What’s that Governor?

OPPOSITION Leader Brendan Nelson says comments made by Reserve Bank of Australia (RBA) boss Glenn Stevens, defending major banks lifting home loan interest rates above the official cash rate, are borderline “insensitive”. Herald Sun: Brendan Nelson criticises Reserve Bank comments on rate rises

Whether or not Glenn Stevens remarks are ‘insensitive’ or not is entirely missing the point Mr Nelson. The statements are outside of the range of what has traditionally been an institution to regulate ‘independently’ the money supply in Australia. It brings into question recent statements by Rudd to legislate the further independence of the RBA. Nelson’s statement as leader of the opposition is as peculiar as repeated statements by Treasurer Wayne Swan, asking the major banks to show constraint. To hear politicians make emotive statements about banking instead of proactive legislation to claw back de-regulation is quite laughable, unless of course you happen to be an Australian suffering from ‘mortgage stress’.

What we can learn from both Glenn Stevens remarks and the charade of compassion from Wayne Swan, is a form of complicity to aid and abet an industry granted a free licence to wreak financial havoc upon ordinary Australians. We are further learning that the Rudd government has no plans to use standard legislative powers to curb banking powers to protect Australian consumers from predatory activities unleashed in the last 30 years by Coalition and Labor governments. Dont forget it was Paul Keating who contributed major collateral damage as treasurer under Hawke by lifting the ceiling on interest rates on advice/pressure from the Australian Banking Association. Interest rates in Australia are amongst the highest in the world and in the country where the alleged ‘sub prime’ crisis is occuring money is almost free by comparison. Christopher Zinn of Choice media correctly points out that Mr Stevens’ comments:

…didn’t address the failure of banks to explain their decision-making on rates. We need to know what is the quantum of the added costs that the banks are facing — what was the tipping point for NAB to put up their rate? If we knew that, we could remind them to put rates back down again when the situation changes

Well said Mr Zinn, the problem we face is that the Reserve Bank, the Treasurer, the Prime Minister, and the Banks restrict themselves to a limited language of cliches, pre-digested for a dulled down public which has for some time been isolated from basic facts and the truth.

The fact is there is no surprises about banking in Australia or for that matter anywhere else in the world. Howard saw to this back in the seventies when he sowed the seeds of de-regulation, Commonwealth Bank privatisation and the entry of new international players including ABN Amro, Rothschilds, Babcock and Brown…the money masters list goes on – fueling and profiting from the wholesale extraction of mineral, soil and water wealth from this country. For the time being the reins of banking have been set free and its difficult to decipher exactly what the RBA does in relation to the new regulator APRA. The last instalment of the banking changes occured in 2006, when all major banks went on-line with a global ‘risk management’ system, Basel 2, which tracks the customer debt of the major banks globally. The privacy implications for this alone are enormous but when you ask the question why our government has enabled private banking details to cross our national boundaries, without consent, you are getting into the nitty gritty of global banking and what it means to Australians.

The appointment of the RBA board is also contentious and occasionally spills into the papers. The government may refer to the RBA as independent but ask who’s making the appointments and who monitors potential conflicts of interest?: Recent case in point:

On Tuesday, November 29, Wayne Swan, the Shadow Treasurer asked of Costello in the first question of Question Time about an apparent statement that Costello made to Gerard (proposed RBA Board ), namely, “I know there’s an issue with the Tax Office but I don’t have a problem with you on the board”. Costello responded that he had no problem with Gerard, noting that “he brings a great understanding of Australian manufacturing industry to the board”, and that the obligatory declaration of interest was “indeed was signed by Mr Gerard”.

But then it gets a bit messy and we see how bent these RBA appointments can easily become:

Later it was said by Swan in the House of Representatives that Gerard’s company was using “tax havens as tax avoidance schemes to the value of $150 million” and that the declaration of interest mentioned was only in regard to his personal affairs and on asking the Treasurer when he knew this, claimed that him actually knowing the information “would breach the secrecy act”. Later Swan revealed that Gerard “and his corporate vehicles” have been “substantial donors” to the Liberal Party. Costello maintained that the Government “[does] not think that supporting the Liberal Party is a disqualification from holding ministerial office, prime ministerial office, Treasury office or other offices in Australia” Wikinewsflash

As ‘mortgage stress’ tightens across Australia we are likely to see a continuation of the same Swan/Stevens charade. A government that has the power to legislate change but is unlikely to intervene given its active role in finance de-regulation spanning back to the Fraser years. The good cop bad cop sideshow will continue and Treasurer Swan will no doubt offer more ridiculous consumer advice (let your fingers do the talking) instead of taking responsibility to manage banking in Australia, in the interest of people. As for the RBA and its directors they will continue to meet once a month and continue to play the political line but they are very unlikely to give much away about the real drivers controlling interest rates in Australia.

Further Information: 

Who Really Owns the RBA? (Reserve Bank of Australia)