Banking

Stop all the cheering, cut off the champagne. Prevent the pollies from barking and silence the drums. The piddling interest rate cut didn’t even happen.

Today’s widely expected drop of 25 basis points was the catalyst for plenty of chest beating. Treasurer Wayne Swan tried to unleash righteous fury, the banks tried to cry poor, the unions said the banks are squeezing ordinary Australians, and not in a good way. Nothing happened. The Reserve Bank of Australia decided to keep the cash rate steady.

But was all the hullabaloo justified in the first place?

Continue reading "Interest rate barney barely even rates as interesting" »

Poor old bankers. They keep telling us how tough it is for them with their funding costs expected to go up and how they will need to keep interest rates inflated.

And if the crying poor line isn’t enough the banks are quick to tell us that we are “picking on them” if we have a debate about how poorly they behave especially when the RBA changes the official interest rate.

Perhaps the “we’re doing it tough” line would carry some weight if the big banks didn’t show record profits year after year and if the banks’ CEOs weren’t getting such big pay packets year after year.

Continue reading "Time for an inquiry into this bunch of bankers" »

Sue O’Reilly, who has guest written today’s column on The Angry Cripple is a freelance journalist. She co-founded Australians Mad as Hell last year with Fiona Porter to campaign for an NDIS and established a charity called Fighting Chance to help people with disabilities pay for essential therapy services.

Bill Moss was one of the highest paid business executives in Australian corporate history when he worked for Macquarie Bank, prior to his retirement in 2007 on health grounds.

As head of the bank’s real estate and banking division, Moss built - literally from scratch - an international real estate and funds management business that spanned five continents, created thousands of jobs and made billions for the bank’s investors, shareholders and, through tax payments, federal Treasury coffers.

So really, all Australians are pretty fortunate that the slowly degenerative physical disability with which this razor-sharp businessman was born - a form of muscular dystrophy known as FSHD - happened not to become overly evident (to others at least) until Moss was in his early 40s and had already established his credentials.

Continue reading "The heroic banker crusading to employ the disabled" »

Here we go again - another bank switching package from Wayne Swan. Has Swan got it right this time? Well, yes and no.

There’s no doubt that Wayne Swan’s recent announcement that bank customers will be allowed to sign a single form to switch banks is well overdue. In reality, Swan could and should have pursued the “one form” approach back in 2008 as we all suspected that bank switching can be as simple as filling in just one form.

Should we be excited about Swan’s latest bank switching package? Well, not just yet. Any excitement needs to be tempered by doubts as to whether the latest reforms are to be extended to small business customers.

Continue reading "The itch to switch is still not easily scratched" »

Holy crap, Ralph Norris has resigned. Well, I guess if you were Ralph Norris with all that pressure and all that money, you’d be looking for some R & R too. Still. The world will never be the same.

According to the legend of Ralph Norris, for a while there they called him ‘Chuck’, which is a sissy kind of name for a dude who grew a beard in utero and burns it off with a withering gaze each morning. And then every five minutes.

The Commonwealth Bank chairman David Turner described him as “outstanding and fearless”. That doesn’t even scratch the surface of Ralph Norris.

Continue reading "Norris’ retirement a roundhouse kick in the guts" »

A News Ltd survey of Australian imams unearthed a renewed call for the recognition of sharia banking in Australia. At The Punch we weren’t really sure what that meant, so we asked expert in Islamic banking Dr Hussain Rammal, a lecturer in International Business at UniSA, to talk us through the basics.

What are the main differences between Islamic banking and Western banking?

The main difference is in the way the two systems deal with money. Under the Islamic economic system money is seen as a medium of exchange and has no intrinsic value. Therefore charging a higher rate of return (interest) on lend money does not sit well under the Islamic system. Islamic financial institutions use an asset-backed system where they purchase the assets on behalf of their customers and then use various financing agreements to on-sell the asset to their clients. These include profit-and-loss sharing, leasing and hire-purchase, and mark-up based agreements.

Continue reading "Punch Q & A: What is this Islamic banking caper?" »

ATM fees have long been a sticky topic. For many people, paying an ATM transaction fee is an unwelcome but accepted fact of life.

For Indigenous Australians in remote communities however, ATM fees can have a significant impact on their life, swiftly eroding their humble bank balance.

This is the finding of a report released late last year by the feisty Australian Financial Counselling and Credit Reform Association (AFCCRA), titled “ATM Fees in Indigenous Communities”, which focussed on excessive ATM fees in remote communities.

Continue reading "When banks rob people at ten bucks a hit" »

Each and every day millions of Australians pay financial institutions to access their own money.

Some pay more while others pay less, depending on the way they do it. Sometimes, as with EFTPOS transactions, the price consumers pay for their own money is largely invisible, being factored into the prices of goods and services. In other cases, the cost of using your own money is embedded in bank fees, or else in forgone interest from transaction accounts with negligible rates of interest.

One of the most expensive ways for Australians to access their own money is by using a third-party automatic teller machine - that is, an ATM not provided by their own bank. In most cases, third-party ATMs charge $2 for every transaction, including checking one’s account balance. In other words, $2 is the price consumers pay every time they are disloyal to their bank.

Continue reading "Owning an ATM is money in the bank" »

Have you had a close look at Wayne Swan’s December 2010 bank package? Don’t worry if you haven’t yet as you haven’t missed much.

For those who have, it’s clear that it’s so light handed and minimalist that the big banks aren’t bothered by it. In fact, the big banks have even told the Senate banking inquiry that they actually like aspects of the package.

