banking

Andrew Little doubles down on threats to banks

Andrew Little has doubled down on his threats to banks:

Labour leader Andrew Little said he would not rule out legislating to force banks to pass on cuts by the Reserve Bank, after some banks failed to fully respond to a cut to the OCR to a new record low of 2.25 per cent.

That threat drew scorn from National, and the Green Party responded by saying it was not a measure it would look at.

On TVNZ’s Q+A programme today, Mr Little said he stood by his statements, which were about sending a clear signal to the banks to change their behaviour.

“I stand by the stance I took, which is to get very heavy-handed with the banks. Because the truth is when the banks fail to follow the signal that the Reserve Bank is sending, that’s keeping money out of the back pockets of ordinary Kiwis. ? Read more »

Little’s empty threats

Andrew Little has stated that he would “stiff arm” the banks.

But can he?

A former Reserve Bank economist, Michael Reddell, ?thinks Little is bluffing…badly.

But I still have no idea what, if anything, Labour is proposing the government or the Reserve Bank should do to ?stiff arm? the banks, to prevent widespread sales.? I?m pretty sure there are no existing legal powers that could appropriately be used for that purpose.? Of course, behind the scenes all sorts of threats and pressures could be brought to bear, but surely that isn?t how we want to country to be run???? So if Labour?s call means anything much?they must be talking of new special legislative provisions.??? There was a great deal of?resort to such measures?in New Zealand during the Great Depression of the 1930s ?? allowing writedowns of loans, and of interest rates. Perhaps one could mount an argument for those interventions ?? on a basis of a totally?unexpected collapse in the entire price level, an issue in macroeconomic mismanagement? ?? but what would the case for intervention now be?

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Chinese economic jitters and the Auckland housing market

Lately there have been some worry warts out there who are certain that the housing market is about to turn.

The key to it has been a minor downturn in sales in December, which doesn’t mean anything at all.

But speculation also exists that the Chinese have been turned off since the Brightline rules came into effect post-October 2015.

Now it’s jitters about China.

The New Year has started with renewed jitters about the state of the Chinese economy. Commodity prices – particularly oil – have fallen. Global share markets have continued their dance macabre to the alternate beats of pessimism and optimism. Some commentators have raised the spectre of another global financial crisis which further spooks the financial markets. The truth is that no one really knows and much of what is written is noise.

But one thing is certain. Governments have learned a lesson from the global financial crisis of 2007/8.

Well, doesn’t this just spoil the narrative that National only looks after its rich mates

The government has announced an initiative to assist?the poor with interest-free and low-interest loans to low-income borrowers that banks don’t normally lend to.

Helping the poor?

Pity the narrative doesn’t fit with Labour’s claims of helping rich mates….

A Government initiative will offer interest-free and low-interest loans to low-income borrowers banks don’t normally lend to.

BNZ announced today it would commit $10 million to a community finance initiative in partnership with the Government, Good Shepherd NZ and The Salvation Army.

BNZ spokesperson Michelle van Gaalen said the programme, to start with a one-year pilot, was designed to help people become self-sufficient and get away from using payday lenders and loan sharks.

“BNZ wants to help all New Zealanders be good with money, including those who currently don’t have access to conventional sources of credit,” van Gaalen said.

“Traditionally banks haven’t provided loans to customers with minimal income, so those people have been using the only other option they feel they have – borrowing at extortionate rates.”

BNZ will draw on the experience of its parent National Australia Bank which has been running a successful community finance programme for more than 10 years.? Read more »

Susan Edmonds flings the brown stuff to make sure some of it will stick

Susan Edmonds is a journalist at the NZ Herald. ?Today, she got a byline on an article with the headline

Big banks charging top dollar

The photo that goes with this piece of professional, decent and skilled writing is this

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Now, I had two reactions:

1) Who is Lisa Lyons, as in, why is she critical to the banking story, and

2) Why is Lisa Lyon’s famous enough to have her photo in the Getty Images library?

So, I set off reading.

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“A dog could run China?s banking system”

I wonder how far away the secret police are from arresting this brave fellow.

The former chief economist and spokesman of China?s National Bureau of Statistics estimated that the mainland?s economy grew 7.7 per cent in 2013, while also making a scathing criticism of China?s banking industry, likening it to an automated system that even a dog could successfully run.

?Banking in China has become like a highway toll system,? Yao Jingyuan said at a Saturday summit on China?s economy held at Nanjing University. ?Banks charge every time money goes through them.

“With this kind of operational model, banks will continue making money even if all the bank presidents go home to sleep and you replaced them by putting a small dog in their seats.?

Yao added that there were no longer any real bankers in China, and that most bankers had become ?freeloaders? who latched onto the wide profit margin they could enjoy by taking advantage of interest differences between deposits and loans. ?? Read more »

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Kiwibank successful at keeping banking costs down? Apparently not.

One of Labour’s big claims and justifications for them deciding to launch an insurance company to compete with the other 96 insurance companies in New Zealand was that Kiwibank had done a wonderful job of keeping banking costs down.

Hmmm…the NZ Herald reports something altogether different from Labour’s claims.

New Zealand’s big four banks collectively made more than $3.5 billion of profit in the last year in another record year for the sector.

Profits grew more than 9 per cent on 2011/12 – a boost of $303 million across the ANZ, Westpac, ASB and BNZ.

John Kensington, head of financial services at KPMG, said loan growth, lower funding costs and less pressure in competing for deposits had helped boost the bank profits.

At the same time the banks had also managed to keep a tight lid on costs while holding on to their margins. ? Read more »

Why the whole banking system is a scam – Godfrey Bloom

Why a Robin Hood tax won’t work

The lunatic left all promote a ‘Robin Hood’ tax, aka a Tobin Tax or Financial Transactions Tax. Matt McCarten, himself a stranger to paying tax, even promoted it in the Herald on Sunday.

The problem with such a tax is that it doesn’t work, and it has been tried before with?disastrous?consequences..

James Tobin, a Nobel-prize-winning economist and disciple of Keynes, first proposed the idea of a global transactions tax?on foreign exchange?in 1972. This newspaper has regularly criticised it on two counts: it would be unworkable unless all governments signed up to it (and perhaps even if they did); and a levy would harm the liquidity of financial markets, making asset prices more volatile. Now there is a third, equally valid objection: that a Tobin tax is a poor solution to the problems in banking?too much leverage, too little care taken in assessing risks and banks that are deemed too big to fail.? Read more »

Not sure the maths is right

Laura Walters of Fairfax launches a thinly veiled outrage attack on our banks, what I shall now call “outrage journalism”

New Zealand’s main banks made $2.13 a day for every man, woman and child in the country in the three months to December 31.

That compares with $1.93 in the September quarter, but is well down on the $2.87 earned in the December 2011 quarter.

The latest KPMG Financial Institutions Performance Survey shows net profits for the December quarter at the country’s main retail banks were $855 million, up 10.5 per cent on the previous quarter.

I’m not sure the maths is right. Let’s examine.? Read more »