AUSTRALIA’S four bank “pillars” account for more than 25 per cent of the ASX 200 capitalisation. Their profits and payments to senior executives are obscene. They have been granted the privilege of creating credit with the guarantee the government will bail them out if they get into trouble. We have recently seen a chief executive retire with a $10-million bonus after making disastrous ventures into China.
He worked no longer hours than most builders, nurses or policemen, yet was paid up to 200 times their wage.
Former Senator Rod Culleton’s maiden (and only) speech was a monumental assault on ANZ’s performance in Western Australia. “The Club” immediately stitched him up for an exit from the Senate. Retail banks are sucking the lifeblood out of the real economy and multiplying the gap between rich and poor. Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority are supposed to monitor their activities, but when ASIC finds scandalous behaviour, it sends draft press releases to the bank involved for its approval before release. How pathetic! Chairman of multinational trader Ali Baba, Jack Ma, recently said banking’s protected dominance was unsustainable. former Queensland Premier (1919-25) Ted Theodore, and former Prime Minister (1945-1949) Ben Chifley wanted to nationalise credit creation. They lost because of the power of the international banks. Paul Keating and John Howard sold most Australians out when they sold the people’s bank – the Commonwealth Bank. Under the influence of international banks with large shareholdings in our Australian banks, our government is resisting a Royal Commission into our banking system. New Zealand has introduced a people’s bank to their post office system. Our lot won’t do that. Our PM was formerly chairman of Goldman Sachs, Australia.
In 1932, during the Great Depression, the Glass Steagall Act saw US investment banking separated from deposit holding banks. President Clinton had it rescinded, and opened the gates for the global financial crisis. Greed took over. Governments (reserve banks) bailed them out with not a single senior banker gaoled.
Our salvation lies in the internet revolution. Nicholas Gruen (son of the late Fred Gruen of agriculture fame) has written and spoken of a civil solution. The Reserve Bank becomes the people’s bank. It doesn’t need the expense of branches as internet banking takes over. It lends direct to the people at 0.5 or 1 per cent interest, diverting the billions in 5-6pc interest “mark up” by the Australian retail banks to the real economy. It leaves risky investment ventures to the retail banks, which charge interest according to the loan’s perceived risk. Because of its low-cost operation, the people’s bank could increase interest paid on deposits in contrast to the current peanuts given by the club. Watch this space.
- John Carter