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Stephen Long analyses the continuing fallout -

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VIRGINIA TRIOLI: So, who's next? That's the question being asked after the collapse today of yet
another boutique broking house in the business of margin lending. This time it's Lift Capital. Its
troubles follow a week of revelations about the failed stockbroker Opes Prime.

Economics correspondent Stephen Long joins me to talk it through.

Stephen, what's gone wrong at Lift Capital?

STEPHEN LONG: Well, the directors have been forced to bring in the well-known administrator, Tony
McGrath, because of what was akin, Virginia, to a run on the bank. The clients got spooked,
essentially because people started looking around and saying, 'well, we've had Tricom get into
trouble, we've had Opes Prime, who's next and who looks a bit like them?' Well, Lift Capital looks
a bit like them. There were market rumours, a couple of items in the press and then the clients
were ringing up wanting to take out their money and bang - the lift is out of order.

VIRGINIA TRIOLI: So sort of a Red Rock situation? What do they have in common, those two companies
in particular and others like them?

STEPHEN LONG: It's not clear at this stage whether it has exactly the same model as Opes Prime, but
there are concerns about the aspects that are similar and the model there differs from conventional
margin lending in that the company at least purports to take over the stock.

People are borrowing money to leverage into shares, but then the beneficial rights to those shares
are being sold off to the broker and then the broker on-solds those shares in a pool to a bank. And
in this case, you had ANZ standing behind Opes Prime giving more than a billion bucks in which the
money was being used to allow people to leverage into penny dreadfuls. These were stocks that were
really 'illiquid', there was hardly any movement in a lot of these shares.

Now, what's ANZ doing that? The whole situation speaks very much about a situation of credit excess
where people thought that the market always goes up and banks thought they could never make a bad

VIRGINIA TRIOLI: And if all of that wasn't strange enough, the Opes story's just got more and more
bizarre this week with Mick Gatto and associates heading off to Singapore to try and find out where
the missing money might be, which has been the strangest story going around.

STEPHEN LONG: And finding out that they can't find it and the people over there are innocent too.
It seems everyone is an innocent victim of this. We may discover that's not the case in the end and
it might move from Opes Prime to 'Opes crime'. It's 'Opes subprime' now. But, definitely,
absolutely bizarre. Just as bizarre when you've got a situation where they're lending nearly 100
per cent of the value of the stocks.

VIRGINIA TRIOLI: Yeah, and if we have those similar run-ons, then, I guess we might see more of the
same. But just in news to hand, we've all been waiting for the earnings results to start appearing
in the US and they have tonight started doing that. So, what can you tell us?

STEPHEN LONG: GE, the world's third biggest company, has brought in a result much worse than the
market expected, down 12 per cent in the quarter and it's also flagging its annual results won't be
as good. It's coming a lot out of the financial division and given that GE can borrow money at
rates cheaper than governments, it's got a lot of people worried. Markets are down and the US
market is expected to open relatively sharply down 1 - 1.5 per cent on this news.

VIRGINIA TRIOLI: Stephen, thank you.

STEPHEN LONG: You're welcome.