As a dutiful UK taxpayer, I have ignored the mainstream media tittle-tattle and spent the last year or two doing due diligence on the banking sector.
The recent obsession of stoking competition by policy makers has been at the heart of the debate, but also at the heart of the confusion.
Like the UK, Australia is also undertaking formal (& informal) investigations in to the nature of banking competition. Attached is a recent submission I’ve made to the Son of Wallis Challenge, entitled Securitise This!
The paper aims to address the merits of securitisation, and asserts that this has been more a contributor to instability & financial speculation.
Instead of the panacea of comsumer choice, freedom and lowered costs in banking, we effectively have zombie banks propped up by Gvt guarantees. Securitisation creates the appearance of risk taming (i.e. low interest rates) but is in fact risk transfer to an unsuspecting (irrational or ignorant) counterparty (hmmm.. taxpayers??). It is tantamount to state sponsored fraud.
The article is a much more condensed version of my recent ICB submission, dissecting the very arguments put forward by de-regulators that liberalisation is a good thing and has created lasting prosperity.
This could not be further from the truth.