JIM COOMBS: Lets have some real banking competition.

Apr 4, 2018

The banks still haven’t got it. They charge $6 a month for doing nothing, theft or fraud, both crimes. But government and their appointed (neoliberal economics graduates) regulators, do nothing about it. Make the Reserve Bank of Australia the Peoples Bank…again.

“Tut, Tut !” maybe, but what about punishment for the crime. Just recall that a social security recipient who, often inadvertently, fails to report excess payment, is charged essentially with theft and penalised by loss of benefit, fines and sometimes imprisonment, for a few thousand dollars. The Bankers misappropriating millions are never brought to book. But so long as the “regulators” believe in “the market” as a sufficient regulatory device, charging “what the market will bear”, i.e. how much can we get away with, will satisfy them. Blow the social, and dare one say, the true economic, cost. Kenneth Hayne might well wonder, “Was there NO regulatory supervision ?” The “commercial in confidence” excuse for not justifying pricing and charging (when the oligopoly tacitly conspire to charge at the same inflated rates) needs to be seen for the nonsense that it is, and disclosure of cost structures should be mandatory, or the licence to operate revoked.

My bank, in the midst of the howls of rage at their overcharging and so on, has introduced a $6 a month account keeping charge for a dormant account opened for my daughter 26 years ago and which has been inactive for over 20 years. Try to close it and bureaucratic barriers are placed in your path. No amount of slick expensive TV advertising their “good guy” community minded doings can replace the disgust people feel at what they do to us. How about a reduction in charges and genuine transparency ? Remember when you trusted tour local bank manager ?

But how about this. When you transfer funds from one bank to another it takes over 24 hours for it to go from A to B. It does not appear in either account. Enquiries of the Reserve Bank, and APRA give the answer that it takes that much time. In the age of nanosecond share transactions that rings hollow. When asked if the bank asked to transfer simply held the money and played the money market, nobody seemed to know. One might suspect, at least. But worst, the “regulators” think it is none of their business, let alone ours, even though it is our money that they may well be gambling, while denying possession. So how about we get a share of the profits?

So, if you are a bank customer, as opposed to shareholder, you are most likely being dudded, charged for non-existent services, and treated with contempt. The smaller you are the heavier the burden: they much prefer to deal with rich folk, and give them the best deals. They pay their staff to push the unwary into arrangements which favour someone else. If we had a government who governed for the benefit of all, practices which discriminated against the weak in favour of the rich/strong would be made offences punishable at law. Instead, we have governments who seem to believe that if it is called “business” it is not to be interfered with. I hope Justice Hayne has an opportunity to raise an eyebrow at that.

Well, of course the ideology drones on: “trickle down” economics, has “Business”, not able to survive in the competitive market it espouses, demanding a huge gift of “tax relief” to get them to provide jobs for the unemployed. None will sign the pledge to do so, the magic of the market will do it. The RBA asks for increases in wages, well “We can only pay what the market will bear” , i.e., how little can we get away with paying, and an unfortunately wrongly named Fair Work Ombudsman actually spouts “market forces” arguments, instead of fairness, justice and sane income redistribution.  The ideology stretches that far, even though it is nonsense. Foreign students and backpackers are exploited, working for slave wages, fearful of Peter Dutton. Tenure, mandatory holidays, sick leave, safe working conditions have been eroded by John Howard’s union hating legislation, and “regulators” think that’s OK, because of the “market”.

The Productivity Commission (especially under Friedmanite Hilmer) defined productivity as getting more out of workers for the same or less pay. What about the productivity of transferring industry profits from the workforce to shareholders ? APRA has steadfastly avoided investigating banking practices. Is it too much to expect to have a government which regulates businesses to protect, let alone advance the interests of the people generally, and the poor and the weak in particular. Roll on, the Banking Royal Commission !

The elegant simple answer to the bank misbehaviour problem is the Gruen Bank, make the RBA the People’s Bank and show the bastards what competition really is.

Jim Coombs is a nearly retired magistrate and a pre-Friedman economist.


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