Global Banking: It’s The Happy Meal!

Having lurched from one scandal to another during the past year, one would think that representatives of the global banking industry would be eager to improve their public image.

Wouldn’t one?

It thus may come as a surprise that global financial specialists have chosen to publicize a recent trading innovation that has been named after a product for children.

What is the product? It’s the Happy Meal! Named after the meal with a toy at McDonald’s, an investor’s Happy Meal is a bond that is convertible to stock, packaged along with a loan of some shares of the underlying stock.

Either way, an investor in a financial Happy Meal stands to earn a profit. If the issuing corporation performs well, the bond can be converted to equity. And if it doesn’t perform well, the stock loan can be utilized to sell the corporation short.

So which investment vehicle — the convertible bond or the stock loan — is analogous to the food in a Happy Meal? And which vehicle is analogous to the toy?

Regrettably, that distinction is not altogether clear. What is indeed clear, though, is that the naming of an investment innovation after a fast food product for children is not likely to enhance the badly tarnished reputation of the world’s global banks in the eyes of the general public.