Transcription
Only the paranoid survive, survive. The life and death battles of global businesses, the fatal decisions, the risks taken, the mistakes made inside the boardroom. We will make an absolute huge amount of money if we're right. The highest of stakes. It was a real threat for everyone. Driven by innovation. All I had was something that I knew was disruptive. It was viewed to be impossible. Blinded by fear. Let's ignore it because we don't really know what to do with it. Desperate times and desperate measures. That was the day that I had to go. Fateful consequences. My only question would have been why. And the lessons learned. The problem was they were wrong and it costs everything.
Wall Street, the early 2000s, the world's financial center and home to hedge funds and investment banks, posting staggering returns. Times had never been so good. Banks were making enormous amounts of profits. There is actually a very nice graph that shows what was happening to the growth rate of all other industries combined. And what was happening to the growth rate of the banking industry, It was surpassing the vast majority of the industries which are known to actually be outperforming. Everybody was questioning, who are these banks making so much money?
Dr. Sumit Agarwal worked on Wall Street, and like any banker at that time, he lived extravagantly. I used to be at Bank of America between 2000 and 2006. We would go out for dinners. And those dinners could easily cost anywhere from $1,000 to $7,000, $8,000. So this gives you a sense of how much money the banks were making. Everybody wants to have a big house and a big car, and they want to show off to the other banker. So you can imagine the enormous profits and no accountability. The kinds of the amounts of money that bankers operate with are so astronomical. They're sometimes even they themselves, right? The analysts, and the traders, and the brokers. To them, it becomes just numbers. Wall Street players thrived on these numbers. And some of the biggest moneymakers on this block, the investment bankers, the golden boys of the industry. All investment banks were very aggressive players throughout the 2000s. And rightfully so. I mean, these guys were living the good lives. They were known to make money for. Investors and shareholders. And the good times were not just rolling in the US.
In Asia, the economy was beginning to boom after the 1997 financial crash, and Wall Street Titans wanted a piece of the action. And Singapore was becoming an especially attractive Asian destination for America's growing banking wealth. There was a period of banking liberalization in Singapore, which meant that more foreign banks, such as Standard Chartered, Citibank, for instance, were allowed. Greater market participation in the retail sector. So the commercial banks in Singapore were all facing, essentially, greater competition from one another in competing for a customer base. Top American investment banks piled in to take advantage of the new opportunities. Merrill Lynch, Goldman Sachs, Morgan Stanley, and also Lehman Brothers, the oldest of the lot and famed for the strong culture of its U.S. operations. Lehman Brothers was a significant and important player in the 2000s in the U.S., In the investment banking industry. At that time, it was number four. Lehman also was one of the most aggressive players in the industry. People, kids, MBAs, students would love to go and work for Lehman. I mean, this was a prime job for them.
Selathurai Sukumaran joined Lehman Brothers in 2006 as a vice president in the Mergers and Acquisitions Group in New York. The firm was at the height of its success. Lehman had a very strong culture, a lot of pride in every employee in working for Lehman Brothers. There was always a lot of confidence that Lehman could take on the bigger competitors and win. Founded in 1850, Lehman was the remarkable survivor. The Great Depression, two World wars, and it was still making money. Over the years, Lehman's bankers had gained a reputation for being the toughest of them all. Now's a terrific time to be joining Lehman Brothers. I've been here 30 years, but I can't think of a better time for you to take part in the changes and opportunities that are going on here. Once you were there, nothing was really... Impossible to achieve. You had a lot of faith in the firm, a lot of faith in your managers, a lot of faith in your peers. And a lot of faith in the clients confidence in your work. No one really feared taking on competition, taking on tough transactions, Whereas I've seen in other places where people would just walk away from a battle without giving it a shot. But in 2006, no one on Wall Street was walking away from an exciting new market opportunity.
