Wednesday, April 25, 2012

(VIDEO) Australia's BankWest and the harm it caused.

Australia's Four Corners (think Frontline) did a special on BankWest and the ramifications of their horrible underwriting.  BankWest was formerly owned by the Royal Bank of Scotland which provided the bank with cheap money (supposedly, I can't verify) and pushed them to make loans. This resulted in giving loans to people who really couldn't service their loans or were giving loans for doomed projects.  During the crisis BankWest was sold to the Commonwealth Bank of Australia which then had to review prior loans only to find out a mad hatter was underwriting.

John Hempton of Bronte Capital has posted about the Royal Bank of Scotland before and never had nice things to say about the way the bank. After watching this documentary, I wanted the people of BankWest and their parent company, Royal Bank of Scotland, tarred and feathered. How can you live with yourself with such abysmal underwriting? 

If anything, this is a good lesson of the damage lending institutions can make to themselves and to others. 

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