Reserve Bank negligent —M.P.

Press, 17 January 1986, Page 1

Reserve Bank negligent —M.P.

By OLIVER RIDDELL in Wellington A political scandal is brewing over the fate of the $lOO million Government stock tender to be refloated by the Reserve Bank. Carelessness and incompetence by the Reserve Bank has been alleged by Mr Winston Peters, the National member of Parliament for Tauranga. “The Government should admit- it had no idea of what was going on,” he said, calling for a thorough review of the Reserve Bank criteria for stock tenders. Mr Peters said it appeared that there had been no check of the resources or credibility of the firm involved and this showed that the Reserve Bank was dealing in a cavalier fashion with the nation’s finances.

Interest rates had risen 2 z per cent as a consequence and that would affect every mortgage in New Zealand, Mr Peters said. He asked why private borrowers should have to pay for Reserve Bank negligence.

“There has to be an inquiry, but instead the Associate Minister of Finance, Mr Prebble, is trying to pull the wool over the eyes of the public by throwing in an extra $lOO million on top of the next planned $3OO million stock tender,” he said. The firm being bailed out by the Government had been speculating in the nation’s future, but had been shown to be “a man of straw.” By refloating the $lOO million in the next stock tender, the Government was making the whole country pay for the Reserve Bank’s negligence, he said. If the firm was not able to meet its obligations in the event of a loss, then why was it allowed to tender at all, Mr Peters asked. Stock tenders, page 2