The federal government had lowered interest rates, which allowed both banks and consumers to borrow more money. Are you looking to buy or refinance your home? Come to Lending Street, where we make the mortgage process easy and understandable. Americans were also encouraged to own a house, and this drove the housing demand. As house prices kept going up, it seemed a one-way bet. To making millions. I was working on what was happening to mortgages of Bank of America. We were actually seeing aggressive growth in the mortgage industry. I mean, we were lending, I mean, we were looking for borrowers. This was a new opportunity that was created because of the role of securitization. Securitization was the brainchild of the new generation of bankers. It started with homeowners, the common men on the street. Each month, they paid mortgages to mortgage lenders. Wanting to make more money, the lenders would then sell the mortgages to investment banks. The mortgage contracts were then bundled by these investment banks, like Lehman Brothers, with other loans to create a new financial product called collateralized Debt obligation, or CDO. Unknown to most homeowners, their mortgage payments that were packaged with other loans were then sold and traded to institutional buyers all over the globe. Securitization became the tool that turned mortgage payments into even more wealth for financial empires. Business tripled over six years. In 2006 alone, the top ten investment bankers sold 1.5 trillion U.S. dollars worth of mortgage securities. And even for the regulators, this seemed like the perfect way for more people to live the American dream by owning their own home. Regulators saw the positive benefits. Of actually securitization, because they saw that credit was being made available to a wider population. Or, you can think about credit was being democratized. So nobody actually envisioned that there could be negative effects.
The world's largest banks were now making mind-blowing amounts of money. Bankers were hooked to the profits made and craved even more. Next stop was selling their investment products to Asian countries like Hong Kong and Singapore. Almost all the banks were pushing different kinds of products to try to attract customers. These products were seen as very attractive because they were sold with the promise that it has quite a high yielding interest of about 5%. In Asia, products like high notes, Pinnacle notes and mini bonds hit the market. When Mr. Tan walked into his local bank with US$50,000 and the intention of renewing his savings account, he was offered a chance to join the money-making party. We have protected his identity upon his request. They see I got this money, they show us to the salesman in charge in the bank. He just let us sit down, explain to us what they have. They tell me that there's another bond with about 4% to 5% interest. So as the brochures, so as a cheque of 500,000, the previous buyer in the morning, We are convinced, and we have been promised, that this is a very safe bond. Like so many other investors, Mr. Tan fully trusted his bank. But what he didn't know was that the product he had invested in was directly linked to top American banks like Lehman Brothers and Merrill Lynch. Many of the investment banks in the U.S. were actually involved in the structuring and the sales of these structured products. And therefore, what was happening, you know, quite far away in the United States, actually had very real impact on the everyday retail investors over here in Asia. This was to prove problematic.
Those top American banks were by now completely entangled in the U.S. mortgage market. But fundamental cracks had begun to appear in this system. Not all homeowners could actually make their mortgage payments. Chris Roebuck is a British economist who has advised major global banks and held senior roles at UBS and HSBC. It was possible for you to get a mortgage, not not by presenting any evidence of your earnings at all, but by merely telling the person who was offering you the mortgage how much you were earning. So there was no evidence at all that any of the people that had mortgages could actually afford them. But to investment bankers, these people were making them money. And banks had even extended their loans to what were termed subprime borrowers. These are borrowers who will not get credit. In normal times. But the banks realised they have so much money, they can actually go out and give credit to these borrowers. A larger problem was brewing, and no one was anticipating it. In any society, there are going to be some people who lose their jobs and can't pay. But it was practice. Because the banks made a lot of money out of it, because they thought it was a bottomless pit, Everybody rather wanted to ignore the reality that the whole thing might blow up in their faces.
But Dr. Sumit Agarwal, who was still working at Bank of America, could not ignore that reality. He began to feel like it was not the place to be. Dr. Sumit Agarwal, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of America, Bank of. In 2006, I could already sense that the banks were making lots and lots of loans that didn't make any sense to me. I felt like it was time to leave this industry. And actually go and work for the opposition, for the Federal Reserve. Dr. Sumit saw the looming danger. But for others on Wall Street, it was squarely in their blind spot. By the end of 2006, pressures were felt across the mortgage markets as housing prices in the U.S. Started falling dramatically. It was the beginning of the end. From that point onwards, to some degree, it was a house of cards.
