Australian banks - safe?

CRC

I would if there was no so much fear and volatility in the markets.
I am concentrating on holding my IP's atm.

I have lost faith in the Share markets because they are closely linked to the US financial system which is in trouble.

Things should get better soon but who knows?
We are in unchartered waters atm, none knows what will happen next.

Cheers

Hi BV,

Yes, it's all based on greed and fear. Recently, alot more fear, last few years was greed, before that fear, before that greed...etc.

It was interesting to note that our market only fell 4.5% by the end of the day. Though saying that the day before the Aussie market dropped about 2% so it was only really playing catch up with the US overnight.

I'm guessing that tonight the US will go up...Time will tell...

CNNMoney.com Market Report - Sep. 29, 2008

This link some of the Dow's biggest tumbles and last night wasn't one of them for the percentage drops!

That's a little scary!

Cheers,

Dan

What happens if you owe money to the bank it goes belly up?
Do administrators chase you up? Can they force you to sale the assets eg.. IP ?
Do you still owe full amount to administrators?

It depends on what happens to the bank.
If they are going to close they will probably sell the assets they have control of, i.e 1 or more of your IP's.





They could terminate the loan and sell your property.





If the property sells for less than the mortgage the bank or their insurer
would be chasing you up for the difference.

CRC

You are no much safer as the rest of us and I will explain why.

If for example a bank went under or people became fearful, there would be a run on deposits. This is what happened to banks overseas, the banks couldn’t supply enough money to meet the withdrawals.

It gets worse though, because if one of the banks fails, then all the other banks suffer as well because of the flow on effect.

For example, let's say you withdraw $100K from your ANZ savings account and they give you a cheque which you then deposit into your CBA account,
At that point ANZ owes CBA $100K. If ANZ is unable to settle that debt,
then CBA has a problem.

Cheers

THis article here says that depositors are, under current laws, covered for up to $20K worth of bank deposits in event of bank failure:

Rudd open to better bank deposit protection and super reform | The Australian

Wonder if that entails $20K in each bank, or $20K in total?

don't know but it doesn't matter because as it's stated in the article
Depositors in authorised deposit taking institutions already receive preference in any liquidation, which means they will almost certainly recover all of their funds eventually.

Doesn't help much if you can't stay liquid in the meantime

disco that is not law yet at the moment deposits are not protected