A number of economists, including the blogosphere’s own John Quiggin and Nicholas Gruen, today released a letter in Canberra calling for a new enquiry into the financial system. [See the hyperlinks for the text of the letter and commentary from Quiggin and Gruen at their respective blogs.] As Bernard Keane observes in Crikey [article reproduced with permission over the fold], there are much more pressing issues associated with finance than can be encompassed by a ‘debt truck’ (or, to be bipartisanly sceptical, a ‘saving jobs truck’). Among the suggestions for items that should be considered by such an enquiry is the establishment of a “People’s Bank” utilising the infrastructure of Australia Post. The economists’ worry is that there is decreasing competition in the banking and finance sphere, driven in part by the consolidation of market power attendant on the GFC and facilitated by some of the policy responses of the Rudd government.
No doubt, as with most of the measures taken to increase competition in the interests of consumers and citizens, the usual suspects will find some reason to decry “government interference” or whatever. Such are the contradictions of neo-liberalism. The ideological patter is all too often a screen for a sort of dirigisme that supports the interests of big business above all others. We’ll see – surely no one could object to these important matters being canvassed in an informed and wide-ranging enquiry?
Back the debt truck up — we need big ideas like the People’s Bank
by Bernard Keane
Back at the start of the year I suggested the economic crisis had taken us into a new world where the role of government had been transformed, and hoped that our best economists should start thinking about where we go from here.
Today several of our best economic thinkers from across the ideological spectrum did exactly that, with an open letter urging a comprehensive review of the Australian financial system ?—?and how it interacts with those across the globe.
The timing couldn’t have been better, coming the day after Malcolm Turnbull revived the debt truck from the early nineties and the ALP ?—?who had evidently been waiting for just such a moment from the Coalition ?—?replied with the clunkier “Supporting Jobs Truck”, which presumably hasn’t been donated by John Grant. While our politicians mess about with trucks, there are pressing issues to deal with.
There are a couple of key issues identified by the economists that have so far not received the attention they deserve. One is that the collapse of the residential mortgage-backed securities (RMBS) market ?—?in essence, non-major bank lenders ?—?has indirectly put pressure on business lending, and particularly higher-risk business lending, because the big banks have moved to fill the gaps left by the RMBS market. This goes, as the Prime Minister would say, to the vexed issue of whether bank capital costs really have increased, as they claim.
Another is that it is not merely global capital markets that are interconnected, it is government policy that is similarly interdependent. New policies already implemented, and being now developed in other countries will have significant impacts on the Australian financial system, but we don’t as yet have any comprehension of the nature of these impacts ?—?and no process for doing so.
Above all, they worry that it may have been good luck rather than, or in addition to, good management that meant the Australian financial system was relatively safe from the sort of disasters that beset the American and European systems. How will we fare next time?
The letter raises fourteen specific questions, each of them meaty issues. There is plenty to alarm the big banks, but the most disturbing will be a suggestion that consideration be given to a basic financial service based on existing Government infrastructure such as Australia Post.
In particular, the group wonder whether there is a role for a publicly-owned entity like Kiwibank in New Zealand, which operates from post offices and participating retailers, but offers both deposit-taking and lending, including business lending.
A more minimalist option would be the establishment of a deposit-taking entity that invested in the Future Fund. That would increase competition for deposit interest rates, whereas a full Kiwibank model would challenge the big banks across most of their activities. It would require significantly greater infrastructure and expertise than a simple deposit-taking entity, but not necessarily need to replicate the full branch-based structure of the major banks.
The proposal flies in the face of what was accepted wisdom before September last year; now, however, even in Australia government is deeply enmeshed in the financial system via the bank guarantee and its own efforts to prop up the RMBS market (not to mention the stillborn ABIP proposal).
It merits serious consideration because the long-term project ?—?pursued by both sides of politics ?—?to maintain competition in lending in Australia is failing. It depended on the availability of externally-sourced capital for the RMBS market, which was fine while the world financial system was spilling over with finance but ended the moment the crisis hit ?—?especially after the bank guarantee massively strengthened the hand of the major banks over what was left of the non-bank lending sector.
