Our poor banks. At great pains to convince anyone who’ll listen that a Royal Commission (RC) is unnecessary, wasteful, redundant, a distraction. Their mouthpiece, the ABA, has attempted to scare Australians by saying it will lead to higher interest rates, and be bad for everyone’s super. Nothing could be further from the truth. Let’s debunk the myths one by one:
An RC will make banks look vulnerable, spook foreign investors, and lead to higher off-shore funding costs, which will have to be passed-on to consumers: Nonsense. Borrower-default risk determines funding costs. That risk is almost zero, thanks to an Australian government (ie taxpayer) guarantee. If the Australian government’s credit-rating was downgraded, then yes, funding costs would increase. Moreover, foreign investors might actually regard our banks as less risky if, thanks to an RC, they were more trustworthy. Plus, if banks are so worried about keeping rates low, maybe they wouldn’t have rigged Australia’s benchmark interest rate?
As above: Our banks are the most profitable in the world. Their return on equity is three times the European average – which also reduces their funding costs. But such high profitability involves gouging every borrower in this country. Every individual. Every business.
Your super will suffer: Nonsense. By being the world’s most profitable banks, they reduce profitability across every other Australian business. Those “other businesses” constitute the bulk of every super fund’s investments. It’s like petrol. Increase the price and yes, petrol companies make more money, but every other business makes less.
Everything’s under control, we’ve addressed our shortcomings: Another day, another scandal. And each time we are told “this one’s the last”.
http://clarityprc.com/wp-content/uploads/2018/02/logo3.png00Clarity PRChttp://clarityprc.com/wp-content/uploads/2018/02/logo3.pngClarity PRC2020-07-29 06:30:272020-07-30 04:46:09What will a Royal Commission mean for consumers?