The news media report that Banks are currently gunshy on lending to farmers. Other considerations aside, who can possibly blame them after the recent Court of Appeal decision regarding some Taranaki dairy farmers and interest rates swaps? The case involved the current media whipping boy, the ANZ, who sold interest rate swaps to a group of Taranaki farmers a decade back.
The Newsroom report described “swaps” in emotive language as “a financial derivative “product” (it’s not a product as so commonly financial accounts misrepresent, but simply a contractual arrangement) so complicated that most of the bank managers selling it didn’t understand what could happen if things go wrong”. What nonsense. A 10 years old could understand it.