Country Writer
"The $300k mortgage required a $30k reserve coverage (at 10%) and this then changes to $300k at 100%."
This is incorrect.
The capital number is be $12k on a $300k mortgage.
Residential mortgages held on a bank's balance sheet are "50% risk weighted". That means for every $100 lent for homes the bank has to hold $4 of capital (8% standard capital ratio x 50% risk weighting x the face value of the loan).
http://www.apra.gov.au/adi/Documents/cfdocs/Requirements-for-ADIs.zip
I am much less pessimistic than you
While you mount a compelling case for a slide into systemic chaos in the banking system, you are very selective in the evidence you choose, and you seem to have little insight on the role of the prudential regulators (whose capital standards you don't seem to understand).
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