Posts Tagged ‘banks’

I first heard about a cashless society back in 1980 when I started work for the Commonwealth Bank. Our manager returned from a conference, informing us that the wheels had started turning to make Australia a cash-free society in as little as ten years. Thirty-seven years later, and long time after the end of my banking career, it seems we are finally getting very close to that point of cash becoming a thing of the past. But so far, I am not seeing anyone talk too much about the very real negative that can come with this unless a government finally steps up to the plate for real for the first time. (more…)

The Thieves Gather

Posted: November 12, 2010 in Uncategorized
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First up, a correction.

In my wrath the other day, I incorrectly stated that the Commonwealth Bank had raised its base variable interest rate by 0.45% more than the recent Reserve Bank increase. In point of fact, the CBA’s total increase was 0.45%. But that is still a long way over the actual RBA increase.

All of the Big Four Thieves have now increased their base rates considerably more than the recent RBA increase. They continue to argue that this is a result of the cost of raising funds to lend out.

Give me a damn break. The F.B.T. are all making literally multi-billion dollar profits. They are purely and simply profit-gouging.

Blubberguts Joe Hockey, Shadow Treasurer, is naturally blaming the Gillard government for this, claiming it to be proof that they are useless, pathetic etc etc. OK Joe – just exactly what do you expect them to do? The Gillard goverment is operating under the same conditions that your lot did. So you would not have been any more successful than Gillard and co. And don’t forget that in your time as a junior finance minister, you were no more successful in pulling banks into order despite your public ‘putting them on notice’.

It is interesting to note that of comparable economies, Germany is the only one that similarly allows banks to have variable interest contracts ie charge what they want, when they want. The US, Japan, Korea, Canada, Spain, France and Holland – those countries do not allow banks to engage in this variable rate profit gouging. The Brits only allow it to happen in certain circumstances.

The reality is that both main political flavours have failed the Australian society at large by creating this monster and refusing to do anything to pull it back into line.

With the mining industry making massive profits as a result of high commodity prices, the Labour government wanted to introduce a super-profits tax on the miners. How about penalising the banks for their making excessive profits that are being taken straight out of the pockets of ordinary Australian consumers, not taken from foreign multinationals who are purchasing minerals etc. Of course this would need to be done with care to avoid them simply passing that straight on to consumers.

How about a massive fine per basis point above rate increases that the banks institute? Make it non-tax deductible. And give the ACCC or another authority the power to monitor and implement further retrospective major fines for any increases in charges beyond reasonable CPI-related increases in fees. Then another whacking great fine for every basis point that banks fail to pass on when prime rates are reduced by the RBA.

These thieving bastards MUST be brought into line. This profit-gouging CANNOT be allowed to continue.

I reiterate a statement I have made before: the objective of de-regulating the banking industry was not intended as a free ride for profit gouging.

C’mon Ms Gillard – give us something positive in response to this unconscionable behaviour. And you too, Blubberguts Hockey – quit grandstanding and offer up some positive suggestions.

And that’s my rant.

I HATE agreeing with Joe Hockey

Posted: November 4, 2010 in Uncategorized
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If there is one thing that I really, REALLY, hate, is being forced to find myself on the same side of an argument as the likes of Joe Hockey. But, like Hockey, I find the behaviour of the major Australian banks simply unconscionable. However it should also be remembered that back when Hockey was a junior finance spokesman, he publicly put the banks ‘on notice’. The reality of course is that they didn’t take any notice of him then and shall be taken even less notice of him now.

It must be remembered that the major Australian banks are making quite literally billions per year in profits. These profits come largely from the seemingly never-ending scale of fees being introduced. The basic operations are traditionally funded by the difference between interest received and interest paid to depositors. But for the last couple of years the banks claim that the cost of raising funds is so high now that they cannot afford to pass on the full extent of any cuts interest rates by the Reserve Bank of Australia. Yet, just as the oil companies play silly buggers with petrol prices at the pump, the banks are equally as quick to pass on the entirety of any increase in interest rates. Until now that is. Now that the Commonwealth Bank of Australia has passed increased rates by more than the latest rate increase by the RBA.

The bottom line is that the banks are allowed to get away with such behaviour for several reasons. Deregulation of the banking industry years ago, freed the banks from the last of such regulation that could have controlled such behaviour. The Commonwealth Bank used to be a publicly-owned asset (note – contrary to public perception, CBA staff were not public servants as they were not paid from the public purse). However following the privatisation of the CBA, like all the other banks, the CBA has to look after the interests of and respond to shareholders. Thus the minor curbing effect the CBA used to have on the market is now gone. Finally, government has absolutely no power to force the banks into line.

Sure, there is plenty of rhetoric, but the Coalition proved unable to stop the banks (Malcolm Turnbull’s boast of 2008 that the banks were scared of them has been proven the load of shite that anyone with half a brain knew it to be). The current Labour government seems unable to do so either.

It must not be forgotten that the recent Global Financial Crisis was caused by a poorly regulated banking sector. That Australia came through the GFC in pretty good shape was no thanks to the Australian banking sector. As the banks have now well and truely shown themselves to be the school ground bullies we all suspected they were, the time has come to really draw a line in the sand. While other sectors were being forced into greater regulation of their activities, the banks were given less.

What is needed now is a re-introduction of a degree of regulation. Please note that I am not advocating governmental control of interest rates that was the logical extenstion of Hockey’s recent public announcements. However legislating that banks are not allowed to exceed the prime rates as determined by the RBA is not an unreasonable thing. Legislation forcing them to pass on all of any rate reductions in prime is similarly reasonable.

Clearly the banks are not prepared to act in a socially and economically acceptable manner, therefore the school principal needs to step in.

As I said, I really hate being on the same side of an issue as Joe Hockey, but in this instance his basic principle was right on the money.

And that’s my rant.

Bastard Banks – again

Posted: April 6, 2010 in Uncategorized
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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.