What do you mean there’s a global financial crisis?
American authorities have charged Wall Street mammoth Goldman Sachs with fraud. British and German authorities want to know more, too.
President Obama is promising to toughen banking regulations. These include shining a light on the murky world of derivatives, the inter-twined financial products so complicated they almost brought the whole system down.
More consumer protection is promised, too, particularly on the credit card front.
Canada’s government unveiled new guidelines for credit cards recently.
And Nick Clegg, the leader of Britain’s Liberal Democrats and star of a recent debate, is proposing a tax on banks to reduce the UK’s deficit. It ballooned, in part, after taxpayers bailed out its reckless banks, which were so chastened by their failure they doled out billions of pounds in new bonuses.
Elsewhere in Europe, new calls for more responsible bank lending are popping up. And of course there are calls for a new, miniscule tax on financial transactions like derivatives to help restore governments’ balance sheets and fund foreign aid.
Throughout the G20, countries are showing they’re serious about cracking down on banks behaving badly.
Meanwhile, Australia’s government seems to have abandoned the field.
It’s not as if we have no problem. Last year, consumer debt exceeded GDP for the first time ever. We owe about $50 billion on credit cards alone. And the gap between what the Reserve Bank thinks interest rates should be and what the banks charge is higher than ever.
Banks overseas aren’t the only ones who have an odd way of showing taxpayers how much they loved the support. Our very own institutions, who enjoyed risk-free banking courtesy of us all, have said thanks by letting us pay more so their padded profits can keep going up.
Can we ask where Kevin Rudd went? Gone is the Prime Minister, quick to cash in on a crisis with essays decrying the downfalls of casino capitalism. Gone is any hint of new regulations aimed at stemming a consumer debt crisis here. And if the banks decide to run monetary policy for their own benefit, not Australia’s, well, it’s a bit of a slap on the wrist and not much else.
About this time last year, Mr Rudd couldn’t wait to take his seat at the newly powerful G20 table. There, he relished talking about weighty, global matters as part of a fancy new club.
Ah, to hang out with Obama and Brown, Merkel and Harper, and marvel at what could be done to improve financial regulations.
Those were the days. Perhaps when the club next meets in June in Toronto, Mr Rudd can dust off his essay and see if anyone would like to re-read. We suspect, however, the nitty-gritty of governments actually doing something might prove more substantial gruel.
There will be those, of course, who say Australia has no problem to fix. Our banks are profitable, and the housing market is strong. And so they are. Just as they were in the United States and Britain before mountains of debt and reckless banking finally caught up.
Still, here we are, with consumer debt levels at 160 per cent of disposable income and rising each year, pretending there’s no problem that needs fixing, and in the process, letting banks continue indebting Australians while our government seems to have nothing to say.
You can learn more, and complete a confidential survey on banking, at better-banking.org.
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