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Is Rudd right to rescue the banking sector?

Are you feeling better about the safety of your investments, not to mention your job, following the Prime Minister’s recent pledges?

The Rudd government has promised to guarantee all deposits held with Australian financial institutions, but is this enough to protect local banks from the spreading global economic crisis?

It’s also planning to pump AU$10.4bn into the economy, but will all this money prevent Australia sliding into recession?

Is Rudd right or should the state stay out of banking? Give us your views on the great Aussie protection plan.

Comments (6)

  1. Yes, without the package our banks would be at a huge disadvantage compared to those in Europe and US which have been propped up by their govts.

  2. It’s about as much as any gov can do without nationalising the whole financial system, but it won’t entirely protect us from recession.

  3. Yest more help might be needed:

    “Kevin Rudd has paraded Australia’s four big banks as being among only 20 banks in the world with AA credit ratings, which helps them borrow on better terms than less well-regarded banks.

    But the bank chief executives warned that their cost of raising funds may increase if other governments provide debt guarantees to other banks.

    “If (British bank) Barclays want to raise money, and governments say we will guarantee it, that makes Barclays paper more attractive than ANZ paper,” said NAB chief executive John Stewart.

    “If that were more widespread, we might have to do the same thing here. People could say ‘yes, you are the strongest banks but you don’t have a guarantee, but the other banks which are weaker do have a guarantee’.”

  4. The banks here are well run and well regulated but they can’t escape the fact that other countries are offering such guarantees – if we don’t match these, we don’t compete

  5. Peoples Republic of Rudd

  6. at least the government doesn’t actually own the aus banks (yet!)

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