Media Release

Wednesday 2 October 2013

Reserve Bank moves to protect banks

“The Reserve Bank’s new housing deposit policy that came into force yesterday requiring a minimum of 20 percent deposit on mortgages has nothing to do with trying to contain a housing bubble driven by Auckland property prices” said Chris Leitch, DSC Deputy Leader and Finance Spokesman.

“Just like other recent moves, it is purely to protect the overseas owned banks and will limit their exposure should the housing bubble burst.

“They can now claim it is not their fault they cannot lend on increasingly shaky looking mortgage levels, and so deflect criticism onto someone else.

“First home buyers in our major cities in particular, are likely never to be able to afford to get themselves into home ownership.

“This move backs up the Reserve Bank proposal to give individual banks the ability to remove sufficient money from the accounts of all depositors to prop themselves up in the event of a bank failure.

“Just like in Greece depositors would find their accounts raided by the very banks they put money into for safekeeping.

“And if that is not enough protection, the Reserve Bank is now signalling a possible rise in interest rates to give the banks even greater profits than the $3.5 billion they dragged out of the economy in profits last year.

“At the very time when an improvement in the economy is on the horizon, the Reserve Bank proposes to strangle the increased economic activity and increased employment opportunities by pulling more money out of New Zealander’s pockets and putting it into the pockets of the banks.

“Kiwis are paying the price of having their own central bank working hand in glove with the overseas owned banks against them”.

ENDS

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