A "Peoples' Bank" - why not?
In last week's Australian Financial Review, there was an article where the creation of a state-funded bank, or a "peoples' bank" was proposed, to help counter-act the anti-competitive [semi-cartel] framework of the current big-four banks in Australia.
This idea was floated by a group of economists who argued that 'the global financial crisis has exposed flaws in the financial regualtory infrastructure and in the competitiveness of the financial system here'. Well 'hear, hear' I say, as this is a concept, similar to NZ's Kiwi Bank, is a concept I have floated for a number of months.
Treasurer Wayne Swan has apparently ruled it out, without any clear reason, other than to state that ' the financial system has performed very well during the gloabal financial crisis compart to all other comparable economies'... Perhaps, but at what cost?
Basically the 'big four' banks in Australia have a cosy cartel, with very limited competitive pressure imposed on them. When the Reserve Bank lowered interest rates a couple of months ago, they didn't feel compelled to pass on those cuts to their home-loan customers, and one bank even increased their mortgage rates slightly!
I cannot see any compelling reason why you would not seriously look at establishing a state-owned and state run bank in Australia. This does not stem from any 'socialist' principles, but rather because it seems that the Reserve Bank [& therefore the Government] has very little leverage over the Big four's cosy cartel - what better way to force them to keep rates low than a competitor who will offer mortgages at fair value, and pass any cuts in funding costs, directly on to their customers!
As an ancilliary benefit, it might help with the unemployment figures. Wayne, you need to lift your game a little here!
-A
This idea was floated by a group of economists who argued that 'the global financial crisis has exposed flaws in the financial regualtory infrastructure and in the competitiveness of the financial system here'. Well 'hear, hear' I say, as this is a concept, similar to NZ's Kiwi Bank, is a concept I have floated for a number of months.
Treasurer Wayne Swan has apparently ruled it out, without any clear reason, other than to state that ' the financial system has performed very well during the gloabal financial crisis compart to all other comparable economies'... Perhaps, but at what cost?
Basically the 'big four' banks in Australia have a cosy cartel, with very limited competitive pressure imposed on them. When the Reserve Bank lowered interest rates a couple of months ago, they didn't feel compelled to pass on those cuts to their home-loan customers, and one bank even increased their mortgage rates slightly!
I cannot see any compelling reason why you would not seriously look at establishing a state-owned and state run bank in Australia. This does not stem from any 'socialist' principles, but rather because it seems that the Reserve Bank [& therefore the Government] has very little leverage over the Big four's cosy cartel - what better way to force them to keep rates low than a competitor who will offer mortgages at fair value, and pass any cuts in funding costs, directly on to their customers!
As an ancilliary benefit, it might help with the unemployment figures. Wayne, you need to lift your game a little here!
-A
Labels: Australian economic policy, Australian Economics, Australian politics
posted by Crema-editor at 7:00 PM
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