The growing US financial crisis has hit Lismore City Council, which has approximately $7.4 million invested through investment bank Lehman Brothers, whose collapse this week sent Wall Street into a state of panic.

Council manager of finance and administration Rino Santin said he was waiting on more detailed information from Council’s financial advisors before he could make a proper assessment.

“We are pursuing information about Council’s potential exposure with those funds,” Mr Santin said.

“I am concerned, it would be silly to say that I’m not, because of the uncertainty.

“It may impact on Council’s funds for future works, as and when or if, the losses are realised.

“We need the assessment to come through from our advisors before we can make any bold predictions.”

Mr Santin said there could be further ramifications as the financial crisis continued.

“Based on the information received this is unlikely to be the end of the situation. I don’t know whether it will be good or bad but it is unlikely to be the end,” Mr Santin said.

Lismore also has money invested in a floating rate note investment with Merril Lynch.

Richmond Valley Council appears to be the only other locally-based council to be hit by the crisis, with financial services manager James Brickley saying the council has four investments that were originally with Grange Securities, which was bought out by Lehman Brothers last year.

The investments are in the vicinity of $4 million, however, one of those investments worth approximately $1 million has a capital guarantee.

Mr Brickley said at this stage it’s a case of wait and see.

“It depends on the flow-on effect the Lehman Brothers collapse has on other entities,” Mr Brickley said. “To say that those investments have disappeared is false. They still exist, but we don’t know what the valuation of those investments will be. It’s fair to say the credit rating on some of them will reduce, but to what extent it’s unclear at this stage.

“At this point the loss is only a paper loss as Council does not at this time need to redeem those investments. The idea is those investments were taken out to be held to maturity.”

Ballina Shire Council and Kyogle Council said they have no investments with Lehman Brothers or its subsidiaries and are therefore unaffected by the collapse.