HSBC Chairman Sandy Flockhart’s recently called for Asian governments to roll back bank deposit insurance. That is like asking for repeal of FDIC insurance in the United States. Recent panic in September and October of 2008 would have been much worse if the were no FDIC insurance guarantees.
Mr. Flockhart told the New York Times Friday that bank deposit insurance shores up weak banks and imposes costs on taxpayers. Perhaps he should calculate the cost of bailouts in the U.S. and U.K., but it must be calculated soon since jobs are disappearing. If the total cost is based on taxpayers Flockhart must realize that taxpayers are disappearing like failed banks.
In particular, Mr. Flockhart encouraged the Hong Kong Monetary Authority to consider rolling back the bank deposit insurance it introduced in October. Flockhart’s comments suggest is that the key to a stronger financial sector isn’t more protection, but healthy competition. Don’t forget a good case of blind regulators and poor fiscal policy, combined with greed and lack of conscience.
It is pathetic to think that HSBC is above the fray when Decision One, HFC, and Beneficial - all of which belong or belonged to HSBC - continued the same subprime and predatory thinking found at Household International.
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