If I gave you $10   to look after   or   if you like, hold in trust, would I expect you to use it to pay your debts?

If you could not pay your debts would I expect the Government to pay them for you   with my tax money?

So why are banks  any different?

There was a time when the banks were government owned and the government   backed the deposits  ,

In 1992 our government bailed out the BNZ to the tune of 380 million using public money to prevent the bank from collapsing.

In 2008 the US government bailed out their banks with $700 billion US . for the Americans  it meant  that the  “ free flowing credit and “market discipline is the best form of regulation” era is over” as quoted by Brian Gaynor

This collapse  is reported in an excellent  movie   called the  INSIDE JOB .  It is one which everyone should watch.

It is a fascinating  and  scary  Documentary  which  raises the question, how much more is going on out there that we are not being told about?

The movie starts with  the 2008–2010 Icelandic financial crisis.

As the movie shows this debt occurred because banks were lending sums greatly in excess of their actual investments and governments were persuaded by lobby groups not to legislate against this.

There are three factors   which have heightened the vulnerability of the banking and corporate sectors .

1.       Credit boom -through which we saw lending  like never before and   the values of  our houses escalate  disproportionately to income

2.       Insufficiently regulated financial markets which saw the collapse of many finance companies, particularly those implicated in fraud.

3.       Corporations  and banks with large domestic and external debt.

Privatisation and the Global capital markets,  pushed poorly regulated domestic financial systems  while  those who should have protected the public   were  diverted  from this by lobbyists who had their noses firmly in the trough.

Greed was the driver and   due diligence   was absent, those running round in ties and suits   pretended to know it all when really like the rest of us they were just guessing. The only difference they were paid high wages   the rest of us stood to lose.

It may be that the Finance Minister saw the movie too  because on 11 march  he announced a consultation paper on the pre-positioning requirements that banks will be expected to comply with to fully implement the Open Bank Resolution (OBR) policy.

“Open Bank Resolution is a long-standing policy option aimed at resolving a bank failure quickly, in such a way that the bank can be kept open for business, thus minimising stresses on the overall banking and payments system. “

The Structure of the Reserve Bank of New Zealand’s Creditor Recapitalization (BCR) Project Process  is

• Imposition of statutory management and closure of the bank
• Imposition of the haircut on transactions accounts and term deposits
• The failed bank reopens for core transactions business
• Imposition of the haircut and other liabilities
• Decisions on future operations and restructuring path

The  Reserve Bank invites submissions on this Consultation Paper by 30 June 2011

I t would appear that the public does not get an  input , I would  suggest that   each of us has to do their own due diligence  as to where you put your money   make the decision soon or there will not be one to make.

To do your home work  you may need to know who owns our banks  we  have done the research it is presented in this document   banks well worth a look

Just as the security commission has  sent out a warning about two companies   and I put my  post on the blog, I receive a letter in my  mail from NZ INVESTMENT SECURITIES  which is identical in format to the energy securities  offer.

I note  that on the register of  Limited partnerships , which is not searchable by  partners name , that the documents filed for NZ INVESTMENT SECURITIES are actually those for NZ CREDIT SECURITIES

Stand by for more  undervalued offers  from both these companies

2538168 – NZ CREDIT SECURITIES LP  registered  13 July 2010

2538169 – NZ INVESTMENT SECURITIES LP   registered  13 July 2010

2538188   CARRINGTON SECURITIES LP registered  13-JUL-2010

2543023 ENERGY SECURITIES LP registered  17-DEC-2010

2543060 CARLYLE SECURITIES LP registered 17-DEC-2010

and possibly more   be careful out there  its a rip off .

What to do if you get and offer

Do not sign anything    take a plain piece of paper  or a bit of advertising which does not have your name on it  and insert it in the pre paid envelope    seal it and post it.

This will send a strong message  both financial and waste of his resources   we have to do as much as we can to make this practice uneconomical.