Reserve Bank governor Adrian Orr aimed another shot at the big four Australian-owned banks, warning that none of them were too big to fail.
“There’s always been a concept: too big to close,” Orr said.
“[But] Nothing’s too big to fail”.
Now that quote by itself is fine. He is saying that you shouldn’t assume the Government would intervene if a major bank was at risk of failing, just because it is “big”.
But then he goes on to say:
Orr also warned that if one of the big four banks were to close, it would bring the other three down with it.
This is what is bizarre. He is basically saying that the Government would let all four major banks fail and go under.
The reality is this would send so many hundreds of thousands of families into poverty that of course it would never be allowed.
You can imagine a situation where one solitary bank was allowed to fail, but not all four major banks.