Now we are left with a true oligopoly, operating in a manner indistinguishable from a cartel and unable or unwilling to reduce business lending rates.
It’s hard to see what downsides there are for the Government in conducting the sort of inquiry urged in the letter. It has handled the triage stage of the financial crisis very well. Now is the time to take a step back and consider an overarching strategy. As the Prime Minister noted in his comments overnight in Germany, managing the recovery sustainably will be as challenging as managing the crisis itself.
How long until the Government is again confronted with one of the banks unilaterally raising interest rates, particularly for business lending? The problem of Australia’s banking oligopoly needs a long-term solution.
Crikey understands that one of the Wallis Inquiry members, Prof Ian Harper, also strongly supports the idea of a new inquiry.
As Christopher Joye told Crikey, “…the financial world has changed more in the last 13 years since Wallis than it has in the last 40 years… The key message of the letter is that it would be a massive mistake for the politicians and bureaucrats to persist with the self-congratulatory hubris. The fact is Australia was very lucky to skate through the crisis unscathed. Our system is good, but also has many glaring flaws.”
Something for the politicians to think about while they’re playing with trucks.
Mmmmm a Public Bank? Didn’t we have one of those? Well
it’ll never happenthat’s an interesting idea. And excellent for the future too. When Neo-Socialism clogs up the works and Neo-neoliberalism kicks in it’ll give the govt something to sell. I wonder what they think of this idea at Catallaxy...
(Cough. Chips. Dummy. Spit spit spit!)
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The problem of Australia’s banking oligopoly needs a long-term solution.
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Indeed. I think Graeme Bird has it. Y’see everyone walks around with a wheelbarrow full of platinum bars and…
Good idea!
People on low incomes pay hefty bank fees every time they transfer money in or out of the bank. In the good old days low paid workers were paid in cash, nowadays your Centrelink benefit is paid into a bank account and you pay $5 per month to run that account if your balance is less than $2000.
It does sound like reinventing the wheel because wasn’t the Commonwealth Bank set up for savings.
Perhaps the Post Office could use effective banking software like the stuff written in Australia to run ATMs rather than the American written Hogan system with 700 programs to run the functions of the banking chamber. The old building societies ran some efficient software. Oh, and don’t offshore the IT function to India and we won’t suffer the terrible internet banking lack of access that CommBank offered at end of year
Christopher Joye, one of the signatories, is very close to Turnbull. It wouldn’t surprise to see Malcolm support the idea of an inquiry along these lines. It would help him shake off his recent troubles; it would show him as an open minded man who is not captured by the big financial interests; it would position him as pro-competition and pro-consumer. It would be entirely in character for him to want to shake up the system, so such support would look genuine.
And besides which, it’s actually a good idea, and it’s not a bad thing for an opposition leader to embrace a good idea, especially one the government has reflexively dismissed.
It does sound like reinventing the wheel because wasn’t the Commonwealth Bank set up for savings.
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Yesterday I was working in one of the public art galleries in Melb. One of the security staff there, a very nice fella whose moved over from India, loves art and always has interesting things to say about current exhibitions, said something interesting: I spend my superannuation because the govt penalizes you for saving.
Perhaps the Post Office could use effective banking software like the stuff written in Australia to run ATMs
Australia Post is now ‘profit’ driven, ask what the fee is to make a credit card payment, or indeed any transaction, may be indirect, in some cases, but you will pay.
However,a ‘true’ peoples bank would be a wonderful thing.
I changed all my business, personal and daily operating accounts over to a large Credit Union and have never looked back ( from Which Bank).
According to a chappie from PriceWaterhouseCoopers, what we need is Islamic Banking! He confidently asserted, on ABC the other day, that the GFC would not have happened if the world had been using Islamic Banking. Why indeed, they might all be as economically prosperous as umm, say, umm, Pakistan or Iran who are paragons of Islamic practices?
