Contributed by Jim Hayes
The push for an inquiry into the activities of the banks in Australia is gathering a new momentum.
Everyone knows that the banks are the most reviled organisations in the country and that there is a good basis for this. Service is poor and declining. Bank charges are notorious. There has been one scandal after another that has revealed a culture, where anything goes in pursuit of profit.
Mike Mangan, who has a background as a Deutsche Bank analyst and now runs boutique funds manager 2MG, has compiled a summary of banks’ transgressions during the past decade.
Over this time, the banks have been fined and ordered to compensate clients to the tune of over $1 billion.
The banks are central to the massive tax evasion industry that sees billions being syphoned each year into the pockets of billionaires, many of them residing overseas.
At a time when so many Australians are feeling the pinch, the multi-billion dollar profits of the banks and the perception that they get favourable treatment form the political establishment, is not going down well.
Support for an inquiry into the banks is so strong that any attempt at a whitewash will not succeed in turning aside the anger. Pressure for action has lit a fire under the politicians, who are compelled to every now and then have a go at the banks, to maintain some level of credibility.
A growing number of them are being driven to go further and support the call for a Royal Commission. This is dividing the government and straining the Coalition between the Liberal and National parties. The National Party is feeling the heat from its regional and rural constituency, where economic hardship and negative experiences with the banks have impacted most strongly on whole communities.
Labor and the Greens are supporting the call for an inquiry.
Community leaders around Australia are calling for action. Unions, businesses and farmers hold that they or their members are getting the rotten end of the stick and that this has to change.
There are three significant cases right now before ASIC. The Commonwealth Bank’s 55,000 breaches of terrorism financing and money laundering laws has attracted the most heat, Westpac’s alleged rigging of the domestic interest rate market and the use of aggressive lending to push up property prices.
Meanwhile, Malcolm Turnbull and those around him have been doing all they can to hose the issue down. They do not want to take on the banks. Turnbull’s own background is in the industry and he is likely to retain many contacts there.
However, a series of blunders and setbacks have made it harder to do this. The last is the failure in the Queensland state election and unless there is some movement on the banks issue, the Turnbull government’s days may be almost over.
The current grab for the superannuation industry doesn’t make it any easier top defend the banks.
Seeing the writing on the wall, the banks have hit back with a massive advertising campaign. The message that each is trying to push through is that they are different and not like banks.
Collectively, they are trying to tell us that they give to the community and that they are not greedy, because profits are redistributed back, since the mums and dads of Australia are the real owners of the banks.
It is all lies. There is no distinction in behaviour between the banks. Support for community initiatives is minor and more to do with marketing than generosity. They impose the condition that the recipient must use the bank’s logo in its public relations. The dominant shareholders are not small-time investors, but a handful of large corporations.
Nevertheless, the advertising campaign and a few small concessions, like the abolition of ATM fees, shows that the banks are very nervous.
In addition to the public relations blitz, the banks are making sure that another message gets out and that is that any inquiry and action to curtail the banks is going to hurt all Australians, by pushing up interest rates and shrinking business activity.
Tied to this is the allegation that the banks are the victims of a conspiracy theory, whipped up by populists for cheap political gain.
The odds are now highly in favour of some sort of inquiry getting up. The tide is too strong to prevent it. This has brought about a change in strategy and this is for the banks to position themselves and the Turnbull government to minimise any inquiry to a predetermined result and therefore little action to follow it.
They must not be allowed to get away with what would be one of the greatest farces in Australian history. any inquiry must produce tangible results and bring about change. Anything less is not good enough.