Do the banks really deserve all this public loathing? Actually, they do, says Ben Eltham in New Matilda – even if they are profit-making entities subject to market forces. “Australia’s banks [are] a kind of public-private partnership where the profits are privatised and risks are socialised”.
Are there any institutions more hated than banks? Right now, the answer is “no”. Financial institutions, and banks in particular, have probably never enjoyed broad popular support. But at the moment they’re more on the nose than ever. Not only have the big four raised their variable mortgage rates, despite the Reserve Bank holding the national reference rate steady, but ANZ has also announced it will retrench 1000 workers as part of a cost-cutting drive.
Predictably, the response by politicians and many in the community has been furious. Some financial commentators continue to maintain that the rate hikes and job cuts are driven by pressures on bank margins, owing to rising costs of funding but most in the general community see only huge institutions making massive profits.
So are banks merely responding to rising funding costs? Or are they greedy corporations arrogantly abusing their power and size?
It’s a little of column A, a little column B. While there is no doubt that making money as a big bank is getting harder, the broad public anger at banks is justifiable. Australia’s big four banks enjoy an implicit public guarantee from Australian taxpayers. By acting in the interests of their shareholders, they are abusing that privilege.
Read the full article from Ben Eltham in New Matilda here.
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