So, anyway, this Islamic Banking was being seriously recommended for Australia, to avoid any sub-prime housing crisis here. The key reason is that they do not charge interest. How good is that folks? THEY DON’T CHARGE ANY INTEREST AT ALL. Apparently.
The system is, you tell the bank what house you want, the bank buys the house off the seller and then it draws up an agreement for you to pay it off in fixed installments, no interest. The minor …umm, fly in the ointment, is that they buy the house off the market at $x and then they sell it to you at $y which is greater by an amount of their choosing.
“So that means an effective lifetime interest calculated up front?”, asked the interviewer innocently.
“NO, NO, NO you never pay interest with Islamic Banking, because it is against the Koran” was the emphatic reply.
“So the Chinese in Malaysia who invest in Islamic Banks must think they are getting a good return?”
“Oh, yes, it gives a better return than normal banks, which is why it is so successful and why the Chinese invest in them”
“Sooo, if the bank makes more money, the people who take out loans with an Islamic Bank must be paying more than those with normal banking loans?”
“No, no, no, well… only sometimes get more…” Further waffle followed…
And of course, no chance of people defaulting on loan repayments with this system? The Basenji will be on your doorstep to explain why…
Well, I’m convinced. Anyone else???
No it wasn’t. It got into the savings bank business due to one of those unhappy accidents that make governments very wary about wanting to own a bank. The New South Wales Government Savings Bank, at one time the largest of its type in the Southern Hemisphere, collapsed in, I think, 1933. It suffered a run by depositors after NSW premier Jack Lang repudiated State debt owed to British banks.
The Commonwealth Bank acquired the wreckage, including the wonderful building at 48 Martin Place, which was formerly the head office of the GSB. This was the start of the Commonwealth Savings Bank. The only piece of wreckage that the Commonwealth did not want was the so-called Rural Department which made loans to farmers. This became the Rural Bank, later changed its name to State Bank of NSW, almost went broke in the property crash of 1991, was sold to Colonial and finally, in 2000, Commonwealth Bank bought Colonial.
Leaving aside the likes of Citicorp, BofA and the like that are supposedly “too big to fail”, 52 banks have failed in the US so far this year. Banking is not necessarily a business that politicians want to get mixed up in.
Having said that, Kiwibank in New Zealand seems to have got off to a good start. However the NZ Post Office has had many decades of experience in running a savings bank which ended, temporarily as it turns out, when the Post Office Savings Bank was sold to ANZ several years ago. Australian Post Office has no experience in the business at all, other than its branches and agencies acting as agents on a fee per transaction basis.
But the proposal is certainly worth discussing.
‘Basenji’ – I hear their bite is much worse than their bark!
Murph the surf, oops, I maligned the poor dogs by mistake.
Not Basenji, I meant Basiji.
It seems their bite is even worse.
I’ve been with my credit union for about 46 years.
1 or 2 minor complaints in that time, several major episodes where I was extremely grateful as they provided services, including loans, far better than I expected and definitely better than other places I investigated.
Better half has a lot of good things to say about Queensland Country Credit Union, where he has had an account for some decades.
Nice idea to have a fee free basic banking service for those on the pension or welfare payments. I can see a small downside in POs having to carry a fair bit more cash, which would make them (as they are set up at the moment) soft targets for holdups.
But I wouldnt like to see it offering full services (loans etc), much easier to offer just the fee free, no minimum balance account.
@6
er … yes? … sounds like a practical mode of home purchase financing. Good to see such emphatic support. Actually it sounds a lot like a fixed interest mortgage.
One other little point Ill make, which was put to me by an ex-bank manager when I winged about bank profits.
The margin of profit of the vast majority of their loans is actualy very small (fees are another question), its only the vast turnover of funds that generates the enormous headline grabbing profits. If a paper was to put in as its headline “ANZ makes a profit of 1.2% of its turnover for the year” its a little more downbeat than announcing a Billion or 2…
If a paper was to put in as its headline “ANZ makes a profit of 1.2% of its turnover for the year” its a little more downbeat than announcing a Billion or 2…’
If a paper would put in insidious fees now the common of the big four, “we only raise ‘administration’ charges to reflect the cost of the ‘market’, how about being open, Invest with us, “Wealth by Stealth”,and “Most of our ‘clients are “a bit lazy on details’ for the wise investor.
