Leadership: when many governments busy bailing out big business, Australian banks to give mortgage help to jobless

To keep Jobless from becoming Homeless in the midst of economic turmoil, millions need direct financial aid. Australia now takes action though its unemployment rate stood at 5.2% in February, while in comparison, unemployment rate in U.S., for example, rose to 8.5% in March and homelessness rates across the States is soaring...

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The Australian government announced Sunday that the country's biggest four banks will give people who have lost their job up to a year free of mortgage repayments. After returning from G20 meetings in London, Prime Minister Kevin Rudd told an employment conference in Melbourne the mortgage assistance plan would alleviate the "anxiety and fear" the jobless feel when faced with ongoing payments.

Australia's big-four banks, which dominate the home loan sector, include the Commonwealth Bank of Australia (CBA.AU); National Australia Bank (NAB.AU); Westpac Banking Corp. (WBC.AU) and the Australia and New Zealand Banking Group Ltd (ANZ.AU).

Banks will now work with borrowers suffering employment hardship to negotiate possible postponement of payments for up to 12 months, with interest payments to be capitalized back into the loan, Rudd said. Banks will also consider extending the period of the mortgage contract, thus reducing the size of individual loan payments under the contract. In the case of car loans, banks will consider interest-only repayments and fee waivers, Rudd said. "The government's purpose in its negotiations with the banks has been clear; To ask the banks to provide maximum flexibility for borrowers suffering temporary hardship through enforced unemployment for the 12-month period ahead," Rudd said.

Rudd also announced Sunday the creation of a A$650 million job fund aimed at employment, training and improving facilities in local communities. The increased assistance comes after both Treasurer Wayne Swan and Treasury Secretary Ken Henry warned last week the government's February forecast of a rise in unemployment to 7% by mid-2010 would be raised in the May 12 budget.

Australia's unemployment rate stood at 5.2% in February, up from 4.8% in January. March unemployment data will be released Thursday with economists expecting more bad news. Finance Minister Lindsay Tanner told the Nine Network the government can call on the banks for assistance in these areas provided that the strength of the banks in not undermined.

"We need strong robust banks. And the key thing that is keeping Australia's position in relatively good shape compared with many other countries is that our banking system is sound, many others aren't," Tanner said. Tanner added that there is a significant chance that expectations for unemployment "will worsen."

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Images courtesy of EPA and Financial Thoughts

Original Source: WSJ