this whole fiasco into yet another investigation into banks is a huge waste of tax payer dollars- there's been what 70 odd inquires in the last few years? the royal commission cost enough so why wasn't this covered? If i was the banks id be rightly pissed and this is more of the banks money they need to pay to deal with it and more of a reason not to pass on rate cuts. Scomo and Frydenberg are both smart enough to realise exactly why the banks arent able to pass on the full cuts and this is nothing more than trying to score a few political points.
One of the ways APRA has helped the smaller banks is by increasing the capital requirements of the big banks so the smaller guys can offer cheaper rates but the main issue i agree is regulation of the banking sector stifling competition. Every time theres some sort of policy changes the big banks must be laughing. they are larger and much more able to cope with any changes than the smaller guys can and for new entrants its just another reason not to bother
for price setting the banks also have some sort of moral/social decisions to make. i.e there are a hell of a lot more depositors than borrowers, a lot of these depositors are self funded retirees who rely on the interest to live. the big banks are around the 1.60% mark over a 12 month term, compared with the cash rate of 0.75%. If they were to pass on in full each time the deposit rates would be about 0.50% (probably lower). how would this effect the spending patterns/inflation/economy overall? i have no idea but its a question that needs to be taken into consideration
they also have to take care of their shareholders who are almost always their customers, if you have super you have a large chunk of bank shares, if the banks do bad the whole economy suffers. Its got to a point where the big 4 are too big to fail its a fact that they are too big to let fail, Australia cant go around bailing out the banks US style. the 4 of them together have assets 4 times the annual GDP of Australia. if they start passing on too much of the rate cuts and profits dip they will lose their AA ratings (there was an article in the AFR the other day about it). how is this going to effect their share price and as a result pretty much everyone in the country's superannuation and as a flow on effect their retirement income?
Theres also the fact that they need to preserve capital if there is a housing bust, arrears skyrocket, international funding costs, regulatory changes etc - they are making it out to be a simple black and white.
They have all done some really dodgy things in the past that were uncovered by the RC which they have right coped some flack for and theres definitely a need for more competition but certainly glad they are as strong and profitable as they are because in a lot of ways their decisions can impact the country and individual wealth more than any government policy can.
Long story short - this ACCC investigation is a waste of time and money they should focus more on how to increase competition and reduce the Big 4 influence slowly over time
