It was pitched as an “adrenalin shot into the economy” but the Morrison Government’s decision to trash responsible lending laws will inevitably result in a return to the bad old days of loose credit and a debt binge.
The underlying assumption is the banks will do the right thing and the regulators will be waiting in the wings if they’re not. Good luck with that.At the heart of the backflip, led by Treasurer Josh Frydenberg, is the ideology of caveat emptor or buyer beware. It is the belief that light tough regulation works best and that banks and non-banks will do the right thing, leaving the onus on customers to make sure that they do.
Little wonder bank shares opened higher on the ASX. Not only will the easing boost credit growth, it will reduce costs due to less details required on expenses and income. Since the royal commission was announced there has been a lot of talk about the responsible lending pendulum swinging too far and spooking the banks into adhering to the letter of the responsible lending laws.
Westpac tried to take Flanagan’s home after her daughter got into trouble but thanks to Legal Aid stepping in to help her, she managed to stave off what could have been devastating. Now the restrictions have been releaxed, more and more people desperate to pay their debts, will dig themselves into even deeper holes.
Source: Financial Digest (financialdigest.net)
adele_ferguson Yes, this proposal is madness. The whole premise is 2 get some kind of “growth” b4 the next fed election. Increases the risk of an Australian sub prime mortgage crisis, especially if there is a another wave of COVID. Hope AlboMP and ind senators stop it Auspol JoshFrydenberg
adele_ferguson JoshFrydenberg Really? You want to risk a sub prime mortgage crisis here?
adele_ferguson Joshy and his Trickle down economics
adele_ferguson tradies will not be paid and trade shops won't be paid and around it goes becauze we let zombie business continue.
adele_ferguson Well this is odd. After the GFC we legislated to make banks ‘unquestionably strong’ and responsible lending laws to protect us against another crisis. Now that we have a crisis we decide we need to dump both of these !
adele_ferguson That's some response to an economic crisis, boost your mates in the banking and gas industries and cut the measures that help families and individuals. This govt is ethically unsuited to the challenges we face.
adele_ferguson The construction stimulus package is literally confined to give incentives to people who can't really afford loans to get loans! Now this!! I smell a banking rat.
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