Hold Up the Banks to Account

Thank you to my bank. Which bank?

The big banks are refusing to bow to pressure from politicians urging them to pass on the Reserve Bank’s 25-basis-point rate cut.

The central bank has dropped the official interest rate to 3 per cent, its lowest level in 49 years, but so far only the Commonwealth Bank has passed on some of the cut.

The CBA was the first of the big four to announce its reaction; it is passing on 10 basis points of the RBA cut.
Banks resist rates cut pressure

Obviously the Reserve Bank lowered interests rates by 0.25% today to help the banks with their profits. Was the Rudd government’s bank guarantee meant to help customers or shareholders? I’d sleep better if there was real competition between the banks and some choice for customers. Greed is still the name of the game.

They even have the cheek to take more than half. It’s time the government insisted on real quid pro quo for their underwriting of the banks.

Kevin Rennie

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12 Responses

  1. I will try and get a graph up later of the banks interest rates falls against the RBA cash rate… but work will have to come first.

  2. In 1960 the cash rate was 3%. In 1960 the Standard Variable Home Loan Interest rate was 5%. So a 2% margin in a highly regulated era with no bank fees of the likes we have today.

    In 2009 the cash rate is 3%. In 2009 the Standard Variable Home Loan Interest rate is 5.64% or higher depending on your Bank. PLUS they now charge fees for every concievable reason. And provide questionable service via the removal of thousands of staff and branches.

    So much for better competition leading to better consumer results and savings.

  3. There’s even a quote from Glenn Stevens in the news this morning saying funding costs have gone down significantly so I’m not sure about the banks supposed justification that its costing them more to get credit. Certainly I don’t see them caving in to pressure from the public or politicians though, banks have all the power in this scenario, I’m pretty sure if I wanted to walk on out on my bank for it my chances of another bank approving a loan would be slim.

  4. You have to respect economists and analysts on the basis of their predictions.

    Economists had been divided on today’s outcome, with some predicting the board would decide to keep rates on hold.

    In a Reuters poll on Friday, 13 analysts had tipped no change while eight looked for a cut. RBA-watchers in the media were also split on the prospect of a cut, making for much uncertainty.

    They should talk to our resident gurus and get it ‘right’. Lol. And for those who are all ‘cashed up’ the bottom of that marked seems some way off.

    “We would hope that, we would believe that this isn’t the end of the easing cycle on behalf of the Reserve Bank.

    “We would expect there is probably at least another 75 basis points to go.”

    at least another 75 basis points to go. Did anyone predict that?

  5. Since the total privatisation of the CBA, fees and bigger spreads have been the name of the game. Kev R should do the same as the Internet, open a Government Bank again. For those idiots that say the privateers can run commerce and industry better than the Government, look at what they’ve done to the world. There is notinng I can name that has worked better privatised. You can’t park at airports without paying an arm and leg, the Banks have ridden off the CBA privatisation no servive from Telstra, and I could go on indefinately.

  6. I agree Dave.

    The Opposition are using the term RuddBank scathingly.

    I think it actually has quite a nice ring to it.

    Government for the people!!

    ————————————————————-

    I prefer to paddle in a swimming pool than drown in the rapids!

  7. It would seem to me that the reason that the RBA provides rate cuts is to take the pressure off the average householder, to put more money into the pockets of consumers and not to provide extra profits for the banks. Therefore in the future if the banks refuse to pass on rate cuts to consumers, there is no reason for rate cuts. Or is this what the banks want?

    I was wondering re the Big 4 what deal is done re market share. Saw this before when I was working for Australian Gypsum..market share was all neatly worked out. But hang on, that’s illegal isn’t it.

  8. Min

    Unfortunately

    Its not illegal if it is all verbal and behind closed doors.

  9. Min

    With the rate cut of 0.25% you can guarantee that all the deposit rates will be cut by 0.25%. So not only is the banks funding cheaper they are actually getting a higher return.

    The other sufferers in this equation are the investors and self funded retirees who have lost income straight to the Banks profit margin because the Bank did not give the same reduction to borrowers.

  10. Wave to shane..

    It’s still illegal, it’s that there is no proof as per your statement ‘all verbal and behind closed doors’.

    If the Big 4 or 5 banks start to dig their heels in, I am thinking that

    dave, on April 8th, 2009 at 9:31 am Said:
    Since the total privatisation of the CBA, fees and bigger spreads have been the name of the game. Kev R should do the same as the Internet, open a Government Bank again.

    Is not so far fetched as it might seem.

  11. “It’s time the government insisted on real quid pro quo for their underwriting of the banks…”

    My thoughts exactly.

    These guys expect the Taxpayers to guarantee their viability and then turn around and screw those same taxpayers (when they also happen to be their customers) at every opportunity.

    Rudd can put an end to that very easily, as the Government has them by ther balls. You just tell ’em: “No itchee no scratchee. Drop your rates in line with RBA rate movements or lose your deposits guarantee.”

    The rates will then come-down to match RBA rate movement faster than the eye can see.

  12. And they’ve all increased the sales targets for their staff and are managing the staff out when they fail to reach them!

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