Auction Rate Securities Mess is Worse than You ThoughtAaron Pressman
The auction rate securities mess has often been portrayed in the press as rich people’s problem. Oh, those billionaires and their financial woes. Turns out, that’s completely wrong. Thousands, tens of thousands, maybe more ordinary folks got caught up in the now frozen market when they went in to their local bank branch to buy certificates of deposit and were steered to the bank’s brokerage rep peddling auction rate securities. I detail some of the problems and the latest news in this week’s magazine.
There are more stories to come on this mess, many more. I also came across other resources on the Internet if you discover you’re one of the unlucky ones. Harry Newton, who sold his publishing business some years back, is stuck for $3.5 million and runs the excellent web site, AuctionRatePreferreds.org, with frequent updates, for example. You can read on Newton’s site today about a development just after we went to press — Nuveen announced its first redemption for investors trapped holding tax-exempt closed-end fund preferred shares.