Monday, October 13, 2008

Labour backs dodgy finance company lending

Digging deeper into Labour's deposit guarantees for banks and other financial institutions we see that they have also backed dodgy finance companies, their free and easy lending practices and interrelated party lending-Doug Somers Edgar and his Money Managers crew must be running around in pure ecstasy right now.

This exposes the New Zealand taxpayer to billions of dollars of cost because more finance companies will collapse, no doubt about it.

The deposit insurance paid by the major banks will not be paid by finance companies because their deposits as a whole total less than NZ5 billion per institution, so the extra fees passed onto the major banks customers as a result of this deposit guarantee will be in effect subsidising those investors in finance companies who are getting more interest on their deposits.

The government backing of solid banks was definitely a good if not belated move by Labour but the bailouts that the Kiwi taxpayers are exposed to within the finance company sector make for dire consequences for the back pockets of every New Zealand taxpayer.

Related reading

c Political Animal 2008

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