Taxpayers will be banks’ deposit insurance scheme backstop
The bank deposit insurance scheme just announced by government is no more then a licence for banks to create even more money out of thin air than they already do and be less responsible about who they lend it to, knowing the taxpayer will bail them out if they get it wrong.
Taxpayers and bank customers will end up footing the bill for the new scheme as banks will pass on additional costs in their lending rates and taxpayers will be the final backstop for any bad bank decisions.
Banks already have the right to take money out of depositors’ accounts to bail themselves out should they get into financial trouble.
Why should banks which are, in the main, overseas owned corporate businesses, get bailed out for bad decisions when no such largess applies to other major New Zealand businesses like Fonterra, Fisher & Paykel Healthcare, or A2 milk.
The big four Australian based banks pulled six billion dollars in profit out of the pockets of New Zealanders last year and those profits continue to increase every year.
Those profits should be funding the banks’ own retail deposit scheme.
Additionally there should be a re-instatement of a reserve to assets ratio where banks are required to hold a substantial value of reserves with the central bank.
The Bank of England, the German Central Bank, and our own Reserve Bank, confirm that our money supply is created by banks out of thin air when they lend to customers.
The Reserve Bank (the country's central bank) should take over some of that money supply creation and use those funds for government and local body projects, to reduce the exposure of the commercial banks.
Those three measures would mean a taxpayer funded retail deposit scheme was not necessary.