While Mr Swan sits there crowing 'how smart am i' with his new banking reforms, he could be doing more harm than good, because the banks are simply untouchable if they so choose to be.

All the reforms in the world, designed to make banking more transparent, will amount to nothing in the way of savings, if banks simply choose not to pass on an interest rate cut.

Just remember Mr Swan, for every action, there is a reaction.

Have you considered that!

Considering your only tool for forcing banks to pass on rate cuts is 'guilt', you are playing a very dangerous game Mr Swan!

Sorry Rechtub, not my intention to start the new year by picking on you.
This is a subject you would be best avoiding.
A complex one clearly not understood by you in any detail.
It was the ALP who opened Australian banking up.
Not many on any side would today, disagree.
As law makers governments do have power, in this and other areas.
Australian Banks are in far better condition than others.
And used tax payers funds as insurance during the GFC.
You baffle me, what do you see as dangers in Swans move, are you aware both sides have and will continue to challenge banks greed?
Do we buy back the Commonwealth bank as a way to cut interest rates?

Ah, so it's the banks doing all the mismanaging eh ? They're not mismanaging, they
re making huge profits. They're just getting greedier & greedier & more brazen, sanctioned by Swan's gang. Was it the banks who squandered billions with all these one-off schemes to cover up incompetence ? Oh yeah, carrying on like a porkchop about the bad banks sounds pretty convincing but how about being a real Government & real Treasurer & pull the banks into line. Too much for Swanee maybe ?

A threat to set up a bank just for home loans, may keep them honest. Or we can say NO or CRAP.

Gentlemen, not sure that I see things the same way
as you. I find that Mr Swan's banking reforms are
a step in the right direction and cannot understand
your negativity. For example:

1) Mortgage exit fees can amount to thousands
of dollars. And, since Mr Swan banned exit fees in
July, 273,236 households have taken on new loans.
Which meant people were free to swap their home loans
without being penalised for it.

2) Home loan providers will now have to publish a
one-page mortgage fact sheet, designed to make
different home loan products directly comparable with
each other. Clients will now be able to work out the
best deal available for them. This will kick-start
competition among the banks - which can only be good
for clients.

*Considering your only tool for forcing banks to pass on rate cuts is 'guilt', you are playing a very dangerous game Mr Swan!*

Actually that is not the case, Rehctub. Mr Swan is simply playing
politics, on the assumption that the average punter like yourself,
does not know much about banking. Your post proves him correct.

Banks obtain around 40% of their money from offshore and that money
right now, is becoming more expensive, due to the EU financial
crisis.

So their average cost of funds is not declining by the amount
which the RBA lowers rates in Australia.

So if their real cost is higher, why should consumers not pay
accordingly?

You claim for yourself that business needs to be able to pass on
cost increases, but want to deny banks the same rights as you
claim for yourself. So clearly Mr Swan played a clever game of
politics, relying on your ignorance. He won.

Hay 579, it's great to be able to agree with you on something. A home loan public owned bank may be a bit messy, but could do the trick, with enough clout to pull the others into line a bit.

I am so glad I've got to where I have no need to borrow from anyone.

Do remember who it was that sold the Commonwealth. It is perfectly true to say that one Labor decision has cost millions of Ozzies billions.

If we don't get rid of Julie soon however, those costs will be very minor compared to what she will, & has all ready, cost us.

Lexi,
Swan is banning exit fees so people have more money left to pay for higher rates left, right & centre.
He's getting his hands on more more money that way. It's not smart at all, it's criminal. Or did you already forget the recent pay rise for parliamentarians. That's the kind of short memory ALP is exploiting. Shame on all the other parliamentarians for not rejecting it.

Lexi/yabby/ even hasbeen thanks comments not lost in a fog of failure to understand.
Our banks are not government owned.
Currently, at the first sign of danger we jump in to protect them.
Because without them we are nothing.
Swan did what every one in his job ever has done, talk the talk walk the walk saying he wants lower interest rates.
Still unable to see why Rechtub fears Swans actions

Yabby, I have no beef with the banks, nor do I have a problem with them passing on costs, however, if anyone should pay super profits tax, it's them.

Belly, you make me laugh at times. Any point if view will do, so long as it differs from mine.

Lexi, les wait and see how great Mr Swan is when people start to loose their jobs and the banks foreclose.

Sorry, I forgot, Mr Swan is also in denial about the looming jobs cricies.

If not for the banks most Aussies would not own their own homes. They are a necessary 'evil' for Australians who want everything instead of saving to get it. They are usually a good excuse to hide one's greed. Sure they are willing to feed that greed but no one makes anyone sign documents in this nation. When our greed is uncovered they are a convenient excuse for all those who fail to take responsibilty for their actions. None more so than our current Government addicted to borrowing and spending.

*however, if anyone should pay super profits tax, it's them.*

Hang on Rectub, the banks return on capital is less then what you
have quoted as being return on capital for your butcher shop.
So why a super profits tax on banks and not butchers?

I remind you that banking can still be a high risk investment. Just
take a look at the shareholders in American, British, and many
European banks, who have just lost their shirts in the last few
years.

Ok Yabby, so what is the combined assets of the big four. Not the capitalized assets, (share values),just the bricks, mortar, fixtures and dollars in the bank.

Now are you trying to tell me that banking is a higher risk than mining?

Rehtub, you'd have to read up the financials of the major banks
to add it up, but its often quoted in the press and comes back
to return on equity. Last time I checked, there were some miners
and even the odd manufacturer whose return on equity was well
ahead of the banks.

As to your second question, it depends on the miner and it depends
on the bank. An investment in BHP is certainly far safer then
and investment in Citibank, Bank of America, or most other global
banks. As to our local banks, yes they have done well whilst times
have been good, but when the Australian economy tanks at some stage
in the future, we will see.

