Bank-bashing as a sport

Many would say that it’s like shooting fish in a barrel to poke criticism at banks.  Doesn’t mean they don’t deserve it, though.

To be fair, they serve a very useful role in our capitalist society and we would, frankly, be buggered without them. Our whole way of life these days is predicated on debt. There was a time when our forebears had a handy maxim that if you didn’t have cash to make a purchase, you simply went without.

It was an eminently sensible mantra and saved many people from a lifetime of heartache worrying about their indebtedness.

But in an era when instant gratification reigns supreme, commonsense has been turned on its head as hedonism sucks us into its vortex of uncertainty.

Borrowing is, for the most part, quite a simple process these days. Easy access to credit is one of the defining characteristics of contemporary society, after all.

The issue with banks – Australian ones in this instance – is their level of profitability.

Okay, it is a no-brainer that banks should be profitable. We can all accept that, right? Yet the level of profitability is an issue of concern. Which makes the news that Australia’s major banks are THE most profitable in the world somewhat disconcerting.

A new survey by The Australian Institute says our big banks make a profit of $1460 for every man, woman and child in the nation.  Allowing for some very broad rounding, that’s a profit margin of about $32 billion. Not bad for a nation of roughly 22 million people, eh?

What deserves scrutiny is whether this level of profit is justifiable.

As pillars of our democratic, capitalist society one wants our banks to be robust, viable and stable. Generous would be a nice attribute but we should not, perhaps, be overly optimistic on that score.

As our major banks have lately created a new trend by refusing to pass-on to customers the full reduction in the cash rate determined by the Reserve Bank of Australia, their profit level is one of national interest. It should certainly be a topic of serious discussion to ensure their mission to maximise commercial advantage remains aligned with our societal objective that our major banks serve broader interests than just those of their own shareholders.

We’re watching you, guys, and we’re quite suspicious. Give us reason to choose alternatives and we assuredly will.