So much for Swan’s tough talk regarding the big banks. Given how much of a fizzer the package will be, one has to wonder if Swan’s announcement was more about being seen to be “doing something” in response to the public anger towards the big banks.

Continue reading "Swan’s bank package is a fizzer" »

Wayne Swan is aggrieved. The hard-working treasurer is disappointed at the way his long-heralded bank reform package has gone over. But should he be surprised really?

Let’s face it, bank packages, especially over-hyped ones, always underwhelm. Knowing this, it is curious that the Government has again managed expectations so ham-fistedly, taking weeks to reveal an unremarkable hand. Perhaps, like many things, it depends on where you stand.

After toiling away behind the scenes, the Government feels it has offered up serious reform. This may or may not turn out to be true if things like genuine portability of account numbers come to pass. Ditto with allowing banks to tap into the one trillion dollar national superannuation nest-egg, which may help storm-proof the finance sector against future global credit crunches. But neither of these reforms, nor many other aspects of the package, will do much for home-owners right now.

Continue reading "There’s not really a lot Wayne Swan can do about banks" »

Treasurer Wayne Swan, as Acting Prime Minister, began his press conference today by acknowledging Australians who have been hit by savage, widespread flooding.

Then he started talking about how he was going to help ordinary Australians by shaking up bits of the financial system, and it was at that precise point that Wayne Swan lost about 99 per cent of banking customers.

Floods they could understand, even if they were high and dry; covered bonds and RMBS funding were outside their usual ATM transactions.

Continue reading "That’s all great Wayne, but what about interest rates?" »

Not since Paul Keating introduced compulsory superannuation contributions in the early 1990s has there been such an important opportunity to change the way Australians think about saving for their retirement.

This urgent need for change is magnified when Australians are asked how much they actually know about their superannuation. A recent survey by Suncorp Life found 49 per cent of us don’t understand our super, and 30 per cent of us don’t believe our super is even our own money. Annual changes to the superannuation system are also a constant and frustrating occurrence. That’s why it’s vital for the Government to get it right this time.

The results of the much-anticipated Cooper Review announced last week urge a range of sweeping reforms to superannuation, and herald an exciting new era for the industry. The question is whether the Government is prepared to do what’s needed to simplify the system, and restore Australian’s confidence in superannuation.

Continue reading "We might save more in super if we knew where it went" »

Hands up everyone who never sent an email which, if made public, would cause themselves and their employer massive embarrassment.

The particularly modern form of humiliation has the added bonus of many of them being recorded electronically, putting them beyond dispute. It’s not someone’s recollection of events - it’s Microsoft’s.

Investment banking firm Goldman Sachs is the latest to cop it, with emails from executives talking about “shitty” products they were selling with one hand and betting against with the other. The most sensational are the emails from Fabrice “Fabulous Fab” Tourre to his girlfriend referring to “Frankenstein” products invented via “intellectual masturbation” being sold to widows and orphans. Not much room here for the traditional defence of being taken out of context.

Continue reading "A few stupid emails do not an industry conspiracy make" »

How long have you been with your bank? When was the last time you switched all your accounts to another bank?

If you’re like most Australians the answer will either be “never” or “years ago”.

And there’s your reason why bank service will never be quite up to scratch. It’s us. We’re bank suckers. We talk about how banks treat us, and the poor level of service, but that’s all we do. Talk.

Continue reading "Rebelling against banks can make them lift their game" »

Before the election, in the May 2007 budget in reply speech, Rudd the Regulator stated “I have already announced our intention in government of adopting a simple principle: no new regulation imposed on business unless an existing regulation is withdrawn”.

So how is Mr Rudd going with this promise? According to the Federal Register of Legislative Instruments on the Comlaw website, in 2008 – 4699 new legislative instruments were added and in 2009 till the end of September – 3699 new legislative instruments were added.

That’s 8398 new forms of select legislative instruments, statutory rules and regulation.

Continue reading "Rudd the regulator seeking reform for reform’s sake" »

A few days ago, I was part of a group of 6 economists who wrote an open letter arguing for a new Inquiry into the financial system—a so-called “Son of Wallis, Daughter of Campbell.”

Put simply, so much had changed in our understanding of finance, banking and economics and so much ‘on the fly’ policy had been undertaken, that surely stepping back and reviewing our policies above the political fray would be a good idea.

We had hoped that this might get a little media and perhaps push the government into putting an inquiry onto the agenda. Our letter was a long and not particularly reader-friendly affair. But towards the end we asked the following:

Continue reading "Mad furore surrounding the so-called “people’s bank”" »

LIKE darning socks, car-pooling and drinking instant coffee, bank bashing went out of favour when we were all getting rich during “the great neo-liberal experiment”. Now, from the top office in the land down, this wholesome pursuit is making a comeback.

It’s not that the banks ever lost their talent for bastardry. It’s just that for a decade or so it has been suppressed by competition – from the likes of Aussie and Wizard – and by the buoyant economy. That $140 annual account-keeping fee didn’t look so bad when your credit card was in the black and the value of your house had doubled in the past two years. But with competition to the Big Four now all but wiped out, leaving the Westpac, Commonwealth, NAB and ANZ as the last saviours of our financial system (just ask them), the bastards inside can once again be unleashed. 

The Commonwealth took one for the team this week when it raised variable home loan rates 0.1 percentage points to 5.74 per cent. It was the first mortgage rate increase by the banks since last year but won’t, unfortunately, be the last.

Continue reading "Bastard banks making a comeback after the boom" »