Lehman Brothers, America's oldest investment bank, was growing fast, with offices emerging all around the world and employing over 25,000 people. By 2007, its revenues totaled 19 billion U.S. dollars. It was becoming a powerhouse investment bank, standing on its own. Being very independent and really clocking away very good results in all of its franchises. M&A was number one, number two in the US. Equities was doing well. And these were traditionally not Lehman's in a stronger suite, but they were really catching up and beating the stronger players in that market. For everyone, Lehman Brothers was a threat. Lehman Brothers' success could be attributed to one man. His name is Richard Fools. Hi, my name is Dick Fuld. I'm the chairman and chief executive officer of Lehman Brothers. I'm pleased that you're considering a career in investment banking. Dick Fuld was a very strong leader. If you take large investment banks, there are anywhere between 25,000 to 100,000 employees. You will find employees in these large institutions who would not know the name of the CEO. It would be fair to say that every employee at Lehman Brothers knew. Who the CEO was, and that he was a very passionate leader about the firm, about its franchise, about its team. Fuld began his colourful career at Lehman Brothers in 1969 on its trading floor. But the feisty character quickly rose through the ranks and became the firm's chief executive in 1993. By 2005, he was taking home more than US$34 million in pay and bonuses. This man lived and breathed, Lehman Brothers. Almost 95% of his wealth was in Lehman stock. So people had faith in his leadership. Whatever he was doing for the firm, for the shareholders of the firm, had a very direct impact on his own personal wealth and future. He had a lot of vested interest in making sure that Lehman Brothers did well.
As part of this, Fultz looked to the east to further his money-making aspirations. In 2007, Asia was Lehman's highest growth region. It took in more than US$3.1 billion in revenue, having doubled this in just two years. Lehman is the fourth largest investment bank in the US. It had a large presence in Singapore. In fact, we experienced record volumes in 2007. And there was environment of confidence, easy credit, and people were optimistic. And this optimism filtered down to consumers and investors like Mr. Tan, who seized the opportunity to build a pot of savings. The purpose is to save money for old age, to make the money grow in a safe place. They told us that this is the safest place to park the money and earn more. That's why we put there. We just trust the bank. Those investors did not know the underlying risk in these securities. They didn't know what they were holding. Were they holding subprime mortgages? Were they holding prime mortgages? They were packaging all these things together and selling them as prime securities. These packaged securities continued, making millions for financial giants. But some key players from Lehman's global team grew doubtful. Anthony Fry was the head of Lehman Brothers in the UK. I think they were in a position where they really believed they were the people in charge of the whole world. They were winning. Everyone else was losing. Anthony Fry had 35 years of investment banking experience. He even worked closely with Margaret Thatcher. Yet even then, his knowledge and expertise were challenged. Dick Fult had steered his U.S. operations on a completely different route. The firm borrowed more money than any other bank on Wall Street. I was in a position that I was fortunate I could say, we won't do that. And they were already talking to me and saying, you're trying to stop this, we want to do X, Y and Z. We had a fundamental disagreement between them in America and myself working in England, and it got very difficult.
Lehman's chief executive was not letting anyone get in the way of his vision. Now, this is a guy that, to some degree, is on a personal mission. He's a grandee of Wall Street. He has his own little show. He's been there long enough. He doesn't want anybody getting in the way. It's his focus, his success. The truth was that he controlled everything. And it was very clear that if he decided that someone wasn't doing what he wants them to do, he'd fire them. But if they were loyal to his vision, then he would reward them handsomely. And these salaries incentivized them to take bigger risks. The remuneration, the pay that people were getting, you've got a situation where these people were effectively being paid to make as much money as quickly as possible. So the psychology is, if this is a safe deal that only makes a little bit of money, or this is a risky deal that makes an awful lot of money, We're so clever that we can control the risk. Or that's what they thought.
