More pulp fiction from the banks
There is nothing more profitable for the banks than confusion about what they do. As long as they keep talking about acronyms no one has heard of and financial theories that no one understands, they can continue the enormously profitable business of borrowing money at low rates and lending it at high rates. This year alone the result of this strategy will generate after tax profits worth more than $22 billion, more than $1000 for every man woman and child in the country. The problem for the banks, however, is that they are finally being asked some hard questions about their simple strategy, and the answers haven’t been pretty. The hardest, and from the banks’ point of view the most heretical, question is the one that Steven Munchenberg from the Australian Bankers Association fumbled so badly in today’s Sydney Morning Herald: that is, why do banks even need to increase mortgage interest rates in line with movements in official interest rates?
Related documents
Between the Lines Newsletter
The biggest stories and the best analysis from the team at the Australia Institute, delivered to your inbox every fortnight.
You might also like
Millionaire Tim Gurner’s Refreshing Honesty Reveals the Soul of Business
Every now and then a window opens into the soul of the business community, and we catch a glimpse of the values and goals that shape the actions of the captains of industry.
The carbon con killing koalas
The NSW Labor Government took office promising to create a vast koala sanctuary on the state’s mid-north coast – the Great Koala National Park. Despite the threat of koala extinction in the state, more than a year later the Great Koala National Park is yet to be established.
67% of Australians Don’t Want Philip Lowe to Move Immediately into Private Sector
The Australia Institute surveyed a sample of 1,501 Australians about how long the outgoing Governor of the Reserve Bank of Australia, Philip Lowe, should have to wait before being able to begin work at a private bank.