The RBA appears to be running interference against interests in favour of a Budget guarantee for securitisers.
From a speech today by deputy governor Guy Debelle:
In thinking about the AOFM support for the RMBS market, I believe the AOFM program has a number of advantages relative to alternative means of support: it can be easily tailored to help specific types of institutions; it can be phased out easily; the likelihood that the Government loses money on its investment is very small; and there is no ongoing contingent liability to the Government from providing the support. If instead a government guarantee of RMBS were provided, it would be difficult to phase out, creating a commitment that could generate a large contingent liability for the Government.
As well, the entire tenor of Debelle's speech was aimed at reassuring investors that Australian securitisation doesn't need extra support.
Last Friday we had Glenn Stevens tell us that:
In many areas it is probably the case that more competition is always better for consumers, but in banking more competition is good to apoint but beyond a point more competition is not good, because the bankers can be led to do things that ultimately cause a lot of subsequent damage. I think we have to understand that. That is not to say that the current amount of competition we see in any particular market is necessarily enough, but there is a point beyond which extreme competition in lending money leads to problems.
Whilst this blogger is far less sanguine about the stability of market-mediated credit than either of these statements, it is clear that the RBA is pretty uncomfortable with the idea that we return to the wild days of non-bank credit cowboys, especially, it would appear, wielding the badge of the sovereign.
That anxiety is well-founded and should be congratulated.