Friday, March 13, 2009

Could RuddBank become Australia's new Commonwealth bank?

LEGLISLATION setting up the so-called "Rudd Bank" goes far beyond its stated intention, according the Opposition.

Tabled Thursday, the bill was intended to allow the government and the big 4 banks to replace foreign banks who pulled out of commercial property syndicates, but its wording appears to allow the syndicate to buy out any lender from any form of commercial finance.

"Mr Rudd has is essentially establishing a new bank which can engage in any kind of business that he wishes, with all of the risk is being taken by the Commonwealth," said Opposition Leader Malcolm Turnbull...

"It will encourage banks, not just foreign banks, but second tier banks below the level of the big 4, to exit."

"It is entirely counterproductive and could only have been put together by a government that has no experience or understanding of finance."


Ilya said...

Peter, an excellent post and should also be placed in the context of banks' reluctance to lend to the private sector as is (as pointed out by John Hewson in today's Fin). The Rudd government seems intent on providing the majors with as little incentive to fund the domestic economy as possible. This is all good news for the banks but not a great state of affairs. Turnbull has a point.

gandhi said...

You seem to be assuming that banks below the top four have any hope of surviving the next six months.

Now why would you do that?

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