Imagine yourself as one of the millions of so-called "home mortgage loan slaves", scrimping on everything to make the repayment to the bank every month. And then one evening after dinner, sitting on your sofa watching a silly TV drama (one of the few entertainments you can afford), you got a call from a stranger making you an offer that promises to reduce your loan principal.

Sounds too good to be true?

Not so, at least in the US. The financial wizards on Wall Street, who were responsible for creating the subprime mortgage debacle that plunged the US into the worst economic crisis since the Great Depression, have found a way of making money from the mess. The New York Times reported that some investment funds have been buying non-performing mortgage loans from distressed banks at substantial discounts. They then seek cooperation of the borrowers to obtain Federal Government guarantee for the loans, which are then repackaged and sold to other investors for a profit.

The funds which bought these loans from the original lenders at a discount can offer a reduction in principal to secure cooperation from the borrowers, who are simply too happy to comply. In so doing, the funds have become allies of the hard-pressed homeowners in unloading the risks of those mortgage loans to the government agencies.

The overall scale of these transactions has remained small relative to the total amount of the subprime mortgage loans. But some economists and financial analysts have found the idea troubling. Although the operation has not been legally challenged, some experts agreed that it didn't seem right for people to profit from the debacle that they precipitated.

Moral principle aside, we must admire the ingenuity and resourcefulness of the Wall Street insiders. Those of us brought up in the capitalistic environment, augmented by the common law system, of Hong Kong, have learned to reserve judgment on the myriad ways devised by clever people from all walks of life to make a fast buck without breaking the law.

To be sure, we are angry with the property barons for driving up prices of apartments by cornering the supply in Hong Kong. Many frustrated citizens have staged massive public protests against profiteering by the utility monopolies. And nobody is really happy about the interest income they are getting from their deposits in banks.

But the real estate market has remained a pillar of the Hong Kong economy and properties are seen by many hard-working salary earners in Hong Kong as the safest haven to park their savings for retirement. For that reason, the most prominent property developers are being lionized in Hong Kong more than sports stars or movie celebrities.

Despite frequent complaints about excessive charges, few people can find serious fault with the quality of the service rendered by the public utilities, including electricity, telecommunications and transport. That's because the Hong Kong government has a time-proven system in place to monitor the operations or the utility monopolies.

Thanks to keen competition, the commercial banks in Hong Kong are constantly trying to excel each other by offering quality and diverse services to woo customers. The vast array of wealth management products offered by the banks can satisfy the myriad needs of their target clientele in Hong Kong as well as neighboring economies.

While we reflect on the US credit crisis, we must bear in mind that the major Wall Street firms, including the investment banks and fund management companies, have played an important role in the development of the Hong Kong financial market. The innovative ideas, if not carried to excess, can still set an example for all aspiring financial centers to follow.

E-mail: jamesleung@chinadaily.com.cn

(China Daily 11/27/2009 page9)