If say the economy tanked completely, a miner like BHP could shut
down operations and wait for better times. A bank cannot do that.
Their shareholders are the first with their heads on the chopping
block, as we see now in Europe.

Yabby, no need to do the math, the banks have office space, often leased, IT goods, generally written off in 12 to 24 months, and really, that's about it.

What else do they have?

Furthermore, they don't run the risks the miners do, as they have their margins, they also charge for just about everything, and some.

The miners on the other hand are exposed to many risks, including commodity price drops, failed projects, environmental changes by governments. The list goes on.

Now I have no problem with taxing more, but not the way that is proposed.

Vic and the ACT don't want the royalties increased as they will miss out, but then again, when their government receives stamp duty on a property sale of one million, instead of brisbanes $600K, do they share that with us. No!

Another issue I have with the tax, is that it is unfair to shift the goal posts mid stream.

A percentage based royalty would fix that as well.

Now back to the banks, they make a killing with little risk, other than self inflicted.

Rechtub please!
I fall out with people I like and admire, yabby and Banjo, Bazz Poirot for a start.
Because my views are not for sale or swap, I just will not put on the cloak of niceness to fit in.
All views have value not one more, than honest ones.
Your rather insulting questions about our differences ignore I am not to only one here who disagrees with your stand.
I would still have that beer and sausage sanger with you, but if you got in to politics would insist on wearing personal protective equipment.
Both ear plugs and muffs.
I get it wrong, you do too, both of us must learn, every day, fixed positions, unwillingness to learn is brain death.
You are quite wrong yabby and gee forgive me, runner, are right.
Without sound stable banks we are nothing.
Super tax!? come on your would scream the place down if it was put on snags.
Have a great year my grumbling opponent but hear this.
If you both under estimate my ability to think, and over estimate yours, you will be easy meat in our verbal tennis mate.

*A percentage based royalty would fix that as well.*

Well we already have that. Its paid to State Govts.Check your
constitution, the states own minerals under the ground, the
Commonwealth owns offshore minerals.

*Now back to the banks, they make a killing with little risk, other than self inflicted.*

Sounds just like butcher shops to me. So why a super tax on banks
and not butcher shops?

Correct me if am wrong yabby, but I was of the opinion that royalties were a set amount, not a percentage.

Now on the other hand, if they are a percentage, well why the tax?

I have have always maintained, if you wish to share in the profits, you must also share in the risks. Thats what shares are about.

I think you get my point with the banks and thier return on capital investment.

As for belly, I hav no idea what he is on about.

Ok Rehctub, I will correct you. With things like iron ore and in
WA generally, royalties are a percentage. Qld uses a different
system again, AFAIK, which is a mix.

People forget the historic perspective of all this. For decades,
the miners were screwed into the ground by the Japanese, who controlled
demand. Mining iron ore and coal were seen as backward
industries and profits were low. The only way the miners made anything,
was by becoming more and more efficient with ever larger
machinery. Along comes China and its a complete game changer.
As demand soars, there is no ready supply to meet it, so prices
skyrocket. So the miners which hung in there for decades are now
getting their just rewards. But of course now the Federal Govt
wants in on this too, as rising company taxes collected by the
Govt are seemingly not enough.

Something not being discussed here is the real state of the banks.
The banks have been asked by AAPRA to report on the results of a
"stress test" on their financial robustness.
There is a real question implied here.
With their very large home mortgage exposure, the removal of EU funds
by Eu banks from Australian banks, will they stay viable if
unemployment rises significantly ?
Their overseas funding has dried up as banks around the world are not
lending to each other. The EU central bank pixel generated a big slice
of money and gave it at low interest rates to EU banks for them to
buy EU country bonds. Instead they just invested with the EU central
bank at a higher interest rate !

In these sort of circumstances is it any wonder there has been no
discussion of our banks stress tests ?
I don't think any banks are very safe until they recognise that we
are operating under different rules from now on.

*I don't think any banks are very safe until they recognise that we
are operating under different rules from now on.*

Well that's the thing, Bazz. The whole global financial system is
kind of interconnected and politically interfered with. So its
hard to predict the next black swan, as they call it.

Now if you take European banks, one would think that they would have
been ok, lending to Govts. That is clearly not the case, as Merkel
and Sarkozy tried to force them to take a 50% write off, which would
send most of them insolvent. OTOH countries like Greece and others
simply can't repay the loans and likely not afford the higher
interest rates which they now face.

IMHO, Australian houses are greatly overvalued and Australian
commercial real estate is too. The effect of the internet is yet
to fully play out, as shopkeepers go bust and landlords will be
forced to drop their rents. That will lower commercial property
values. Add a crisis in China and our banks could have all sorts
of issues to deal with. Which is exactly why they need lots of
reserves, to be ready for the unknown. That is especially so right
now, given so much economic uncertainty.

Yes Yabby, I agree, the whole situation is, world wide, very dodgey.
The whole system has been based on credit and the borrowing of very
large amounts by governments and the use of credit on a large scale by
individuals. The only polly worrying about it is Barnaby Joyce.

The very low GDP and growth has removed the surplus needed to repay
the loans and interest. Now we need a new type of economy that can
operate with zero growth and GDP.
This is a very different animal than the present system.

Very few economists have twigged this new situation and those that do
while they realise the size of the job don't know what to do with the
outstanding debt.
They cannot see a way to fix it without inflating it away.
If so money in the bank, like most small investors, is a problem.
Just go and buy enough food for the rest of your life or land.

It is interesting to read the antics of the financial advisors in the
papers or TV, including my son, who are of the firm opinion that all
will be right when growth returns.

Pigs might fly !