From AusHousingCrash via Twitter comes news that the Australian Treasury recommended that the Government formulate a policy that frees the Residential Mortgage-Backed Securities (RMBS) market from Government support.
According to the below Treasury Executive Minute, obtained via Freedom of Information, three-quarters of the $20 billion of Government support earmarked for the RMBS market remains, which is likely to be fully spent within the next year.
There remains around $5.4 billion within the AOFM program (including the $4 billion announced in the Government’s Competitive and Sustainable Banking Reforms). Depending on market circumstances, this is likely to be fully spent sometime in late 2012 or early 2013.
- Before this time, the Government should formulate policy objectives to help finalise the transition towards a RMBS market that is independent of Government support.
The news that the Treasury is seeking an RMBS market free of government support is music to my ears. Removing this type of government support as soon as possible is a good idea given the distortions and imbalances that accumulated under not dissimilar US and Canadian schemes.
www.twitter.com/Leithvo
Australian Treasury – Securitisation Market (Dec 2011)
