Joe Hockey and his “Hockeynomics” proposal calling for tighter banking regulation kicked off an almighty round of bash the banks, and now it seems everybody is joining in.
It didn’t exactly help when the Reserve Bank of Australia last week unexpectedly lifted the official rate rise to 4.75% and even had the nerve to announce their decision on the same day Australians were enjoying the races at the Melbourne Cup.
Fanning the fires, the country’s largest home lender the Commonwealth Bank then raised its variable standard mortgage rate by 45 basis points. This immediately prompted a tongue lashing from Treasurer Wayne Swan, who described the move as a “cynical cash grab” while the Coalition crowed from the sidelines about Swan’s alleged weakness and ineptitude.
Eight days after the RBA’s rate rise, the other three of Australia’s four major banks have resisted the urge to follow suit and are locked in a three-way stalemate – a showdown in which each party wants to reach for their pistol last.
Gillard has spoken about abolishing exit fees and Wayne Swan has promised some kind of action to be implemented in, well, some time soon.
As Mungo MacCallum wrote in yesterday’s Crikey, the issue of what to do with the banks presents some opportunities for Gillard to – in her own words – “move forward.”
the unexpected re-emergence of the banks as a major public issue provides a perfect opportunity to do so. Gillard and Wayne Swan lost the early initiative to the Opposition but there is ample opportunity to regain it. Their proposed legislation to lower exit fees should be seen as just a start…
Some commentators have stopped just shy of calling the banks a pack of ravenous blood-sucking mongrels while others have called for calm. Here’s a selection of today’s round of bash the banks:
Michael Stutchbury: Banking on populist reforms
What is urgently required is to slash the cap on the government’s deposit guarantee.
Greedy bank boss Gail Kelly last month flagged that Westpac would hike its mortgage rates by more than the Reserve Bank’s cash rate increases because the global financial crisis had made it more expensive to raise funds to lend.
The Daily Telegraph
Andrew Carswell: CBA boss Sir Ralph Norris admits extra rate rise will cause hurt
Commonwealth Bank CEO Ralph Norris has conceded his bank’s mammoth 0.45 per cent interest rate rise will cost some of his customers their homes, a reality he says causes him immense angst.
But in defence of his bank’s Melbourne Cup Day rise, Sir Ralph said it was better to see “a few” foreclosures than have an economy hamstrung by a low-profit banking system.
The Herald Sun
Susie O’Brien: Banks treat us like fools
Why do we hate banks? It’s because we have to use them, but they continue to treat us like fools.
Banks let us go over our credit limit and then charge us $30 for the privilege of being overdrawn. Banks charge us $50 because our account has gone into the red, even though it was their fees that ate up the balance.
Terry McCrann: Bank shopping beware
It looks so obvious. And easy. Abolish, reduce or limit so-called ‘exit fees’. What you pay to terminate your mortgage early. But usually payable, only very early, like in the first four years of a mortgage.
It might appear to get to the heart of the problem. You are unhappy with Bank A putting up its mortgage interest rate; you want to move to Bank B; but that exit charge might wipe out the benefit.
Malcolm Fraser: No benefit in bashing the banks
I believe the government should tread carefully. Joe Hockey’s idea for the future of the banks smacks of the stance of the Socialist Left in Victoria 50 years ago. This faction pursued policies that guaranteed the Labor Party would stay out of office until its policies were put aside.
Sydney Morning Herald
Stuart Washington: Big banks in game of bluff on rates
A stalemate of twisted motives enters its eighth day today as three of the big four banks steadfastly delay interest rate rises after last week’s move by the Reserve Bank.