Saturday, August 01, 2015

Showing LOBO salesmen the door

Another council insider, David Green, adds more on the website Room 151 to the sorry tale of the LOBO debacle after watching the recent Parliamentary Select Committee investigation.

He recalls as a former local authority treasury management officer, how the LOBO salesmen who pitched these toxic loans were sent away by his director "at the earliest opportunity".

David writes "Having worked for a local authority, a money broker and now an independent treasury adviser, I have seen LOBOs from many angles.  

I know that when our brokers and advisers visited me as a junior council treasury officer, the initial low interest rate looked superficially attractive.  But I also remember asking what I would be charged for a plain fixed rate loan from a bank, and on finding that it was much more expensive, I gained some idea of the value inherent in those options".

The most damning comment is towards the end 

"And in retrospect, I really can’t imagine a local authority treasurer asking for a loan whose rate stays fixed if market rates fall, but whose rate can rise when market rates increase, in what was called a lose-lose situation at the Committee".

Check out my previous posts on the LOBO scandal and most importantly - what can Councils and Housing associations do about it here, here and here.

(about picture - LOBO is Spanish for "Wolf". Quite an apt name I think) 

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