The One That Got Away - Still In Search Of A Safe Financial System

Sam Ferraro

Global Founders Funds Management

The One That Got Away - Still In Search Of A Safe Financial System. The test of the Murray report's success will be its ability to contribute to the healing process since the financial crisis and help restore sorely needed trust in the financial system. Taxpayers remain justifiably cynical about remaining on the hook for excessive risk taking by banks, but that bankers continue to enjoy the spoils of the upside, in a classic game of 'heads I win, tails you lose.' The recommendation that Australia's banks use more loss absorbing capital to fund their loans is a step in the right direction, but the Murray report does not go far enough, and has missed a golden opportunity to create a genuinely resilient financial system. The key risk is that the next crisis of confidence will expose that the Australian banking system remains under-capitalised; a decline of less than 15% in house prices for instance, will be enough to wipe out the sector's common equity buffer. See the video log below. (VIEW LINK)


Sam Ferraro
Senior Portfolio Manager
Global Founders Funds Management

Managing Director of Global Founders Funds Management, Sam has over 20 years experience in financial markets, with Merrill Lynch, JBWere and Goldman Sachs.

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