Bailout cost not as bad as it looks, Key says

The total cost to taxpayers of bailing out collapsed finance companies isn't likely to be more than about $400 million, Prime Minister John Key says.
The Government last week paid out $1.6 billion to South Canterbury Finance's (SCF) 35,000 depositors after the company went into receivership, which raised questions about the extent of taxpayer liability.
The Retail Deposit Guarantee Scheme, which covered the depositors, had about $900 million in it for all the banks and companies signed up to it.
The Government expects to recover about $1.1 billion from SCF's assets when they are sold or wound up, and Mr Key said today there was also about $500m coming in through the fees that were charged to banks for being in the scheme and in the parallel Wholesale Deposit Guarantee Scheme.
``This leaves us with a net expected cost to the taxpayer of around about $300m to $400m in total,'' he said at his post-cabinet press conference.
``Given the acute risks our financial and banking system faced at the height of the global financial crisis in late 2008, the Government is satisfied it has done the right thing.
``The alternative to not having a guarantee could well have led to a collapse in confidence in the New Zealand banking and financial systems, and if that had happened the bill for taxpayers without doubt would have been significantly higher.''
The guarantee schemes were introduced by the previous government, with National's support, just before the 2008 general election.
Mr Key said today it had been ``plain downright dumb'' to charge the big borrowers and lenders like the banks but not the smaller ones like finance companies which came in for free.
The current Retail Deposit Guarantee Scheme is being replaced by a new one next month which will have much tighter criteria for belonging to it.