The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Saturday, February 25, 2012

The Australian: RBA confirms taxpayer subsidy of bank deposits worth "hundreds of millions"

Great article from Adam Creighton in The Australian today (as an aide: if you take, say, 5 basis points, and you multiply by $1 trillion, you get $500 million per annum):

AUSTRALIAN banks could be benefiting from free insurance from Australian taxpayers worth hundreds of millions, Reserve Bank governor Glenn Stevens suggested yesterday.

Under questioning from Nationals MP Scott Buchholz, the governor said the Reserve Bank had not done a formal calculation of the fee banks should pay for the Financial Claims Scheme, which provides free insurance for bank deposits worth up to $250,000.

But he suggested the fee would be roughly equal to a small fraction of one percentage point of the insured deposits' value, which implies a premium of at least $200 million a year.

Christopher Joye, a financial economist at YBR Funds Management, said "the governor of the RBA has provided an estimate of one explicit taxpayer subsidy to the Australian banking system; it is now incumbent on the government to tell taxpayers what the other implicit ones are worth".