Let's see, the Treasury and the RBNZ advised the government on Friday 10th Oct 2008 that the scheme wasn't necessary nor desirable. Dr Cullen ignored their advice and announced the scheme on Sunday 12th Oct 2008.

Subsequently RBNZ reports showed that the big banks never suffered any loss of profitability, capital adequacy or liquidity. (That said, even if one or more of the big banks had have faltered or failed, it could have been restructured without calling on taxpayer support -- the creditors would take a haircut and the bank would re-open within days).

The Scheme was introduced by Labour, but with the support of National. No one in Parliament objected. When it came to vote on the scheme and its extension, all MPs voted for it.

Well, now you have the pay-out side of the scheme, and many of the voters aren't too happy about funding the big pay out for a rotten company. But did you hear any MPs complaining about it?

The moral of the story is that the MPs and ministers of the Crown have failed to have any backbone or the balls to see a few more weak financial institutions closed or restructured at their creditors expense and re-opened. They also show the perils of giving the Minister of Finance the power to grant guarantees without legislation, and the ability of the parliment to pass legislation without deliberation or time for consideration and public submissions.

The way forward is to require the big banks to be able to effect a creditor recapitalisation within 1 business day, and to entrench a no guarantees and no deposit insurance policy. In this way any institutional distress or failure can be dealt with quickly -- no zombies allowed to live on while dead -- and the financial system can be made more sound and resilient, more clearly able to continue to operate with minimal disruption while dealing with institutional failures. It also means investors and depositors and banks and their managers have every reason to be prudent and avoid failure. Also that there is less need for intrusive government regulation of financial institutions.

None of what I'm saying is new, either: time to get on with what was the longstanding policy of NZ before this lapse.

Lets not fool ourselves Mr Hubbard didnt cost the taxpayers of New Zealand anything. The NZ parliament both National and Labour did.

Anytime Government enters the commercial arena there is always unintended consequences. The bond holders mentioned in TOMs letter have not only been protected by taxpayers for their principle sum but will receive a straight out gift from recovering the face value.

Commercial realities can be very cruel sometimes but that is the way it has to be. Bankruptcies and receivership wipe out bad decisions and wastful ventures. Unfortuneately Government does not have to face such discipline.

Dead right Anonymous though I see Forsyth Barr deny anything untoward

Ironic in the extreme that it was the implementation of the government guarantee that actually led SCF into the receivership situation(by generating so much money that it had to find a home for and whihc ended up in the bad loan book)

One of Bob Jones books put an economic theory that every government action achieves the opposite to what it intends. This goes perilously close to proving that.

Ironic that FB are now advertising in the press to attract investors who have received the windfall that they have helped orchestrate - is there only the ethics of greed in their organisation?

As far as the sale of SCF goes (ably assisted by our community minded group FB) the play will now be to one of only two parties still in the hunt apparently. This will be very interesting especially since we know that the top offer received previously was $300m - the bottom I think was $100m. No doubt an astute person like Mr Saville will be well south of $300m now he only has one competitor for the purchase and who will wear the balance? The tax payer of course who owes such a debt of gratitude to all the clever people who could not put a sale together even when (according to Mr Maier who is such a straight shooter after all) there were 5 parties bidding. Im sure nothing to do with self interest of the negotiators who would have been meticulous with seeing all bidders had a fair chance, not just their "friends".

Obviously it is far better to sell an asset in receivership than as a going concern as you have total control of the process through your receiver puppets and everyone will get the fees that have been pre-agreed and it is all kept within the happy circle of friends. And of course receivers are such experts at negotiating sales they seem to take such great care it may take months and their fees just keep on ticking up.

What a crock this all is - the question is how are they going to sell the sale to the tax payers that are footing a bigger bill than they need have? Probably by breaking it all up and fudging the whole sale process. Who knows maybe Mr Kerr will get his snout in the trough yet?