Are Kiwi Farmers the Victim of Fraudulent Derivatives?
A fellow blogger pointed me in the direction of the fact that in 2007, 2008 and 2009 Farmers in New Zealand have been sold Derivatives Swaps. In an interesting series the Sunday Star times is shining a light on this practice.
In Britain, it’s being called a scandal. In New Zealand, there’s been barely a squeak.
But with around one in 10 farmers in dire straits with high debt burdens and devalued farms, claims that complex “interest rate swaps” were missold to farmers who did not understand them are surfacing.
The swaps, traditionally used by sophisticated businesses with expert finance staff, were sold in 2007, 2008 and even 2009 by some banks to farmers as insurance against interest rates – and hence floating rate farm mortgages – rising rapidly, farmers say.
But when the opposite happened, the farmers who bought them were left locked in to high interest rates which they could not escape without paying hefty break fees. Already heavily indebted, some farmers have lost their farms as a result of the instruments.
No comments:
Post a Comment
Thanks for your comment. All comments are moderated - BronnyNZ