This is a good correction for some of the popular errors such as this one that I have already addressed before from Stuart Nash MP (Labour, list):
Mr Dinsdale [KPMG] said the banks should not be taking part in the extended scheme.
"There is no benefit to it. It is a cost the customer doesn't need to bear. There is no risk for a customer.
"If I was a chief executive, I would be saying: `there is nothing wrong with my bank, I am very comfortable with our risk profile and our credit position, we don't need a retail guarantee and we don't believe it is in the customers' best interest'."
Bank customers were never concerned about profitability or the risk of the banks losing vast sums of money during the financial crisis, Mr Dinsdale said.
Nor was there ever a real risk of New Zealand bank customers sending their money to Australia, where deposits were being guaranteed.
Instead, the guarantee supported the failing finance company sector, Mr Dinsdale said.
The reason for that, as has been outlined, is that there was a belief that if the Australians had set up such a scheme and New Zealand had not, then there may be a run on funds from New Zealand banks across the Tasman, therefore necessitating the collapse of the New Zealand banking sector.I don't know why the NZ CEOs of the big four Australian owned banks signed up for the guarantee in the first place. If I was in their place, I would have pre-empted my competitors by announcing that my bank neither needed not wanted it, and that I challenge my competitors to confirm they don't need it either by not signing up either. This could have kept 90% of the NZ banking system out of the scheme, and shown the guarantee for what it was: a prop for risky finance companies that should have been allowed to die.