Thursday 29th of February 2024

life at the trough ......

life at the trough .....

Banks will be put under further pressure this week when the government releases the formal definition of the term ''gouging'' that it will use to guide prosecutions.

Since July it has been illegal for a bank to charge a mortgage exit fee any higher than needed to cover its costs.

But until now no bank has been taken to court because the Australian Securities and Investments Commission has been preparing what it calls ''regulatory guidance'' detailing what it will regard as unfair.

The Prime Minister, Julia Gillard, said yesterday the guidelines would help crack down on the fees ''that keep people bound into their banks even though they want to change''.

The Treasurer, Wayne Swan, said they would ''give [bank] customers the capacity to ... get out of some of those very unfair mortgage exit fees that keep them locked in''.

But for most of Australia's 2.5 million mortgage holders the guidelines will do little. The law that came into force in July applies only to mortgages entered into since then.

The guidelines are also unlikely to result in many prosecutions. Government sources say few banks are likely to contravene the guidelines, meaning customer protection without the need to use the courts.

The Australian Securities and Investments Commission let the banks see the draft rules five months ago and is refining them. The bank-switch package unveiled in 2008 is rarely used. Only 1818 mortgage holders lodged forms in its first year.

For the present, rewards for switching have never been greater. For the first time since 1990, when the Reserve Bank began announcing rate moves, three big banks have held off with responses, opening a record gap with the Commonwealth Bank after it lifted rates 0.45 of a percentage point.

Banks await redefinition of fee gouging

back at the trough ......

Not so long ago, the government was singing the praises of the Commonwealth Bank and its boss, Ralph Norris. It was April last year and the nation was in the grip of the global financial crisis. The stimulus spending was at full speed and the government was urging sacrifice all round to preserve jobs until the trouble had passed.

In a slick public relations exercise, the Commonwealth Bank announced that Norris and his directors would take a 10 per cent pay cut over the financial year 2009-10

Still, he was lauded as a role model of executive restraint. It turned out to be hot air. Norris did not go backwards in 2009-10. His total package jumped by 80 per cent.

The reduction to his base salary was offset entirely by an increase in his short-term bonus and, when other extras were added, he received $16.15 million - $7 million more than he earned the year before.

CBA and its cronies can bank on the wails

Price Gouging: A pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits.

The term is not in widespread use in mainstream economic theory, but is sometimes used to refer to practices of a coercive monopoly which raises prices above the market rate that would otherwise prevail in a competitive environment.

usury .....

There seems to be an area of bank behaviour which no-one's game to mention: interest rates on credit cards! This affects millions of Australians ... at least as many as have mortgages. Most people seem focussed on mortgage rates, but credit card debt is a huge factor in many people's lives and many businesses. And they're a huge slice of the bank's profits!

It used to be the case that these rates fell whenever the Reserve Bank rate fell but, during the last two or three years, this largely stopped happening. Banks are offering investors (i.e. they're borrowing investors money) a 6% to 7% return. What are they charging borrowers? Here are some examples:

- CBA: Purchases: 19.24%. Cash advances:21.49%

- Westpac: Purchases: 19.34%. Cash advances: 21.24%

- NAB: Purchases: 19.49%

- Citibank: Purchases: 20.74%. Cash advances: 21.24%

So, they're borrowing at, let's say, 7% and re-lending at up to 21.24%! That's a margin of 14.24%! For doing what? Running a computer system! And, don't forget, on top of this 14% profit margin, there are all the "extra" charges and fees!

The traditional role of banks used to be as a safe haven for people's money. For this, a 4% margin was considered a suitable reward. But that was before the banks started building skyscraper head-offices and paying their executives millions in salaries. Now the banks have become the robber barons.

The Treasurer can't get away with the usual waffle about "shopping around" for better rates: the evidence shows there aren't any significantly better rates! And don't let the banks get away with claiming they need this obscenely high margin to cover defaults: there wouldn't be so many defaults if the rates weren't so greedy!

No Thanks to the Banks.

Our first but not only experience of Banks' rorts was when our savings were deposited in the NAB. Quite by accident we noticed the new charges that were going to be enforced on any of their clients who had a balance $300 or less and were entitled to a very modest interest for the Bank's use of their money.  There could have been thousands of them and we enquired why their money, of whatever amount, was not considered belonging to the depositor and should be treated as such.

The Bank Official told us that if the people with these small accounts did not operate their accounts, then the Bank would continue to charge administration fees anyway.

We asked him what would happen when the clients' money had been gobbled up? If we remember correctly, the account would be closed and forgotten.

We advised him that the amount of deposit clearly indicated that the investor would be a pensioner or a very poor individual.  That's business he said to my memory.

At the time we had some $20,000 deposited and immediately closed our account.  That too is business. 

"Well might they say......" Safe as a Bank!  NE OUBLIE.

hi babe....

“Hi Babe, thanks for last night. Lovely for you to visit. I always enjoy your company and our romps.”

The bombshell dropped earlier this month. Star witness for the prosecution, Natasha Keys, was under cross-examination by Saul Holt KC in the courthouse at Southport. It emerged in open court that Keys was having an affair with a senior National Australia Bank executive while she was also the girlfriend of NAB adversary and bank victims advocate Geoff Shannon.

Things aren’t going too well so far for the corporate regulator. The Australian Securities & Investments Commission (ASIC) is suing Shannon, claiming he was acting as a director while also a bankrupt. However, ASIC was also ordered to pay costs for the first couple of days following revelations that it relied on 16,000 documents provided to ASIC by Keys, a trove of emails which had not been given to Shannon’s defence team before the trial. 

And they are red hot. Besides the “Hi Babe” revelations and other personal matters, they shed light on the opaque world of banks, bank victim advocates, regulators and journalists (including journalist Michael West of this publication Michael West Media and reporters from AFR and SMH).

There is a tiny band of bank victim advocates, of which Geoff Shannon’s Unhappy Banking was one, and they are constantly at war with each other behind the scenes, as well as fighting the banks themselves and “dropping” stories to a handful of finance journalists to put pressure on the banks to settle with aggrieved customers.

The business model is to take a cut of any money recovered from the banks, whether by “lawyering up” or using media, as in this case of the blind pea farmer from Victoria who was charged 28% interest rates on his mortgage with the NAB.







FREE JULIAN ASSANGE NOW.......................