The Hon Julie Bishop, MP, speaks on financial crisis

Julie Bishop was very straightforward in speaking about the current financial crisis amongst Australian Banks and non-banking institutions (credit unions and building societies) at the AFA High Flying Networkers and GenXt Breakfast at the Tawarri Lodge in Nedlands, on Friday 31st October, 2008.

She made a key point: there is no exit strategy being put forward by the Rudd Government – just that at the end of three years, the guarantees will cease.

This will almost certainly “guarantee” a “flight to quality” from those smaller financial institutions to the four big banks, which will then be worse than the current situation between them now.

She likened Rudd & Swann to being caught on sticky fly paper – not able to get both feet off the ground at the same time, to be able to exit their “strategy”.

She was adamant that the Australian Banking system did not need the unlimited guarantees that were offered and it placed one second tier bank in the position of having to move $600,000,000 ($600 million) into one of the ‘four pillars’ – so that they could be absolutely sure that the cash was covered by the Government’s guarantee.

The destabilisation of the Australian financial system was far more related to the manner in which the Federal Government had handled the situation than due to the sub-prime crisis, according to Bishop.

It initially was sparked by a little unrest beginning when depositors in building societies and credit unions began moving to the major banks.

The offer of the guarantee specifically excluded foreign banks (for example Deutsche Bank) even though they are regulated by APRA and they are ADTIs. This accelerated the crisis rapidly, she concluded.

Julie Bishop’s rating:  A Tall Poppy.

About Lesley Dewar

Passionate about story telling and getting kids involved with adventures to improve their self esteem and self-confidence Blogger, Author, Networker, Social Media, Activist.
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3 Responses to The Hon Julie Bishop, MP, speaks on financial crisis

  1. Pingback: » The Hon Julie Bishop, MP, speaks on financial crisis

  2. henry says:

    Political rhetoric from Julie Bishop.

    Was it all her own work???

    On 13 October (a long time ago in politics)Malcolm Turnbull welcomed the PM’s decision to guarantee bank deposits (foolish political opportunism, against what should have been his core principles). So now they are back-tracking by sniping about the method (as you’d expect).

    Poor Julie’s credibility has taken two big hits lately, it will take a long time to rebuild it.

  3. Lesley Dewar says:

    Henry

    During her talk, Julie made the point very clear that when the Opposition said they would support the PM’s decision, it was in the context of the PM saying ‘I am the PM, trust me’ – because at that stage the Govt had not given any specific details of the degree of guarantee.

    As a financial planner, I believe that the current Government opted for the populist vote rather than thinking through the whole exercise. I cannot believe that the PM and Treasurer did not understand the fallout that would follow – if they did not, they are not qualified to hold their jobs. If they did, they were negligent in the extreme.

    If any Government guarantee had to be given (and I don’t believe that it did) – then a limit of around $100,000 would have covered probably 85% of the country and saved us from the mess in which we find ourselves now. I will be happy to discuss this with you off line, as well.

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