In the final months of 2007, cracks in the U.S. Housing market deepened. Property prices dropped so much, some houses were worth less than the mortgage itself. And now, homeowners who could never actually afford a mortgage to begin with struggled to pay. So many simply stopped paying. The scene looked set for disaster, but the brightest minds on Wall Street still felt they had it under control. As soon as the house prices started falling in 2007, I wrote a small paper. It was actually a peddle letters where I talked about the subprime crisis. And I said, it's not a big issue, because subprime loans, per se, are a very small fraction of the entire mortgages. They are around 10 to 15 percent, even if one third or half of them defaulted. That will still amount to around six to seven hundred billion dollars. That's not a big enough number. Okay for a major crisis to happen. Uh, you can guess I was totally wrong. Defaults caused huge problems, but decades of success made banks believe they could ride out this storm. The reality was they lacked the reserves to cope with those losses. And in early 2008, the subprime crisis had claimed its first victim. Bear Stearns, America's fifth largest investment bank. The firm was hit too hard and raised its white flag. A bailout by the U.S. Federal Reserve and JPMorgan Chase worth more than 30 billion U.S. dollars pulled the bank back from the brink. But the crisis was far from over. Wall Street's money-making machines were crumbling. The bull run had finally come to an end.
The financial giants of the world were making billions of dollars on the housing market. But in 2008, alarm bells rang on Wall Street. Bear Stearns, America's fifth largest investment bank, was brought to its knees. And no one saw this coming. When I went to the office and I heard that Bear Stearns was sold to J.P. Morgan at a very, very cheap price. price. It was shocking. It was astonishing. It was unbelievable how this happened, how quickly it happened. That's when we realized that these investment banks actually may have taken excessive risks. And now these risks are actually coming up and coming back to bite these banks. It was a watershed event, right? So Lehman stock tanked by 48%. That sent a signal that there was more. To come, suddenly, the entire sort of stock market tanked a bit. So people's investment portfolio, they were all suddenly, you know, in the reds.
Dr. Sumit Agarwal, who was formerly working at Bank of America, had now become a senior financial economist at the Chicago Federal Reserve, and regulators like him were worried. So immediately at the Federal Reserve, we started looking at what are the other investment banks doing. What are their portfolios like? Could this happen to them as well? And the concern that we had is because we are not regulating them, we have no idea what these investment banks are up to. This was a shocking revelation. Financial titans were left to their own devices. Anything could happen, and it could even have global ramifications. In Singapore, financial regulators were also worried about the impact of Bear Stearns' failure on its market. It's the fifth largest investment bank going down. It Is No Mean feat. There must be some pressures going on and we needed to be on the lookout as to how other investment banks may be similarly affected. In SGX, how we looked at it from a risk management perspective, Although Bear Stearns was not a member in our markets, it was evidence to us that there may be some credit concerns. But one bank, which was a member of SGX, was under increasing strain back on Wall Street. All eyes were now on the next bank on the list, Lehman Brothers. Everybody in the industry started worrying, specifically about Lehman Brothers. Are they well capitalized? Can they sustain this crisis? Will, do they have enough capital? There were speculations that Lehman Brothers will not be able to weather this crisis. We didn't think that all of us were going to be saved of our jobs, but we never thought Lehman Brothers would go down. We still felt that if someone like Bear Stearns found a buyer and was bailed by the government, Lehman was bigger than Bear Stearns. So there was a lot of anxiety, but there was some sort of a calm. Reassurance about being at Lehman. But by June 2008, this calmness had disappeared. Lehman announced its first quarterly loss in 14 years, a dizzying $2.8 billion. So when Lehman Brothers announced that they actually made a loss of $2.8 billion, it was shocking. That is an enormous amount of money. For any investment bank. Also, you start worrying that when they're announcing that much, what else is happening on their balance sheet? I mean, we were just, didn't know what to do at that point. Immediately, we were thinking, what else is happening in this industry?
