Is Rudd right to rescue the banking sector?

at least the government doesn't actually own the aus banks (yet!)

Peoples Republic of Rudd

The banks here are well run and well regulated but they can't escape the fact that other countries are offering such guarantees - if we don't match these, we don't compete

Yest more help might be needed:

"Kevin Rudd has paraded Australia's four big banks as being among only 20 banks in the world with AA credit ratings, which helps them borrow on better terms than less well-regarded banks.

But the bank chief executives warned that their cost of raising funds may increase if other governments provide debt guarantees to other banks.

"If (British bank) Barclays want to raise money, and governments say we will guarantee it, that makes Barclays paper more attractive than ANZ paper," said NAB chief executive John Stewart.

"If that were more widespread, we might have to do the same thing here. People could say 'yes, you are the strongest banks but you don't have a guarantee, but the other banks which are weaker do have a guarantee'."

It's about as much as any gov can do without nationalising the whole financial system, but it won't entirely protect us from recession.