RBA slams big banks
RBA Slams big banks
The Reserve Bank of Australia (RBA) has recently raised concerns over the big 4 banks tendency to raise interest rate levels above official rate rises. In its March analysis of rate movements the RBA pointed out that the major banks were guilty of excess pricing, or charging higher interest rates than they needed to.
The RBA is calling attention to the fact that during the global financial crisis the big 4 banks managed to increase the money they made from loans. The RBA acknowledged that the financial crisis made it more expensive for financial institutions to lend money. What the RBA has a problem with is that these large banks increased their interest margins more than what was needed to cover their increased operating costs.
The RBA is owned by the Australia government and its main responsibility is to formulate and implement monetary policy. In plainer English, the RBA’s responsibilities are to ensure:
• the stability of the currency of Australia
• the maintenance of full employment in Australia
• the economic prosperity and welfare of the people of Australia
So when the RBA alters the official interest rate they are trying to keep the Australia economy healthy. What the RBA is annoyed about is that the big banks have effectively leveraged extra profits off the recent interest rate rises, in a time when many Australians were doing it tough financially. With recent reports showing that Westpac, Commonwealth, ANZ and NAB all earned profits in the billions of dollars during the past year, perhaps the RBA has a point.
Nobody should be surprised or outraged to learn that the big banks main goal is to make profits. They are big businesses and have shareholders to keep happy. What some of your friends and colleagues may be surprised to learn is that your Credit Union is an excellent alternative to the big banks. It’s an alternative that puts customers and customer service first. It’s an alternative that is not all about profits but about building communities and helping people achieve their financial goals.
