BELLFLOWER, CA -- As banks collapse and the quick shuffle to hide quilt grips failed financial institutions; the effect on Main Street America is pushed out of the public's eye.
On Main Street, the value of the dollar is measured over a life time of savings. When that savings is trusted into the hands of Wall Street and lost in market instability, the loss is measured with tears and fears of those on Main Street. What does an elderly person do when they have lost all of their savings?
Such is the case of 86 year old Mrs. Daisy Austad; a resident of Bellflower California who invested her remaining healthcare money after the loss of her spouse in 2007. Mrs. Austad found herself making investment choices based upon the recommendations of the Washington Mutual Financial Center in Cerritos, California.
The investment information led Mrs. Austad to believe that a $150,000 investment in Lehman Brothers Bonds would secure her future. In early 2008, the bonds were introduced to Mrs. Austad as a secure investment; yet the truth was that markets were already in decline and the investment she made was doomed.
Several months later Mrs. Austad's son ate lunch with the financial advisor from Washington Mutual to discuss selling $50,000 of the bonds to pay for needed upgrades to Mrs. Austad's property. After touring Mrs. Austad's property, the advice was not to sell bonds that have decreased in value, it was best to take a loan against the bonds, do the work, and wait for a market rebound. That rebound never happened.
Mrs. Austad son was notified of the Lehman Brothers bankruptcy and was told that her $150,000 bonds were now only worth $19,000 and that Lehman Brothers was going to liquidate the bonds if the balance due on the loan ($45,000) was not paid immediately. This would leave a balance due of $26,000 owed, blamed on the collapse of Wall Street. In less than a year Mrs. Austad's life's savings turned into a debt she may not be able to pay.
This past week, a class action lawsuit was filed against Lehman Brothers in behalf of the investors in J Class bonds. The lawsuit alleges that the prospectus issued prior to the offering failed to reveal Lehman's large exposure to the sub-prime mortgage market and contained various false and misleading statements about the financial strength of the company.
This is just the first of many suits that will flood the courtrooms and again the court costs burden will be on America's great Main Street.
On Main Street, hard working people are often uninformed of the trouble that boils behind the closed doors of Wall Street. Yet now Main Street might not be able to stand up under the mistakes of Wall Street.
