Bastard Banks – again

Posted: April 6, 2010 in Uncategorized
Tags: , , , , ,

In my experience, there are three particularly unprincipled industry groups in Australia: the banks, insurance companies and oil companies. Being an ex-banker who worked in the industry through the madness of the 1980s, I know who I think is the worst. I have previously blogged on the subject.

An ongoing matter for a couple of years now is the fact that when the Reserve Bank changes interest rates, there is no compulsion on any of the banks on what they may or may not pass on to the consumer. In fact we now have a standard practice in the banking industry. When the Reserve Bank lowers interest rates, the banks refuse to pass on all of this rate cut, protesting the cost of raising funds as the cause. But when the Reserve Bank increases rates, the banks all but fall over themselves in passing on 100% of that increase.

Now back in late 2008, when the banks passed on 80% of an interest rate reduction, after earlier generally expressing the view that they would only pass on less than that, we were subjected to then Leader of the Opposition, Chief Turning Bull (Malcolm Turnball), claiming the credit. His justification? He claimed the Opposition drew a ‘line in the sand’ which somehow forced the Banks into line. Does that mean they have to also carry the can for when the banks pass 100% of a rate increase after shortchanging their customers on rate reductions?

Ironically, dear Ex-Chief Turning Bull has just announced he will be standing down from politics at the end of his current term. Oh how the mighty have fallen. After failing to talk the former Labour government into handing him a seat, he suddenly became a true believer in the Liberal Party (for my friends outside of Australia, replace ‘liberal’ with ‘conservative’) cause. And now as the banks continue their bastard practices, Turning Bull is cowering away, his tail well between his legs.

A reality check – despite the arrogance of Turning Bull (and his then mate, Blubberguts Joe Hockey, although TB is still walking around with Fatboy’s knives in his back), the banks are not in fear of the Liberal-National coalition. Or the government for that matter. They are in fact a law unto themselves.

Enough is enough. Deregulation of the financial sector has plenty of things going for it. But this was never intended to be a free pass for the banks to blatantly engage in price gouging.

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