you're discounting it back. In theory those two things can't ever overlap, but Macquarie occasionally gets pretty close to it. That's how they get these quite extraordinary valuations. Maybe one day they'll come up with an infinity valuation, meaning they can just pay anything they like.......... Chancellor himself also expressed disquiet at Macquarie's practice of paying the firm success fees. The practice certainly seems at odds with the Australian Securities and Investment Commission's Practice Note 42.12, which states: "An expert who is paid a success fee will not be considered independent."

 Lehman brosAn investment bank undertaking roles previously performed by government is anything but a like-for-like swap. A government is elected on the basis of what it may giveth; an investment bank is chiefly interested in what it can taketh away.   In the past decade Macquarie has been one of the great stories of Australian business. In the next decade it will surely be one of the most intriguing. How ready is Macquarie for the consequences of owning businesses on which citizens vitally depend? And how ready are citizens to depend upon Macquarie? ..........

 http://www.themonthly.com.au/issue/2007/july/1240964771/gideon-haigh/who-s-afraid-macquarie-bank

 

The ‘Macquarie Model' is begun when the bank buys all or part of a business, whether it be road or bridge, airport or utility. After a period of ingestion, the investment is passed on to one or more of its specialist funds, crystallising a profit, usually modest. But these funds not only pay Macquarie for management; they also pay fees for advice, underwriting and refinancing, as well as bonuses for outperformance of market indicators. In conjunction with rapid growth, Macquarie's fee structure sometimes produces bizarre excesses: in the three years from June 2002, for example, the rake-off from the Macquarie Infrastructure Group was 54% of cash flow.

Big private-equity firms like KKR and Blackstone extract their returns by instilling financial controls, breaking companies up and floating or flogging the constituent parts. In the ‘Macquarie model', a Macquarie fund is substituted in the last leg of this process. Since 1994, the organisation's funds have sold only eight assets, worth just over $10 billion, to unrelated parties - all, it should be said, at sizeable profits. The emphasis of Macquarie funds is on holding assets and providing big dividends - which suits the retail investors who have suddenly flocked to the organisation as never before - rather than selling assets for the outsized capital gains expected by most private-equity investors. It's a philosophy reminiscent of Gus Levy's immortal injunction to his partners at Goldman Sachs: "Be greedy, but long-term greedy." The Macquarie funds contain some oddities. The Toronto-listed Macquarie Power & Infrastructure Income Fund, for instance, proclaims its "emphasis on power infrastructure"; yet it also contains, almost whimsically, a 45% interest in a chain of retirement homes....................

 http://www.dailyreckoning.com.au/macquarie-model/2008/06/18/

 Is the Macquarie Model Dead??

 18 June 2008   (months prior to the GFC - cheap bottle of scotch recommended for Wall Street investors)

 What about the financial economy? In the U.S., Lehman Brothers (NYSE: LEH), Merrill Lynch (NYSE: MER), and Goldman Sachs (NYSE: GS) all report earnings this week. If you are a Sovereign Wealth Fund that decided to recapitalize Wall Street in the last six months, we recommend a cheap bottle of Scotch to go with your wasted capital.  Wasted and wasted..............

 

 

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  • setup
    setup Tuesday, 19 August 2014

    The warnings were cammoflaged therefore there were no clear warnings to the innocent and unsuspecting.
    Time to pressure and make these criminals accountable now.

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