Makes me puke.
Remember this, if you are are depositor in a banking institute, you are an encumbrance, if you are a debtor to that institute , you are an asset, also, remember this, as I pointed out to this very lovely young person yesterday when I asked , ‘if I lend you some money, what rate of interest would you pay?’, ‘The reply was, me?, I said no, your Bank,it said, we don’t borrow money, we lend it. “you can’t lend us money”.. Oh, really?.
I’m still struggling to understand why an oligopoly exists when the universal perception is that (a) the Big Four treat their customers with contempt, in terms of both service and money, and (b) credit unions are fantastic all round. I am not sure I buy all that blather about it being Hard To Change and Banks are Safer and so forth. Has anyone done any actual research on why customers stay with companies that so obviously don’t have their best interests at heart?
It is rather amusing to see an assertion that neo-liberalism is anti-competition. So much for Haeyk’s emphasis on the price mechanism and the need for competition as a pre-condition. Oh boy.
Elise,
If you want to read about Islamic banking you could do worse than to start here.
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Mark,
I would agree that the process has been facilitated by some of the policy responses of the Rudd government. It could barely have more favoured the big 4 more if they had simply handed policy formation over to them.
I would be more than willing to support a review if I thought that they would genuinely be examining the fundamentals of banking regulation in the country, but, given their inept policy responses so far I would be very surprised if it was to do anything other than bring in more restrictions; the net effect of which will be the big four get even more dominant.
To me the staggering thing is that many seem to believe that the correct response to market dominance is yet more regulation to control the market dominance. When that fails, more regulation is obviously the solution. When that fails … and so on. I will not hold my breath that this will be any different.
Unfortunately credit unions are becoming more ‘bank-like’. Mine is charging fees at a rate of knots, the service is not much better then a bank and they basically suck. So when your credit union sucks, where do you turn?
A people’s bank would be ideal, but I can’t see it getting any traction with KRudd in charge.
Several times I’ve looked at switching to local credit unions, but each time I’ve turned away because the costs far exceed what I pay with my current bank. Then there’s the lack of a full range of ‘Net services, branches, ATMs etc. The nearest Rediteller ATM charges $2.50 per transaction; I pay nothing with my bank.
While there’s a definite need for competition in the banking business, credit unions no longer seem to be the answer as they were when I first joined one in 1966.
IIRC a few years ago the head of NAB suggested setting up a ‘people’s bank. It seemed transparent at the time that what he actually wanted was to offload all those fiddly little savings accounts and small loans (which are costly to administer) on to the taxpayer. Then the big banks would be free to make the big bucks with the bigger investments. I would be very wary about a people’s bank that became another way of privatising the profits and socialising the losses.
Tim @ 21 – very good point – the banks don’t really want those customers who only have little savings accounts. Even with the fees I wonder if the bank makes any money out of them? Its probably why you see credit unions introducing fees now – they can’t afford not to without cross subsidising from their home loan businesses and that would make competing against the banks even more difficult.
PatrickB (Comment 13): “er … yes? … sounds like a practical mode of home purchase financing. Good to see such emphatic support.”
I thought the tone of my post (Comment 6), and the wink at the end, showed that I was NOT convinced that it was a good idea. Unfortunately, it seems a couple of people missed the writing between the lines. Sorry that I was not more explicit.
It does seem to be a bit like a totally fixed-interest loan. As such, the bank would probably try to set the interest rate (or its NPV equivalent in the front-loading of the purchase price) with a generous margin to allow for contingencies. The consumer would be betting their judgement of the future against that of the bank, if they thought they would get the better deal out of this arrangement.
Chris / Tim,
They do not make any real money out of them. With all the fees they can come close to breaking even as long as th eaccount holders are not inconsiderate enough as to want to use the branches or phone banking time too much.
