Seems to me that the banks are gouging their depositors, The rules of borrowing from investors are now on a level playing field.How come some finance companies are 3%to 4% more on investor returns than the greedy banks.The bank that most NZs would die for KIWI BANK is leading the depositor gouging charge.

If the guaranteed finance companies are receiving so much money, to whom are they lending it? One assumes that it is not for property development or other speculative purposes. Also why would borrowers now go to finance companies when the banks would be so much cheaper for loans? Could this spell trouble over the medium term? It may be that these finance will require the Government guarantee if they don't lend this money out wisely. By the way why don't we call the Government guarntee by it's proper name i.e. a taxpayer guarantee.

I shouldn't have had to explain that and it is obvious in the context of the current economic enviroment. I think you need to find a new website to post on.

so someone please fill me in here, is it just the deposit that is guaranteed, or the deposit and any promised ROI??? If it is just the deposit, then I wouldn't invest for a higher promised, but not necessarily achieved return. However if all was guaranteed, then I would borrow every cent I could get my hands on to invest... even if they promised 1375829% interest p/a. Someone please explain to the uninformed (probably the only one)

It can only be the initial capital investment.

Confirmed, the Crown guarantee covers deposit AND interest.

SEE BELOW FROM THE TREASURY SITE (Q&A SECTION - DEPOSIT GUARANTEE)

Q: Does the guarantee cover interest earned on deposits?
A: Yes, the guarantee covers the interest owed to creditors (subject to the $1 million cap).

However please also note from the treasury site:

"The Crown has the ability to withdraw the guarantee if the business is being deliberately operated in a way to undermine the intention of the guarantee".

Considerng the above, I would therefore invest only with sound finance companies, possibly with an official rating (such as MARAC).

Alex - repaying wholesale debt with retail debt is a sensible answer - the most sensible answer. It's not the answer you or Andrew want to hear, but it is a sensible one none the less. Making underhand comments about finance companies recklessly lending money they have taken under the government gaurantee is a pointless arguement.

Sam,

Yes, your first comment was a sensible answer.

The comment we were referring to was this:

"I shouldn't have had to explain that and it is obvious in the context of the current economic enviroment. I think you need to find a new website to post on."

Cheers

Alex

We at interest.co.nz

Jill.. i have to agree with you to some extent after being quoted a break fee of $35000 to quit a fixed mortgage (22mth remaining) to go floating, when if the mortgage amount re-lent to another customer at todays rates would be 2k loss to bank or 14k if fixed amount not re-lent to another party, and only we paid today's floating rates instead. But as they say and warn us, a bank will be the first to loan you an umbrella, and the first to ask for it back if it starts raining... it's just the game we play, risk and reward, but when you're underwriting your own lendings as tax payer and they write the rules it does become a bit of a joke. then again, without that, it would be a bit of an uncontrolled gamble for the banks. For both parties, does the person going into the casino genuinely think they will win every time, or just think it would be nice if they could.. The banks just play with a loaded deck...

Yes quite right Brent ,with bank cards 22%over drafts 13% plus personal loans 16% up Mortgages 20% equity and the banks get a taxpayer guarentee What the **** is going on?are we as bank customers living in A FOOLS PARADISE?SURE ARE ,WE ARE THE FOOLS.