Stop this puritanical bureaucratic meddling
The puritanical smallmindedness of our bureaucratic class is perfectly captured by a petty interrogation launched by the Financial Markets Authority (FMA) and the Reserve Bank into the culture of our banking industry.
Banks are private firms that have to compete to earn a dollar. Twenty-six outfits hold banking licenses and there are smaller non-banking outfits constantly chipping away at their margins.
Yet both Westpac and BNZ recently recorded billion-dollar profits and the ANZ fell just pennies short of hitting the two billion mark.
If you don’t like your bank, you can change. According to the NZ Bankers Association we have the ‘‘fastest switching in the world’’ (although being an industry body they would say that). Our financial system requires stable, conservative, well-run banks. They achieve this by making large profits in the good times so they can weather the occasional recession.
Governments should stay away from banking. The last bank failure was the state-owned BNZ in 1990. Incoming Prime Minister Jim Bolger was forced to tip in $380m of tax-payers’ funds to stop the bank imploding. Thankfully the Australians took this turkey off the Crown’s hands a few years later and it’s been a solid performer ever since.
Repeated failures, including Helen Clark gifting a billion dollars to the wealthy investors of South Canterbury with her Crown guarantee scheme, has not stopped Wellington’s confidence that they should be meddling in the banking industry.
This misguided belief presumably prompted the FMA and Reserve Bank to investigate our banking culture, and the idiocy of the final report is best demonstrated by quoting from it.
‘‘Where banks have not identified any issues requiring remediation, bank boards and senior management need to seriously challenge whether this is because there are no issues, or because there are weaknesses in the processes and systems for identifying and recording issues.’’
Kafka could not have penned a better line.
The main gripe about banks appears to be that they make too much money and to be fair they probably do, but only because the Reserve Bank imposes oppressive requirements on who can becomes a bank and the FMA has successfully regulated the second-tier finance industry out of existence.
Firms that fail to respond to our demands will be replaced by those that do. The best guardians of a bank’s customers are the customers themselves.
The FMA serves no purpose other than to insulate a legion of government bureaucrats from the indignity of honest work.
The best guardians of a bank’s customers are the customers themselves.