John Key's appetite for commercial risk seems to have evaporated since he became Prime Minister.
Four weeks have gone by since South Canterbury Finance was tipped into receivership.
But despite receiving two more proposals from Sydney-based investor Duncan Saville to acquire SCF as a "going concern", the Government appears to be proceeding down the more expensive break-up path.
Just one month ago, Key stressed the Government had acted "commercially" by quickly stumping up $1.8 billion to pay out South Canterbury's depositors, debenture holders, bond-holders as well as various preferred creditors like George Kerr's Torchlight Fund when SCF went into receivership.
Key's argument was that the Government had saved itself several months of interest payments on the $1.6 billion owed through the Government guarantee and more importantly had injected itself into the box seat so it could control the receivership.
But Key also hinted that SCF could be sold quite quickly as a "going concern" - with a party prepared to pay good money for its loans book and other assets.
It's understood that Saville's post-receivership deal would involve the Saville interests paying a nominal amount of about $1.3 billion to $1.4 billion for the SCF assets, but this would be mainly funded by a Government loan repayble over time with about a 10 per cent up-front payment.
The deal was strongly predicated on keeping SCF and its staff and customers as a going concern.
Confidential negotiations took place with Saville - but the Government still seems to be risk averse.
Even before it failed, SCF was not a total basket case.
It had a solvency issue and needed to be recapitalised. But it was still cash positive and had not defaulted. Despite the fraud allegations levelled at SCF founder Allan Hubbard, the overall business was seen to hold good value by the players who wanted to buy it as a going concern.
It had a good commercial footprint: its $900 million "good bank" of assets was sound, the $700 million "bad bank" could be run out, and, even though it might be difficult to attract retail depositors given the Hubbard cult had gone, the potential acquirer planned to turn to the wholesale markets and bond issuance to secure future funding lines.
Importantly; there was potentially still a viable business which could serve South Island - and other - businesses at a time when there is still plenty of complaints about the trading banks' reluctance to come to the party.
What is now clear is that the smart money had already worked out the receivership was in the wind when the Crown bought its own debenture in South Canterbury Finance a couple of weeks before the August 31 deadline the company faced to get a rescue package in place.
The upshot was some very well placed bets were made in the bond trading market.
But if the Key Government had taken a more commercial approach it may have been able to avoid stumping up $1.8 billion in the first place.
SCF chief executive Sandy Maier had already separated the business into the "good bank" which held the performing assets and the "bad bank" which held the toxic assets, and another wing to hold equity investments.
When he fronted journalists on August 30, Maier said he had been in negotiations with a preferred bidder (Saville) until the small hours.
The negotiation has since been portrayed as a failure: Saville offering too little; the Government not wanting to take on any more risk.
There were two other contenders in play in the week running up to August 30: Sheerwater Capital and a Southeast Asian fund linked to the SCF founder (Hubbard). Several variants were discussed.
Under Saville's initial, pre-receivership proposal, the Government guarantee would have stayed in place.
But the Government would effectively contribute $300 million to $400 million in additional capital by buying the "bad bank" for $700 million from the acquirer and selling it back at about $300 million. The new shareholder would have bought the existing shares for $1 and put in a further $150 million.
Finance Minister Bill English has said he will be "a close adviser" to the receiver. Key maintains that without making itself the sole creditor to SCF, the Government "would be in the position of being the 800-pound gorilla who would have to take marching orders from a mouse".
The Government also argues it wants to minimise damage to the wider economy by not driving down the value of dairy farms and other assets through a fire sale process.
Frankly, the best way to achieve that outcome is to ensure SCF gets back into business.
One question which still intrigues: did the Government tip Allan Hubbard into statutory management to get him out of the way while it effectively marched the company towards receivership?
Until June 20, any proposed investor wanting to do a deal to recapitalise South Canterbury Finance still had to talk to Hubbard, whose Southbury vehicle was the finance company's sole shareholder.
Hubbard was a willing player. He had already tipped in other assets like Helicopters NZ, a 79.7 per cent stake in Scales Corporation and 33 per cent stake in Dairy Holdings.
Hubbard was prepared for a credible buyer to come in, recapitalise the business and take the finance firm back to its knitting.
The additional capital could have been supplied through a mixture of convertible notes, bonds, warrants and options.
A basic 51/49 deal was discussed which would have seen the Hubbard interest wound down over time. Four players are said to have indicated strong interest.
But after June 20, any potential investor who wanted to form a partnership with Hubbard to recapitalise South Canterbury Finance would have had to first get the statutory manager's approval as SCF's founder-president had been slapped in a Government straitjacket.
The upshot was a number of potential investors who had looked to go into "partnership" with the SCF founder-president to recapitalise the finance company were scared off.
Let's just park for now the obvious mismanagement of other Hubbard entities such as Aorangi Securities and the Hubbard Finance Management Fund.
The Serious Fraud Office will announce in due course whether it will pursue criminal charges.
What we do know is that Maier had already cleaned up South Canterbury Finance and with a bit of imagination it could have been sold.
Meanwhile, taxpayers face a wait of up to four years to find out how much they will get back from their $1.8 billion bailout of the depositors.By Fran O'Sullivan Email Fran