Punitive action against banks

By Rod Benson

The nation’s big banks are once again returning record profits to their investors, and approving record salaries and benefits for their senior executives.  These actions have unleashed a tidal wave of criticism, with Shadow Treasurer Joe Hockey going so far as to suggest that the government should impose punitive measures to “rein in” the banks.

Now we’d all like to see lower bank fees, lower interest rates, and greater competition between banks.  But a bank is just a business like any other, isn’t it?  Well yes, if by that we mean that a bank is subject to market forces and exists to turn a profit. 

At the same time, banks are in a uniquely privileged position.  They are indispensible; their services provide the fuel on which other businesses – and families – rely; and they’re virtually guaranteed not to fail – propped up by taxpayers in a crisis, as we have witnessed these past two years.

But if they consistently act to the detriment of the community that feeds them, surely the community has the right to take punitive action.  Of course, the banks know we won’t do that. 

Broadcast on 2CH Sydney, 14 November 2010.

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