Within the glass windows of the Lehman office, tensions were running high. Our days were numbered as we knew it. But I think... We never felt the days of Lehman Brothers were numbered. The anxiety was creeping up. People were slowly leaving or were forced to leave. It was an overall captorism that was creeping in. No place was safe in Wall Street. But Lehman's chief executive was determined to keep his empire alive at any cost. He made a series of changes, which included raising more money from investors, even more so than most other banks on Wall Street. Other organizations, like Goldman's, were starting to pull back. And the valid question is, well, why do they keep going? And that is where I think we start getting into culture, the influence of the CEO, and a syndrome that you see in a number of organizations. The fact that we're a good organisation and we know best, it gets to the point that what we look for in senior leaders is self-confidence. Now, sometimes that self-confidence becomes arrogance. As early as 2007, some were already voicing opposition to Fould's approach. Well, I was saying, sell, sell, sell. They were saying, buy, buy, buy. And that was a view. Now, could I have got a different... I wasn't in a position to do it. I wasn't the chief executive of the whole lot to decide that. He had a view that this was the right thing to do, to double it up. I was cussing lots of wrong. And what's happening is that the data they're getting is causing flashing lights and bells to ring, but because they are so focused on their own objectives, they ignore all of that. Lehman's was trying to act as if it could get away with it, but it had got itself into the position that it was just too exposed.
Then why did Dick Fould continue to gamble? Had Lehman's earlier success blinded its leaders from seeing the possibility of failure? They thought the right thing to do is get even more money involved in that because we will make an app. Absolute huge amount of money, if we're right. The problem was they were wrong and it costs everything. Just three months later, what unraveled were repercussions of Lehman's grave mistakes. On 10th September 2008, Dick Fultz released a press statement that read, This is an extraordinary time for our industry. And one of the toughest periods in the firm's history. Wall Street's oldest investment bank reported a staggering loss of almost US$4 billion that day. For Lehman Brothers, it was all going wrong. I think the first thought that probably crept into everyone's mind was that we were going to be part of a bigger bank. And we were going to lose the culture of Lehman Brothers. Lehman Brothers was fiercely independent as a firm. I think it was sobering. Reality facing us, you know, staring at our face. That Lehman, as a firm, the culture that we were so fiercely proud of, was not going to be there anymore. That, I think, sunk in very quickly.
Outside of Wall Street, the rest of the world held their breath as they watched the series of events unfold. In Singapore, the SGX anticipated the worst. It became evident to us that we are at a critical juncture. We did the necessary risk management activities. We looked at the exposures that Lehman has in our system. We did the necessary, worked out stress, performed various simulations to determine what could go wrong, what will happen if it goes really, really wrong. It was a lot of interaction between us and Lehman Management, where we made sure that we took the necessary precautions with them. The conversations were not easy. They were difficult, but necessary. On Friday, 12 September, in New York, U.S. Treasury Secretary Henry Poulsen held more difficult conversations with Wall Street's top executives. How could they save Lehman Brothers? Could they even be saved? As the day progressed, one thing became clear. Unlike Bear Stearns, there would be no federal bailout for Lehman Brothers. Some regulators were worried of the moral hazard problem in trying to save Lehman Brothers. If we go out and save Lehman Brothers, who will be next? Every other investment bank would want to say that I'm in trouble. Go out and save me. So as an economist, I was saying, why do we need to go out and save these rich investment bankers? It makes no sense. And using taxpayer money. Dr. Sumit and his colleagues were also working that weekend. And analyzing potential solutions. I was just looking at mortgages. What is the implications? What is the balance sheets of these banks? We hardly know where the bodies are buried in these banks. So we want to help them, but we had one hand tied behind our back. Cannot do anything. Cannot do much. Whatever they tell you, we have to believe it.
Meanwhile, Dick Fould was running out of time. He only had two days before the Asian markets opened on Monday morning. To save his empire. He turned to Bank of America and Britain's Barclays Bank for help. Anything could have happened over the weekend. They could have found a nice suitor, a commercial bank to buy Lehman. There could be an injection of capital through the Federal Reserve. There were many speculations that actually Lehman can collapse. Lehman was vehemently arguing that collapsing is not an option. It will have huge ramifications. Whether Lehman would collapse eventually without anyone to bail it out never crossed anyone's mind. I don't think it would have crossed anyone's mind at that time. But reality was hitting hard. Both Barclays and Bank of America pulled out. Lehman Brothers was at the edge of bankruptcy.
