In the end, South Canterbury Finance was not, as some had predicted, too big to fail.

The Government, quite correctly, resisted the temptation to support the recapitalisation of the country's second-biggest finance company, consigning it to receivership.

But South Canterbury Finance was too big to die a normal commercial death.

Too many of its 35,000 investors would have been out of pocket and too much of the South Island economy would have shuddered.

That has triggered a response aimed, in the words of Finance Minister Bill English, at achieving "minimal disruption".

The Government has paid out $1.6 billion under its Retail Deposit Guarantee Scheme to cover investor losses.

It has also loaned the receiver $175 million to allow it to repay all of South Canterbury Finance's prior ranking debts.

This leaves the Government in control of the receivership, and negates the need for a fire sale of assets. Mr English said he was confident of recovering the bulk of the Government's outlay.

That may be extremely optimistic given the parlous state of much of South Canterbury Finance's loan book. The final net cost is likely to involve a sizeable slice of the $900 million provision set aside to cover the guarantee scheme.

There was, however, no point in keeping South Canterbury Finance afloat. Bad governance and loan practices have destroyed a once strong brand.

It has survived this long only because its inclusion in the guarantee scheme spurred an influx of investment. Collapse would have been inevitable when this expires at the end of next year.

South Canterbury Finance is the eighth finance company to benefit from the scheme, which was initiated during the dying days of the previous Government. The others pale in comparison, and doubts about its well-being explain the steady climb in Government provisioning.

Reasonable questions can be asked about whether finance companies should ever have been allowed to join banks in the scheme. The risks were always palpable, given that several had already collapsed. Either way, the taxpayer is now paying a heavy price.

More specifically, the Key Government needs to explain why it was so quick to give South Canterbury Finance its original guarantee or, most pertinently, an extension in April. At that time, it had not seen audited accounts.

Nor would the company provide detailed information about the state of its property loans. There was every reason for concern.

The guarantee was extended, however, and South Canterbury Finance used it to market an appeal for recapitalisation funds, and to advertise interest rates of up to 8 per cent on terms until the end of the scheme.

All this did was avert failure at that point. It seems that if the Government did not then know the full extent of the mismanagement at South Canterbury Finance, it was well aware of the fallout from a collapse.

The rescue of its investors now is particularly irritating to those who lost money in finance companies that missed out on the guarantee scheme. They have reason to feel unfairly treated.

In essence, they are the victims of bad timing and the relative unimportance to the wider economy of their investment choice. Ironically, some of these companies may have been in better shape than South Canterbury Finance. So severe is its plight that the Government is right to believe best value can be extracted from receivership.

Investors in other finance companies could have saved themselves much anguish if they had insisted on the same course. Their failure to do so has made the shake-out of the sector messier than it needed to be.

In the case of South Canterbury Finance, it is politicians who have made mistakes along the way. Only at the death is a sense of order apparent.