I'm not sure it's ever happened? But why did the government bring in the law this year if they thought it wasn't a possibility that a bank could fail and they'd rather have the creditors (us!) bail them out?
Maybe not the 'big four', but there's the 1990 example of Pyramid Building Society taking 49% of deposits. Depositors received 51 cents per dollar which took 15 years to be returned (final cheques sent in 2005). Look at how the government guarantee worked in this case.
A licensed Australian business that provided banking services, including taking deposits from the public. It's not much different to what 'big four' banks offer.
That $250k guarantee is paid for by the banks in licences fees etc $250k deposit guarantee isn’t free for banks. A bail in I would have thought to be AFTER the bankruptcy becuase the CEO of XYZ bank is cousins of Prime Miniter, the Government changes the rules to guarantee savers, bonds and debt
Was the guarantee in place back then? If so did it cover that building society? The current $250k scheme started in 2012. Here is a list of current bank covered: https://www.guaranteescheme.gov.au/rules/pdf/schedule-1.pdf
The state government was reportedly telling people that the Pyramid Building Society was "healthy", and not to overreact. Taxpayers ended up footing the bill. https://en.wikipedia.org/wiki/Pyramid_Building_Society
Do you think the government has the capacity to pay depositors under this scheme? No, they'll raise taxes (or 'levies') if it ever needs to be claimed on. Just like they did with Pyramid Building Society and the 3c per litre fuel levy.
That’s the point though... the 250k gauantee is paid for by the banks. The fact the government decides to waste it by giving it to greedy farmers and idiots who build homes in flood zone without insurance etc, it’s not banks fault.
Apartment glut in Liverpool (start at 7:00) 19 apartments for sale in the building, no one even inspecting after price drops, 200+ days on the market: https://www.domain.com.au/sale/?excludeunderoffer=1&ssubs=1&street=420+macquarie+st+liverpool
Only a disaster if one needs to sell urgently now or in the next three years. If that property was reduced to $470k (now) and the strata search didn’t come up with any major repair issues, I’d buy it, looking forward ten years. In fact if the price was about 500k in three years time I’d consider buying it as investment with the second airport in the future.
Very true, it could get worse. But I’m pretty moderate in my outlook and trying to factor in only the known wave that is coming, higher interest and tightening of lending criteria, hence only about 4% percent decline per year over three years, that is without any big unknown crisis unfolding. My views on royal commission is that it will be a “over all” drag on property prices but not a real chance of creating crash just because of it. Still plenty of eager buyers willing to share losses with sellers at the moment. When I see 50 percent clearance over the weekend, I see lucky sellers not smart bargain hunters lol. My view until there is a recession that increases unemployment to 10% we won’t see a property crash.
It's an interesting view and I'm curious what it's based on? America's and Ireland's real estate crashes both preceded a labour market crisis. That is, the real estate crash happened before a recession. High unemployment was only recorded afterward. I think there are other examples too but can't be bothered searching.
What were their investment percentages compared to oz? If your only mortage is your home and you still have your job, you are fine regardless of what the market does. House prices could drop by 80% and it won't have any impact on your repayments. But if you have highly leveraged investment properties on interest only loans, it can be a different ball game.
I'm not sure. Well before a 80% drop, banks would demand more capital or they would call in the loan. As almost every Australian mortgage contract has a clause that allows this. It wouldn't matter whether it's a primary residence, or if it's an investment.