Boom. After threatening to blow for months, South Canterbury Finance finally went this week with a ferocity that captured the attention of the whole country. Nothing focuses people like the news they are paying for something themselves.
Many New Zealanders didn't even know the taxpayer was funding something called the
Wholesale Deposit Guarantee scheme.
Others knew, but were surprised by the finer details of scheme - such as the fact we are covering the interest earned by those who deliberately piled in after the guarantee, knowing they could earn more than the bank rate with no risk. That has been described as a moral hazard of the scheme.
Business Herald readers will know the original deposit guarantee was forged at the height of the global financial crisis. There was no time for hand wringing and long-winded discussion.
Across the US and Europe the banks were falling like dominoes. There was real uncertainty about the safety of the Australasian system.
So the guarantee was always an imperfect beast. The extended guarantee has refined things but ironically, with South Canterbury gone, it is unlikely to be tested when it comes into play next month. South Canterbury was always the big liability, the finance company deemed too big too fail.
From last last year the writing was on the wall. South Canterbury was a goner without the guarantee and even with it, it was struggling. Its one chance was that corporate fix-it man Sandy Maier could restructure it into some kind of saleable entity.
He nearly got there. But the appalling quality of loans made by South Canterbury through 2008 and 2009 had tainted the good parts of the business.
Maier has opted not to reveal lending details of what he described as the "bad bank". But for months he has hinted that its contents weren't pretty.
Those assets are now under wraps with the receivers, although a dozen or so have been revealed this week. Upmarket hotels, Marlborough Vineyards, a Napier waterfront development, and on it goes.
South Canterbury had stretched its tentacles into a bizarre mix of property bubble investments. In the end despite its rural roots and down-home, homespun image, it was sunk by the same junk that took down its slicker big-city peers.
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