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Elise,
The difference in most forms of “Islamic” home loan is that both the purchaser and the bank must share in any capital gain or loss in the property over the period of ownership in proportion to their relative investment in the home. In periods of rising prices this is great for the bank – they make much more than a normal lender would. When prices are falling there is some cushion for the purchaser in that the bank shares in any losses. Essentially, the bank becomes a joint venturer with the home purchaser in the purchase of the house.
The real difference for a bank is on the liability side (the deposits) in that ordinary depositors become, to some extent, shareholders in the bank. If the bank is doing well, they do well as the bank is obligated to pay them something like an equity return. If it is not then the only thing the bank is allowed to guarantee is that they get their original deposit back – they may not guarantee any additional return at all.
I should add that the front loaded purchase price method that some Islamic banks use is also allowed – but there are many Muslim scholars that doubt its compliance with Shari’a. While it is popular in Malaysia is is frowned upon in the Gulf region.
Andrew Reynolds (Comment 25), I was describing the method (front-loaded purchase price) that was being recommended by the PWC chappie on ABC News.
He was recommending it as a good idea for Australian banking, and incidentally as a solution to preventing GFC problems. He had apparently recommended it to some Australian banking think-fest just recently.
The concept sounded oversold to me. And I would severely doubt that any commercial enterprise would willingly and upfront agree to “share in losses” as you suggest. Sounds like PR spin.
Please not at the Post Office!! At our local PO there is already a 10 minute queue most times with it flowing out onto the street. Then you have to dodge all the products on display between the door and the counter. And this seems to be the situation at other POs I’ve been to.
Kiwibank has been remarkably successful in New Zealand primarily because of the sheer rapacity of the Australian banks who own the rest of the banking sector here. When kiwibank can offer a credit card interest rate 5% lower than the Aussie banking cartel, and a mortgage rate at least 0.5% lower, then we know we’re being gouged. Which is why those kiwibank ads showing armies of invading Aussie bankers airlifting piles of cash out of the country resonate so strongly.
Kiwibank has increased competition in the NZ banking sector. It’s provided services to customers the big Aussie banks don’t want. And its capturing a growing market share. Even our (neo-liberal in disguise) National government supports it now. Australia should get one too.
The idea of a government bank is one of the most terrible ideas that I have heard of.
There are places where government needs to take on the ownership role. We call this ‘market falure.’ Banking is not an example of market failure. All the government needs to do to increase competition in banking is to ease off slightly on the ‘four pillars’ policy, or become a bit more muscular in banking regulation, via the banking ombudsman for example.
At the moment the big four are in a good place and they know it. Foreign banks have problems enough of their own in their home markets, so are withdrawing/ not a force. But this is a temporary thing. Local banks are widening their margins and shoring up their balance-sheets, and they have a government guarantee behind them. This is a license to print money in a down-market as well as an up-market.
New Zealand started Kiwibank because they no longer have any NZ-owned banks except for the Taranaki Savings Bank (a small bank). You cannot buy shares in a bank on the NZSX, they are all majority-owned by Australian banks and listed on the ASX as such. The economic landscape across the ditch is as different as chalk and cheese, and just because they did it does not mean that we should follow their example (or that anyone should). Their adventure into extreme free-market theory int the 1980s means that all of their infrastructure, all of their key institutions, and most of their local businesses are owned by foreign multi-nationals who will simply extract as much profit as they ca out of that country now, and squeeze it until it is at the bottom of the OECD. This would be one good reason for government-sponsored local competition.
Fortunately, Australia’s economic issues are completely different.
Hyacinth.
Gotta say Andrew, I love hearing your lucid and well-informed comments on the Australian banking sector. It’s not something I typically read about, and the only other stuff I hear is from the banks themselves, so not the most reliable narrators. It’s fascinating to hear a relatively straight-up, inside story.
Seeing as I stubborly refuse to learn how to do links, could some kind soul please provide a link to an article entitled “Mailing Our Way to Solvency” by Michael Lind (NY Times, 5/10/08).
