Murray must address the moral hazard in housing

The Financial System Inquiry interim report rightly identifies the risk in Australian banks’ fixation with high-leverage mortgages, but it must go further and address the source of the problem.

The interim report from the Abbott government’s Financial System Inquiry dropped yesterday and appears to have been fairly well received. It went some way to acknowledging our banking system’s obsession with mortgages but remained fairly tight-lipped on the taxpayer guarantee that distorts asset allocation and allows banks to avoid the full risk of their behaviour.

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