Share market monstered in minutes

About $35 billion was wiped off the Australian share market in the first 10 minutes of trading.

The Australian stock market plummeted more than 3% after National Australia Bank took an additional provision of $830 million on its exposure to the US credit crisis.

The bank's shares fell as much as 13% in early trading, and it is on track to record its worst day of trading in seven years.

Bell Potter senior adviser Stuart Smith said the US had led the local market lower.

"The US was down considerably and we really did follow their lead,'' Mr Smith said.

"Obviously the market didn't like NAB's provision but we should have known that was coming.''

NAB debt provisions cause shares to tumble

The National Australia Bank has made provisions for a possible loss of $830 million on debt-related investments because of the global credit crunch and the slump in the United States housing market.

That is on top of $181 million NAB has already set aside to cover risky investments.

NAB chief executive John Stewart says losses are likely because of a rapid increase in mortgage defaults.

"Unfortunately the behaviour of the housing market in the US leads us to believe that the worst case scenario may not be too far away from the most likely scenario," he said.

"Now we see our dividend being unaffected by today's announcement and our capital position remains strong."

The announcement of the provisions means NAB shares dived more than 12 per cent in early trade, as sentiment worsened in an already nervous market.

Even before NAB's announcement, Australian shares were in for a rocky ride after steep falls on Wall Street overnight.

The falls were sparked by figures showing US home sales have slumped to a 10-year low and Ford's record quarterly loss of $US9.1 billion.

By 12:00pm AEST, the Dow Jones Industrial Average had plunged 2.4 per cent.

Other banks followed NAB's lead, dragging the ASX 200 3.2 per cent lower to 4,978 and the All Ordinaries index down 150 points to 5,039.

The Australian dollar was worth 95.64 US cents.

'No warning' about Beechwood collapse

The New South Wales Government says it had no warning one of the state's largest building companies was about to collapse, despite receiving more than 100 complaints over three years.

Beechwood Homes went into voluntary administration earlier this week and receivers were sent in yesterday afternoon.

It is believed a slowdown in the housing market fuelled by rising interest rates was behind the collapse.

About 300 homeowners in Sydney, the Hunter Valley and the south coast are expected to be affected.

NSW Fair Trading Minister Linda Burney said yesterday she had not received any complaints about the company.

But today the Minister confirmed she told Parliament about the complaints on April 1.

"I was advised on Monday evening that the collapse had taken place," she said.

"Prior to that, there was no warning that there was a major problem. The complaints that we've received over three years were minor in nature and all of them were mediated."

Ms Burney says the complaints were mostly resolved by the Consumer, Trade and Tenant Tribunal (CTTT).

"The number of complaints over the last three years for the biggest home building company in New South Wales was 119," she said.

"Most of the complaints were minor and they were mediated through the CTTT."

The Government says anyone who had their home built by Beechwood will be covered by the Home Warranty Insurance Certificate.

Related:

One in five will lose homes: report
Up to one in five households under mortgage stress will lose their homes, according to new figures. The findings in the monthly Anatomy of Australian Mortgage Stress to be released on Thursday show that about 20 per cent of people who go "into the slippery slide" of borrowing never get out.

When pain persists, they arrive
ALLEN DIAZLI has seen homeowners come and go over the past 17 years in the mortgage belt of Sydney. He's one of the Sheriff's men in Bankstown, the officers responsible for carrying out repossession orders for banks and mortgage brokers. But Mr Diazli has never seen the belt tighten by so many notches in such a short time for so many people. Since January, he and his colleagues have been repossessing an average 15 homes a week, more than three times the number they were doing three years ago. "This is crazy," he says. "We don't need any statistics to know how bad mortgage stress is for people. We've got a whiteboard that we fill out and it's been chock-a-block for months."

Legendary Author Gore Vidal on the Bush Presidency, History and the “United States of Amnesia” With a career spanning more than six decades, Gore Vidal is one of America’s most respected writers and thinkers. He’s authored more than twenty novels and five plays. His latest book is Point to Point Navigation: A Memoir.