Home Loans News: 08 Feb 2010
The Federal Government says its guarantee of wholesale funding for banks and other lenders is no longer needed...
.
The guarantee was put in place in October 2008 at the height of the global financial crisis to help financial institutions access funding from overseas, ensuring credit was still available in Australia.
The Government says it will be closed at the end of March.
The guarantee is expected to earn the Government $5.5 billion in fees by the time it is wound up.
Treasurer Wayne Swan says the guarantee was one of the most important factors in Australia's economic recovery.
"Without the guarantee, our banks would have lent less and interest rates for borrowers would have been far higher," Mr Swan said.
"This would have led directly to lower growth and more households losing a bread winner right across this country."
Mr Swan has warned banks against raising interest rates because of the guarantee's withdrawal.
"If any major bank were to attribute some move above the Reserve Bank rate to a decision such as this, they would be wrong to do so," Mr Swan said.
"I think they would incur the wrath of not just the Australian people, but of the Australian Government."
The guarantee of deposits under $1 million, however, will remain in place until it is reviewed in October next year.
The Government has also announced it intends to withdraw its guarantee of state and territory government borrowings at the end of 2010.
The Greens leader Bob Brown wants to know how much money the banks made with the backing of the guarantee.
"I would have thought the banks would be proud to tell us about that, and that the Government would want to tell us as well," Senator Brown said.
The Opposition says the decision shows the Government's stimulus spending should also be withdrawn.
SOURCE: ABC News
|
|