Back in Singapore... Agnes Koh led her team through stressful times. It was tense. Trust me, it was tense. As early, I think, as Sunday evening, word got out that there was no deal broken. And Lehman will likely file chapter 11. We went into an overdrive, came into the office late into the night, made sure, looked at all the positions and performed. Various simulation stress events as to what can go really, really wrong on Monday morning. It was Monday morning on 15th September 2008. The Asian markets just opened and everyone was taking in the news. Lehman Brothers was bankrupt. Its debt, 613 billion US dollars. It was. Shocking. There is no other word you can use that. The regulators, everybody else was shocked. Nobody anticipated that the Fed and the Treasury will actually let Lehman collapse. Everybody thought that these guys are so big to fail that there will be a solution to save them. At 745 7th Avenue in New York. Lehman employees were seen leaving the building with boxes of their belongings. Sukumaran was especially affected by Lehman's demise. I was very upset. I just was in disbelief. I couldn't believe that a 157-year-old firm had just become a part of history. And I think I still was carrying my gym bags. Lehman Brothers, you know, my business cards, I still had probably leftover business cards there. And it's just like, you know, someone died.
With Lehman's collapse, the products sold to investors in places like Hong Kong and Singapore lost most of their value. Thousands of ordinary people stood to lose millions. I knew the gun didn't want to hit a thing. The fall of Lehman Brothers was the biggest bankruptcy in history that cast a sense of dread across the industry and beyond. The failure of Lehman's at that specific point in time, for a few days afterwards, was like the entire global financial and business system looking over the precipice. Nobody knew, probably for a week to two weeks, what was going to happen next. Bear Stearns had gone. Lehman's had gone. Everybody was waiting for the next domino to fall. And everybody was worried that if the next domino goes, the whole lot will go. The music had stopped for the players on Wall Street. And with it came a sudden and remarkable clarity. So once Lehman's had gone, that galvanized everybody, financial services institutions, IMF, governments, to say, hang on. We really are on the brink of armageddon here. So it doesn't matter. Personal animosities, competitive advantage, this is out the window. You know, either we all get together and sort this now, or effectively, the world's financial system is going to implode. Therefore, to some degree, you know, you could say that Lehmann's was the sacrificial lamb that got everybody back to a sense of reality. It was the ultimate reality check.
In Singapore, panic had not yet taken hold. Investors remained unaware of what they had gotten themselves into. They were at risk of losing their entire investment. The reason the Lehman crisis in the U.S. affected Singapore was because of how these notes, like the high notes and mini bonds, were structured. For example, in high notes, they were linked to eight different entities, one of which was Lehman. And when I say linked, what that means is. If any of those entities defaulted, that would mean that the notes that these investors had purchased would also default. And once these notes defaulted, the investors will not get their principal amount back. Siraj Omar was a lawyer who represented more than 200 investors who lost all their money when Lehman Brothers filed for bankruptcy. Mr Tan, who had invested US$50,000 in mini-bonds, suffered a similar fate. He watched the crisis unfold on the news. Petrified, he headed to his local bank to cash out his money. So we go there, we ask them what happened to our money. They say it's safe and sound, not to worry. We still get what we are promised. So we just trust the bank and go back. All their money, hard-earned money. It's inside. Of course, they want to withdraw their money, but the bank says, no, they cannot do anything. At that point in time, we don't know who is the main brother or sister. But at the end of the day, the boat sings even more. After that, they refuse to see us. They want to talk to you. Some investors became frustrated with the uncertainty of what happened to their investments. In October 2008, almost a thousand people took their frustration to Honglim Park, Singapore's only platform for public demonstrations. In the year of 2008, up to that point, it was the biggest demonstration that was ever held in Honglim Park. So, and I think that was a very, quite an accurate reflection of the public sentiment. Around the event and how upset and anxious people were. There were people who have lost entire life savings, $100,000, $200,000. People who were elderly, a number of them that were interviewed by journalists as well during that time, were speaking in Mandarin or in other Chinese dialects. So they clearly were not very well versed in English and couldn't really understand the prospectuses and the bank documents they were signing at that time. In that case, didn't really fully understand the full risks and characteristics of the product that they were buying. And Mr. Tan was one of many who did not fully understand the complex documents he had signed. Little did he know that this ordeal would lead to a painful awakening. We talked to the management, then after talking for a while, they just refused to talk further, I refused to leave, then they get the cut. To chase us out, force us out, we're gonna start argument that, feel that heart tight, then just lie down on the floor. Very, really like fainting. So call for an ambulance. Mr. Tan suffered a heart attack. The stress was too much to bear. For investors like him, there was little to no support from the banks or authorities. So I had to pay for my bill for the hospital. Very emotional, very sad that this thing happened. People hard earn money, the banks still making a lot of money, You still do this kind of thing to your loyal customer, they give you business.
