Kevin Rudd is pushing bankers in two directions at the same time.
On the one hand by guaranteeing all loans to banks he is in effect handing them a license to take high risk gambles with no impact on their effective credit rating or their cost of borrowing. So long as the government stands guarantor on every loan to a bank then no matter how risky the banks investments the people lending money to banks (depositors and other banks) need not worry about getting their money out if things go pear shape. And of course chasing higher returns irrespective of risk means that the more bullish banks can pay better interest.
On the other hand Rudd is promising to punish bankers that take high risks.
Which will win, the carrot or the stick?