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Senate establishes inquiry into bungled bank guarantee.

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- MEDIA RELEASE - SENATOR DAVID BUSHBY Liberal Senator for Tasmania Advancing Tasmania’s Interests…

DB090604 Monday, June 29 2009

Senate establishes inquiry into bungled bank guarantee Liberal Senator for Tasmania and Chair of the Coalition Economics Policy Committee, David Bushby, last week moved a reference to the Senate’s Economics References Committee to inquire into the current state of and the unexpected consequences of the Federal Labor Government's bank guarantees.

The inquiry will inquire into and report on the validity and effectiveness of the guarantees and the subsequent decisions to change or define them. It will examine the market distortions, estimated effect on interest rates and effects on competition in our financial sector.

"The Bank Deposit Guarantee and the wholesale funding guarantee were both rushed and poorly implemented. Questions over the market distortion caused by the guarantees have gone unanswered by Federal Labor," Senator Bushby said.

"It is vitally important that we also consider the broader economic and social consequences of these distortions.

"We must consider the size and nature of the contingent liability that these guarantees have created for Australian taxpayers.

"The inquiry will effectively examine whether the instability and uncertainty created by these guarantees and lack of detail on their duration has outweighed the uncertainty caused by the financial crisis, the very problem it was designed to mitigate.

"An inquiry into this policy initiative will finally be able to provide the Australian people with the answers they deserve.

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