First Cyprus, now New Zealand

In the No Bad Idea Goes Unused department, it seems that New Zealand is about to do the same thing to its bank depositors that Cyprus is about to do to their depositors. Rob the accounts of the people who had the misfortune to put their money in a bank that fails.

Now I will be the first to say, that about all I know of New Zealand is that they made the Lord of the Rings and Hobbit movies there, and they have a lot of sheep. So, I’ll just let the Scoop Independent News fill you in.

The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.

Open Bank Resolution (OBR) is Finance Minister Bill English’s ((Simon William “Bill” English)) favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

So, this super genius thinks stealing from depositors to pay for a banks failure is a good idea?

“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.

“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.

So, theoretically, someone could lose all of their money to keep the bank they happen to be using afloat? Oh, that’s going to go over real well down there.

“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.

“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”

Small depositors? I have news for you buddy, if this goes through you’re going to see a run on the banks in New Zealand rivaling what happened during the Great Depression and is about to happen on Cyprus. Those banks that might have had a problem will definitely have one within a day or so of this idiocy going into effect.

Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.

“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.

We have something similar in the United States. If you go into a bank, you should see the FDIC ((Federal Deposit Insurance Corporation)) logo. This means that if the bank goes toes up, your money is safe up to a specific amount. Over that, and you have no promise of seeing that money returned to you. (Above the FDIC level) If I’m reading this correctly, what Bill English is proposing is to do away with their version of the FDIC and loot the depositors accounts. Granted, I know nothing of the banking system for New Zealand so they might not have anything like our FDIC.

OBR is not in line with Australia, which protects bank deposits up to $250,000.

“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.

Now, I don’t know anything about Bill English other then what I saw on Wikipedia. I don’t know if he thinks Karl Marx was to conservative or if he makes me look like a flaming lefty. I’ll have to wait for someone in New Zealand to brief me. I will say that this has to be one of the most asinine ideas floated in a long time. If you want to kill the banking system in your country, just announce that your going to seize the depositors assets if the bank fails.

I made my opinion known in yesterday’s post on Cyprus on what might happen if the Federal Government tried something like that here. The short version is “Tar, Feathers, Rope, Tree, Politician. Some assembly required.” My guess is, this will go into effect in New Zealand, then the run on the banks will begin, followed by the collapse of the banking system and the collapse of the New Zealand government. You know, it just occurred to me that a large group of people known as the M?ori ((M?ori people)) are native to New Zealand. They were renowned for being tough warriors. They also ate their enemies. I have no doubt that the M?ori also use the banks in New Zealand. If this plan goes into effect and they lose their shirts, they might decide to revive that tradition with regards to the political class down there.

I hope this incredibly stupid idea does a quick death, otherwise the New Zealand economy is going into the dumpster, (What I believe is called a “Skip” in the old British Commonwealth), quickly followed by the political careers of the idiots who signed on to this.

Thatisall

~The Angry Webmaster~