Philosophical Conversations Public Opinion Junk for code
parliament house.gif
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
South Australian Links
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

more competition in the banking sector « Previous | |Next »
July 12, 2009

One of the consequences of the Rudd Government protecting the Australian banks during the global financial crisis is that competition in the financial sector has been sacrificed. The balance sheet of the state was put behind the big banks. The non-bank financial institutions, which lent for home mortgages at cheaper rates, have been decimated or taken over. Time for a big inquiry into the finance industry to restore some form of competition.

PettyBgreenshoots.jpg Bruce Petty

The big four banks are amongst the most profitable in the world, and they have set up a flow of money from a variety high charges and penalty fees that bear little relation to the actual cost. The banks, in short, are gouging customers who have little power to challenge the banks. It's called saving the banks and socking it to the people. As soon as the big guns get into trouble, the state bails them out. The inferred politics is that state power should protect financial institutions (bailing out the banks) at all costs.

In the words of Martin Wolf at the Financial Times:

What has emerged after the crisis is even worse financial system than the one with which we began. The survivors are an oligopoly of “too-big-and-interconnected-to-fail” financial behemoths. They are the winners not because they are necessarily the best businesses, but because they are the best supported. It takes no imagination to realise what these institutions might now do, given the incentives for risk-taking.

The big four banks are deemed to be too big and interconnected to be allowed to fail, no neat structural solution can be identified, and the banking sector is vital to the UK economy. The the banks are using the money not to lend to anybody but to buy other banks. They are consolidating their power. We’re the ones who are paying and they are the ones who are benefiting.

What then of the costs imposed by the financial sector on us? What we know is that the financial sector will see off attempts to impose a more effective regulatory regime in the name of the “light touch” approach to regulation, the concentrated interests of the banks will overwhelm the general one, and the state is concerned with protecting the bankers, not with protecting the people.

We are going to hear a lot of special pleading from the industry mixed up with rhetoric about individual liberty personal responsibility, privatisation and freedom of markets and all those kinds of neo-liberal things.

| Posted by Gary Sauer-Thompson at 9:27 AM | | Comments (3)


My credit union has met all my financial needs quite satisfactorily thank you for decades.
I have not dealt with a big bank, or even a moderate sized one for umpteen years and have no intention of ever doing so.

I'm very unhappy with my credit union which is becoming very 'bank-like' with its fees and charges. They slugged me nearly $20 last month, half of which was for a new ATM card, it wasn't my fault they sent me a crappy piece of plastic.

So there are credit unions and credit unions.