Fighting for people over profits
Here’s how it’s supposed to work:
The Reserve Bank of Australia cuts interest rates in order to spur the economy. The banks pass those interest rate cuts on to their customers, lowering our mortgage rates and credit card interest.
But the system is breaking down. First, the Big Four banks are stalling on passing the cut along to us, making $500,000 an hour in the process. Next, NAB has announced plans to pocket over one-third of the rate cut, and the other three banks may follow suit. If they’re allowed to get away with this, the Big Four will make over $1.5 billion this year in money withheld from us.
These are the same banks that have taxpayers to thank for their current profitability. The deposit guarantee by the Australian government is what kept our banks stable and profitable during the global financial crisis. Now, the banks are repaying us by testing out their oligarchy, seeing if they really have to stay competitive or if they can start pocketing the Reserve Bank’s rate cuts for themselves and their shareholders.
The banks are crying poor saying they face increased costs of accessing wholesale funding and that they need to cut costs. Not only are they increasing the cost of borrowing for Australian consumers, they are at the same time cutting staff and offshoring jobs to developing countries where labour is cheaper.
But Australian banks are still some of the most profitable in the world. The big four banks collectively posted more than $13 billion profit in the first half of the 2011 – 2012 financial year, on track to make this their most profitable year ever. In fact, ANZ has already decided to pass some of that money along as profits to shareholders instead of savings for customers.