Australians getting bent over by banksters too. "Mother of all bailout funds"Submitted by go213mph on Tue, 03/05/2013 - 23:54
Anybody keen for a loan of $380 billion at, let’s say, an interest rate of 3.4 per cent?
Sounds nice eh? Well, you the taxpayer are in the process of actually making such a loan. Or at least you will soon extend, most kindly if as yet unwittingly, such a credit facility to the big banks, to be used at any time, at their discretion.
Taxpayers already guarantee some 60 per cent of bank funding via the deposits guarantee for zero compensation.
Yes, it is execptionally generous, the so-called Committed Liquidity Facility, which is in effect a permanent bailout facility which comes into play in 2015.
In a story somewhat interred in the inside pages of the AFR this morning, Christopher Joye makes the point that this massive line of credit is unusual and generous by global banking standards and it has been established with “no public debate”.
“Smaller building societies and credit unions are not subject to the liquidity tests and will not, therefore, have access to the bailout fund,” writes Joye.
To put this in perspective, bank loans to small businesses now average 8.45 per cent. Secured by the businessperson’s residential property they are priced at 7.6 per cent.
The average mortgage holder is forking out 5.65 per cent fully discounted.
Yet the biggest businesses in Australia – CBA, Westpac, National Australia and ANZ – will be able to trot down to the Reserve Bank, lodge a bunch of their own loans – car loans if they like – and march off with billions at the bargain-basement interest rate of 3.4 per cent for 12 months or more.
Not only do taxpayers already guarantee some 60 per cent of bank funding via the deposits guarantee for zero compensation, but the wholesale funding guarantee – with its prejudicial pricing in favour of the Big Four – is still in play until 2015, and now, we have the mother of all bailout funds.