Lind has moved from the National Review Right to become an idiosyncratic liberal and I think people will find it really interesting reading. It seems more than a few people are thinking along these lines.
If we really have entered a new social democratic epoch, and we’re not just in a period of short-term emergency Keynesianism, we should be thinking along these lines.
If Rudd were to do something like this he’d cement his place as a true nation builder – alongside Ben Chifley in importance. He’d probably create a formidable electoratal coalition in the process, too.
…electoratal?…I meant electoral.
Another thought:
Paul Keating is always going on about his baby: superannuation. One of the reasons he said he loved it recently was that he said it created a pool of savings that could be used for investment here in this country instead of our banks and companies going overseas to borrow money on “corrupted” international markets.
Good point, but it will be interesting to see if Keating comes out and supports and indigenous pool of savings like this. He used to lecture Labor on getting hung up on ownership – well if that’s true let’s see him support a common-sense idea of a “people’s” bank. Or is he just the neo-liberal ideologue some always suspected him of being?
Elise,
Investment banks generally expect to share in at least some of the losses (although they will try to avoid it if possible) as they also expect to get some of the upside. It is standard equity participation.
In a small way the lending practices of current banks also shares some of the risks – if the loan goes into negative equity there is always a chance the bank will lose money on the loan. They compensate for this by charging a little bit more interest on every loan – it’s called the credit margin.
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The structure he was describing, then, is a “Murabahah” (cost plus arrangement). In substance it is a long term fixed interest loan, only the bank cannot charge extra for late payments and it maintains ownership of the home until the whole lot is paid off. The risk of the borrower paying late tends to be added into the upfront charge.
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Thanks PatrickG.
Daphon @20, if you joined a credit union the rediteller would be free, wouldn’t it? My credit union must be a particularly good one, if the others don’t have internet banking etc. It’s an education industry credit union, so they know members are out of reach of branches and behave accordingly. We can use post, phone, Internet etc and also withdraw via Commonwealth ATMs. Had no idea it was unusual!
Yes, I am still a member of a Credit Union even though I long ago left the job with which it was linked years ago. Low fees and no ATM charges if you use the Rediteller network, plus full internet banking for at least the last 5 years.
Andrew Reynolds: “In a small way the lending practices of current banks also shares some of the risks – if the loan goes into negative equity there is always a chance the bank will lose money on the loan.”
Yeah, I really have noticed how the banks accept the sharing of risks. Like the time we took out a house loan for about HALF the LAND value, with total property cost more than double the land value. So the bank insisted that they had to have the property fully valued before giving the loan. They were going to get their money back, even if the house burnt to the ground. That is real risk-taking, and don’t you worry about that.
What they need to ban in banking to get competition going is all establishment and exit fees. If someone decides to use say a different accountant the new accountant doesn’t charge you a fee just to meely become a client and the old accountant doesn’t get to sting you for leaving.
What stops most people from switching banks even when they are massively annoyed is they do the sums of switching and it is prohibitive. Especially when you start to involve significant loans. Likewise Govt’s need to remove any stamp duties on loans that are just switches of banks not genuine new borrowings.
Can anyone name another industry where they get to charge serious money just to become a client/customer and even worse charge you something if you elect to leave?
These types of fees are massively anti-competitive.
“Name another industry where they get to charge serious money just to become a client/customer and even worse charge you something if you elect to leave”…
Not sure what counts as ‘serious money’ but phone companies/ ISPs … ? I gather I’m about to be charged a “porting out” fee when I change my mobile provider.
Elise,
…and the credit risk premium you were charged would have been low (I hope). Compare your rate on that to a credit card and you should see what I mean.
Danny – interesting and thinking about it more myself another major offender is the managed funds industry who actually might be worse than the banks.
From Mark’s post:
It is true that Rudd has thoroughly implicated the state and taxpayers in the survival of a select and powerful sector of the Australian banking system. This state of affairs exists around the world. The Australian government was a late adopter of this policy. So far as I can see, the Rudd policy has bipartisan support.
