Wednesday, April 08, 2009
Australia's banks think they are so clever...
Richard Farmer in Crikey:
"Their time will come. Banks might think it is very clever to protect their profit margins by not passing on the cut in official interest rates but their time will come. Treasury officials and politicians have long memories and when circumstances change there will be a day of reckoning.
When the immediate international financial crisis changes the government will get around to changing the very nature of banking back to that old fashioned concept of taking people's savings and lending them to approved borrowers. Banking will return to being one of the world's most straightforward and boring occupations. New regulations will ensure that profit margins return to what used to be norm 30 or 40 years ago.
So those bankers today pocketing all or most of the latest 0.25% rate cut should enjoy it while they can."
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7 comments:
Any commentary on this one, Peter?
Yes they will! but not this time. The next time the RBA cut all banks will follow suit.
Horses for ...
The comment system here sucks
I must be missing something. If the Govt. is so keen for the banks to keep their rates really low, whyc did they charge them 0.70% to 1.50% for the guarantee? There's no doubt that this is a fair price for what's offered, but how can they expect banks to do anything but restore their margins where they can?
The rest of Farmer's rant is a bit on the childish side isn't it?
I know that it will never happen, but let us put "nationalization of the banks" as an agenda item in the public domain for discussion and debate. Maybe, just maybe, those in the banking boardroom will take note of their social obligations to the taxpayers underwriting their banking guarantee.
Once again, government is trying to bully banks into cutting shareholder returns for the benefit of home mortgage-holders. There are probably far more Australians holding shares in the banks directly or indirectly via superannuation funds, than there are mortgage-holders.
Farmer's ridiculous comment about bankers "pocketing" banks' profits is idiotic. What does he think publicly listed companies do with their profits? For widely discussed reasons, Macquarie Bank is something of an outlier in this respect, but it is not Macquarie that is being criticised in this context.
It's time someone spoke up for shareholders.
Perhaps I'm naive, but if you don't like the banks, take your business somewhere else. I haven't been a customer of one of the major banks for 20 years, and I don't seem to be suffering for it (apart from my endearing naivety).
Also, MkeM has a point. Less than half of households (I think) have a mortgage. The rest are net savers, and would prefer that the borrowers pay more interest to them via savings account and dividends.
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