Tag Archives: banking sector

Swan Tells Parliament 5 Lies In 2 Short Sentences

19 Aug

Wayne “OOPS! I did it again” Swan has been “talking up” the economy lately.

But remind me, dear reader … aren’t there rules against lying to Parliament?

Consider this, from Swan’s Ministerial Statement on the Economy, from Hansard, Tuesday 16 August 2011:

MR SWAN:  As these global events buffet global markets we should bear two things in mind. First, we should remember that 2011 is not 2008. Households are not as highly leveraged

Lie #1.

The RBA Statistics, B21 Household Finances – Selected Ratios, shows that the ratio of Household Debt to Assets @ March 2011 was 19.3 (versus 19.3 @ September 2008).  And the ratio of Household Total Debt to Disposable Income @ March 2011 was 155.2 (versus 154.4 @ September 2008).

Households are more highly leveraged now, than at the peak of GFC1.

our banks’ balance sheets are stronger

Lie #2.

The RBA Statistics, B2 Banks – Assets, shows that our banks had $2.72 Trillion in Total Assets @ June 2011 (versus $2.46 Trillion @ September 2008). Importantly, it also shows that our banks’ total “assets” comprise 38.3% Residential Loans @ June 2011 (versus 30.5% @ September 2008), and that total Resident Loans (ie, Residential + Personal + Commercial loans) comprise 65.3% of their Total Assets @ June 2011 (versus 62.4% @ September 2008).  It also shows that the banks’ growth in total “assets” from September 2008 to June 2011 ($260.7 Billion), is comprised of a $291 Billion increase in housing loans, offset by decreases in Personal and Commercial loans.

In other words, (a) the so-called “assets” on our banks’ balance sheets are mostly loans, (b) their entire “asset” growth since GFC1 is 100% loans, and (c) they are now even more heavily leveraged to Residential Loans (ie, to our last-to-pop housing bubble) than at the peak of GFC1.

B5 Banks – Consolidated Group Impaired Assets, shows that our banks had $10.55 Billion in Specific Provisions For Bad And Doubtful Debts @ March 2011 (versus $4.1 Billion @ September 2008); $10.54 Billion in General Provisions For Bad And Doubtful Debts @ March 2011 (versus $7.4 Billion @ September 2008); and $30.1 Billion in Total Impaired Assets @ March 2011 (versus $13.2 Billion @ September 2008).

In other words, our banks now have 83% more Bad And Doubtful Debts, and 128% more Impaired Assets lurking on their balance sheets, than at the peak of GFC1.

B3 Banks – Liabilities, shows that our banks had $2.54 Trillion in Total Liabilities @ June 2011 (versus $2.33 Trillion @ September 2008).

In other words, our banks now have $210 Billion more in Liabilities, than at the peak of GFC1.

… and the emerging economies of Asia are still doing quite well.

Lie #3.

The latest RBA Chart Pack shows quite clearly that our “emerging economy” ASEAN economic partners (not including China, India, and Japan) all have sharply falling economic growth, currently at the levels of 5 years ago (2006):

Source: RBA Chart Pack, August 2011

And while global confidence and global markets have taken a battering in recent weeks, overall, global growth remains reasonably firm

Lie #4.

The latest RBA Chart Pack shows quite clearly that World economic growth is falling sharply, with global growth (and especially that of our major trading partners) currently at levels of 6 years ago (2005):

Source: RBA Chart Pack, August 2011

… supported by continuing strong growth in China and good growth elsewhere in our region.

Lie #5.

The latest RBA Chart Pack shows quite clearly that China’s economic growth is falling, and is now below the levels of six years ago (2005), while India’s economic growth is now at levels of 5 years ago (2006):

Source: RBA Chart Pack, August 2011

Could this be a new record for Treasurer Swan?

Five lies, in two short sentences.

Why do we all stand by and permit such criminal dishonesty, from the Treasurer of our taxes?

Any Financial Officer for a public corporation who performed their duties in this way, would receive a very long sentence.

The deceived shareholders would insist on it.

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What The Senate Ignored: Banks Make The Most Profits On Fees To Get At Our Own Money

7 May

The Senate Economics Reference Committee released its report on Competition within the Australian banking sector yesterday.

The media has immediately focussed on one of the recommendations – that the Gillard government should “reconsider its decision to ban exit fees” on mortgages, “with a view to allowing enough time for the effectiveness of the existing ban on unfair and unconscionable exit fees …to be assessed”.

Controversy.  Wow-wee.

I’m much more interested in why both the Senate Committee, and the media, have ignored the far more obvious (and costly) example of banks gouging customers with “unfair and unconscionable” fees.

Their fees to access our own money.

Evidence from the RBA showed that the banks make far more profits from charging you to get at your own money, than they do from fees charged on credit cards.  Personal loans.  Even more than the profits from their fees on housing loans:

Economics Reference Committee | Competition in the Australian banking sector - Bank Fees 4.65

It gets worse.

The Committee also received evidence suggesting that bank fees hurt the poorest in our community the most.  And, that these poorest customers are effectively subsidising wealthier customers:

Economics Reference Committee | Competition in the Australian banking sector - Bank Fees 4.69

The Senate Committee made 39 recommendations concerning the banking sector. Did any of their recommendations try to tackle the fact that banks make the most profits on their fees charged simply to get at our own money? Or, the fact that bank fees hurt the poorest in our community the most?

Only if you think the following recommendation would actually achieve anything:

Economics Reference Committee | Competition in the Australian banking sector - Recomm. 31

Or, if you think that spending taxpayers money to set up special ATM’s in remote indigenous communities with low fees – rather than forcing banks to pull their greedy heads in – is a practical and just recommendation:

Economics Reference Committee | Competition in the Australian banking sector - Recomm. 32

This Senate Committee report leaves what is clearly the most “unfair and unconscionable” example of bank gouging effectively untouched.

It is the bank(ster)s most profitable rort.  Billions and billions and billions of little “transaction” and “service” fees.

The price of permission.

To get some of our own money.

Senators … for shame!

UPDATE:

Twitter user Yagu4Pm comments –

@BarnabyisRight banks never put ATMs in to help customers. It was to reduce labor costs & make huge profits by charging usage fees.
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