Finance Minister Bill English has asked Treasury for a report on the government's deposit guarantee of financial institutions, with Prime Minister John Key saying in hindsight it was probably wrong for Mascot Finance to have been allowed into the guarantee. English said he thought the government's bill for the Mascot failure could be more than NZ$10 million, after the recovery of funds by receivers because of the size of the company's loan book. Both English and Key said Mascot should not have been in the guarantee scheme. "The guarantee has signed up one institution at a time, on the basis that they're institutions that would be viable. We wouldn't want to guarantee ones that obviously aren't," English told the Dominion Post.
"In this case Mascot have gone into receivership so we need to learn from this example how to make sure that we minimise the risks to the taxpayer that institutions that come along looking for the guarantee in the future may not be viable," English said. Mascot was put into receivership on Monday, seven weeks after receiving the Crown guarantee. It had stopped taking deposits a month before the guarantee scheme was announced in order to review its situation.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.