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Comment (AUSTRALIAN banks are different, right?
Our lenders, according to the well-worn spiel from Kevin Rudd and Wayne Swan, are strongly capitalised and well-regulated, with little exposure to toxic sub-prime assets. So far, moreover, they have been mere observers of the government-sponsored mergers, bailouts and general mayhem that has enveloped global markets.
And as Bank of America -- one of the remaining pillars of the US financial system -- struggled this week to bed down a $US10 billion stock offering, Commonwealth Bank managed to scoop up $2 billion from an institutional placement to buy Perth-based BankWest. The argument about the relative strength of our institutions does carry some weight.
However, the truth is that, in a global financial system where liquidity depends on inter-bank lending and increasingly fraught assessments of counterparty risk, the margin between comfort and chaos for any bank is disconcertingly thin. That is why no banking s...
