In an interview with Business Spectator today, the Treasurer, Wayne Swan, said this: 

SB: But there’s still no liquidity at all in those securitised debt markets.

WS: Well that’s not true actually.

SB: Well minimal…

WS: … I mean I agree with you that they’ve been very tight, but I think one large company got away with securitisation only last week. It was very expensive, but it’s an encouraging sign though.

SB: There are all sorts of people though putting their hands up asking you to help out by creating something like an Australian version of Fannie Mae [the US Federal National Mortgage Association]. Have you looked at that?

WS: We’re not going down that road.

SB: Why not?

WS: Because I don’t believe it’s the way to go. I’ve made a study of those bodies in the United States and they themselves have been beset with many difficulties over a period of time.

That is one of the key features of Chris Joye and my AussieMac proposal. While the fact that these organisations have existed in the US for decades, Australia needs its own solution. Indeed, one of the things we anticipate that it should be a government-owned entity. It is good to see that the government is now considering the details of how it manages the securitisation industry. With St George today increasing its interest rates again, the last thing the Government wants to find itself in, is with a Reserve Bank trying to get interest rates back down but banking competition (or the lack of it) standing in the way.

[Update: Business Spectator seem to have a different interpretation of what the Treasurer was saying. I guess time well tell on that one.]

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