The visible hand in economics

Deposit Insurance Crackdown

Posted on: October 16, 2008

However much I was looking forward to launching my own incredibly risky finance company, I’m glad that the RBNZ and Treasury have tidied up what was a terrible decision by the government to extend deposit protection to finance companies at no charge.

Details here (ht: Migeul Sanchez). News coverage here

I particularly like the quote in the stuff article from an anonymous commentator

“The two-year deposit guarantee announced by the Government on Sunday was a “free lunch for [finance company] gluttons”

While I prefer the term economic opportunist to glutton:) I thin it sums up the situation before the rule change quite nicely.

Now that I think about it, 3% off the 30% return I’m promising may not actually be that bad given how risky our investments will be, we just need to work out how to get a BBB- credit rating….


7 Responses to "Deposit Insurance Crackdown"

“we just need to work out how to get a BBB- credit rating….”

Shouldn’t be a problem – with those fat margins you can afford to cut S&P in on the deal.

Or tell them you’re investing in subprime, that should get you at least an AA.

[…] the rest of this great post here […]

Tranche it!

Is CDO still a dirty word?

Yes Matt, CDO is still a four letter word.

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