While retail investors all around the world were suffering from the enormous loss of money, Wall Street titans still came out of the crisis with millions in their pockets. Dick Fult appeared at an official inquiry after Lehman's collapse. But you get to keep $480 million. I have a very basic question for you. Is this fair? But Fult deflected the question, offering no response except to correct the figure to a little less than $250 million U.S. dollars. Everyone just sat there thinking, Oh my God, we are in a big problem here. It was amazing. But it tells a lot about quite a large number of people who worked for him. Still believe that actually, it was all a mistake. They'd done nothing wrong. They should be suing this job. But you don't seem to acknowledge that you did anything wrong. And that, I think, is also troubling to me. It was evident the investment bankers, who had been living the high life for so long, were far removed from the plight of the common man. These top executives had made so much money in their lifetime. Investment bankers only cared about profit. They didn't care about what implications it has on people's lives. It's true that investment banking attracts the best and the brightest of minds from the top universities in America. But arrogance among these people can make them believe they're untouchable. The analysts and the traders and the brokers, to them, it becomes just numbers. They become so disconnected that it becomes just numbers. So therefore, until something really hits the common people, it's very difficult to recognize that these huge numbers in the billions and trillions that are being tossed around amongst these investment banks actually do have real everyday social impact. Their actions led nearly 10,000 people in Singapore to lose their life savings, a total of almost US$340 million. But could Singapore have avoided this mess? Where did it go wrong? There was a lot of drive to want to develop Singapore's financial centre capacity. So part of that was to encourage everyday investors to be more sophisticated in terms of investing in financial products. But perhaps part of the problem is that maybe the pace was a little bit too quick. People didn't quite understand what they were investing in. And I think the feeling was that the banks and financial institutions could do more to ensure that people understood. They could explain these products a bit better. And I think steps have been taken in that direction. After further investigations into the mini bond crisis in Singapore, the Monetary Authority, or MAS, instituted tighter regulations. In the hope that this would not happen again. The MAS also took some punitive measures against the local banks that were involved in distributing these products. Banks were banned from selling any such products for a period of up to two years. But was this enough for those hit hardest? After eight years, of course, you have to forget everything. Life goes on, no choice. What can we do? They're still around. They're still making a lot of money, but we're still angry over the past. No use. What can I do? That's why I need to be more careful. Mr. Tan's experience showed how one bank's collapse could affect the lives of ordinary people living thousands of kilometres away.
It's been eight years since Lehman Brothers filed for bankruptcy. Wall Street has recovered. The global financial industry is a juggernaut once more. Despite their struggles, investors have found ways to move on. Yet the question remains, could this happen again? I can also tell you, with high degree of confidence, that we will see a banking crisis again. Bankers have very short-term memory. Crisis is over, they are back into making profits, and soon greed will take over. They will forget what happened 10 years ago, and they'll see another crisis. And when this crisis happens next time, I would suspect it will be bigger than what we have.