Did the Rudd government expect some kind of quid pro quo from the banking oligopoly of its own creation? I am unaware of any agreement, either explicit or implied, along those lines.
Currently the world is experiencing financial deleveraging unknown since the Great Depression. Funds available for borrowing are scarce and expensive.
In such a situation, a “people’s bank” (really a state capitalist enterprise) may be able to attract depositors and therefore accumulate capital at a cheaper rate than the large banks. Such a bank may be able to lend at a cheaper rate.
It is possible, though unlikely, that current dire worldwide financial conditions will persist for a long time. When these conditions improve, banks will be able to borrow at cheaper rates, perhaps cheaper than a “people’s bank” will be able to borrow at from mums and dads. When and if that happens, a “people’s bank” will be forced onto world capital markets just like regular banks. Under those conditions, there is not much to distinguish a “people’s bank” from an oligopoly.
The biggest crisis for a “people’s bank” arrives when it gets into financial trouble. The State Bank of NSW was mentioned above, and the State Bank of Victoria was an egregious example in the 1980s. Under those circumstances political and commercial considerations become seriously entangled.
But of course that entanglement is exactly what has happened worldwide in the aftermath of the GFC.
No mainstream political parties complained about that entanglement, which proves that there are few neoliberals in the foxholes.
Isn’t one of the lessons of the GFC that we need a staid, boring – most importantly safe – financial sector. State Banks got in trouble because they got swept up in the deregulation culture of the ’80s and started aping the commercial banks. It’s largely forgotten now, but all banks got in trouble in the ’80s (perhaps that’s one reason they aren’t in so much trouble now).
The financial sector is so large now – larger than it needs to be to fulfil its role of providing capital to the broader economy – surely they handle a little bit of competition from the public sector.
And there could be a social justice aspect to all this: what about all the people out there who just want no-frills banking and don’t want to pay for advertising and all the rest?…or to subsidize lending terms for the wealthy, as happens now.
An Aboriginal friend of mine asked me to take him to the TAB omce, I was running really late and had a bit of a gripe about his need to place a bet not being a huge priority..and he said, “nah, I need to transfer some money to Joe [his son]“, so I took him to the TAB and he did indeed transfer some money…he gets back in the car and says, “see..no fees, no queues and open longer hours, don’t let anyone tell ya blackfellas aren’t cluey”. At the time I was paying a dollar for every interbank transfer I did, .50 for BPAY, plus monthly account keeping fees etc etc at my credit union…I was pretty surprised.
Interesting discussion on banks. I have been doing some research on old 20′s figure who wrote on what he called Cartesian Economics, turns out to be one the founders of ecological economics. Lots of highly useful basic insights into workings of finance. Worked hard to upgrade my knowledge (+4 months work)have concluded the information I have gained would be an excellent primer for public discussion. Missed Griffith review deadline for issue 25, any suggestions where I could try and get it published? I have no financial or institutional support. Is there any non-academic,inter-disciplinary organ that will consider 3000 words on such a topic?
I read this with interest and have to admit to some degree some of the discourse was over my head. However, one thing that is clear is that people need more for a VOICE. I found this site and it has user generated reviews that allow US the customers to voice our concerns: http://mozo.com.au/savings-accounts
Other than this how about if there was a site similar to http://www.wikileaks.org but for the local banking industry that would allow insiders to leak information to keep the banks honest.
There is a groundswell of people within the electorate who are Campaigning fro a Peoples Bank Of Australia. This movement is snowballing becausr the Commonwealth Bank was so successful for the benefit of the taxpayer before it was Privatised by the right wing of the Labor Party Prime Minister Paul Keating this become his undoing. The Peoples Bank Of Australia would not be so expensive as the Conservative critics claim. It would be initiated by Australia Post creating more employment for Post Office workers. Most transactions would happen on-line with new software and all postage would be free for subscribers by posting cheques and transfer forms. It would be fashioned on the same lines as the British National Giro. This was established by Tony Benn when he was Telecommunications Minister, So lobby your Members of Parliament and Senators for the objective of keeping the current Banks honest.