Joe Hockey deserves it.
A federal Liberal MP has mistakenly rubbished opposition treasury spokesman Joe Hockey, describing as ‘‘lunatic fringe-type’’ the idea of parliament regulating how banks increase their interest rates.
Mr Hockey is demanding Treasurer Wayne Swan use all the levers of his position to prevent the banks hiking interest rates over and above Reserve Bank adjustments.
He suggested the coalition might be able to garner sufficient crossbench support in the parliament to take action against the banks if Mr Swan did not act.
Don Randall lampooned the idea as one typical of the Australian Greens.
‘‘This is just another one of their…lunatic fringe-type ideas,’’ he told reporters in Canberra.
Mr Swan jumped on the remarks saying not even his own party was prepared to support Mr Hockey’s ‘‘latest piece of ill-considered rubbish’’.
I like Hockey; but really, making the ALP look economically responsible is bad policy, bad strategy, and bad tactics.
They’ve definitely played with fire on this one. Hinting that “something” should be done when they know damn well that intervening would be a disaster.
Jacques Chester
21 Oct 10 at 10:17 am
Joe Hockey or Major Douglass?
.
21 Oct 10 at 10:23 am
Say it aint so, Joe?
Infidel Tiger
21 Oct 10 at 10:34 am
In fairness could somebody actually check what Hockey said?
I suspect this is another case of Swan attacking a strawman while being aided and abetted by lazy journalists.
New Gold Dream
21 Oct 10 at 11:15 am
This is his media release
http://www.joehockey.com/mediahub/mprDetail.aspx?prID=1074
The Treasurer must detail what steps he is taking to ensure banks do not further increase the profits they make from lending to home buyers and small businesses
Here he threatens parliment to take action
http://www.abc.net.au/news/stories/2010/10/21/3043966.htm
there is audio if you want to listen.
Steve Edney
21 Oct 10 at 11:27 am
Fair point here it is.
Sinclair Davidson
21 Oct 10 at 11:28 am
Steve – snap.
Sinclair Davidson
21 Oct 10 at 11:28 am
Dan Randall is also in trouble for referring to the ABC as the Gay BC
jtfsoon
21 Oct 10 at 11:34 am
Hockey is right, the RBA minutes outline there is no real case of an “out of cycle” rate rise yet the bank CEOs have been spruiking the inevitabiliy of a hike in retail lending spreads.
Parliament should take action if the banks are taking advantage of diminished competition to gouge customers.
What are the real policy options for enhancing competition in the banking sector?
Banning exit and deferred establishment fees?
Introducing account portability?
Certainly $2 for an ATM withdrawal is well beyond the cost of service and the network has natural monopoly properties. Why aren’t they subject to cost of service regulation?
New Gold Dream
21 Oct 10 at 12:01 pm
It’s not for the RBA to say how banks choose to manage their business.
Sinclair Davidson
21 Oct 10 at 12:05 pm
They’re not. The minutes read as follows: “Members noted staff estimates that banks’ funding costs had been relatively flat over recent months”.
It is part of the RBA’s job to determine what retail lending spreads have done and are likely to do when formulating monetary policy. Their assessment is independent, expert and timely.
It is also the job of politicians, like Swan and Hockey, to determine the competitive environment in which the banks operate.
New Gold Dream
21 Oct 10 at 12:40 pm
forgive us if we don’t trust your good faith here New Gold.
you’ve gone from saying ‘Hockey wuz framed’ to ‘OK he wasn’t framed, he was right’ and asking us to make an exception to general principle on financial deregulation because you suddenly think the RBA is god.
are you shilling for the Libs or a Hockey staffer?
jtfsoon
21 Oct 10 at 12:44 pm
You have evidence for this, yea?
I’m more upset with Hockey than with SwanDive as he ought to know better.
JC
21 Oct 10 at 12:53 pm
Hocko has done here what he probably does with the morning marmalade: spread it on far too thick.
C.L.
21 Oct 10 at 12:53 pm
Where did Hockey say he was proposing to set retail lending rates? Swan made that claim and Fairfax have repeated it endlessly today. The media dynamic here is appalling.
The RBA is independent, expert and I would challenge you to refute their analysis if you think it is flawed.
I will assume for your sake the ad hominem dig was humourous and well-intentioned.
New Gold Dream
21 Oct 10 at 12:57 pm
Hockey has proposed legislatively punish banks if they adjust their prices other than how he thinks they should. Its pricing fixing NGD, and I bet the greens are eager to sign up.
Steve Edney
21 Oct 10 at 1:06 pm
Okay then he should disavow it by coming out publicly and saying Shane Wand is a lying little turd
and then everyone would go quietly about their ways because no one would doubt it.. not even those slobs at Fairfax.
Oh so you’re having two bites at the cherry here.
look the RBA is a public sector entity whose prime and only focus in this matter is proper and effective conduct of monetary policy to ensure we operate in a non-inflationary environment.
It’s not their job to determine if the banks are taking a few more points in spread.
In any event the banks would be doing the RBA’s job in raising the spread instead of the RBA doing so, so what’s the RBA’s beef when they’re on a tightening bias?
They should fuck right off as it’s not their job to be worried about commercial spreads.
No don’t assume anything here.
And if you’re that concerned with oligopoly perhaps they ought to lay off the regulation of lending more.
JC
21 Oct 10 at 1:07 pm
Great. We now have a conservative party doing the bidding for the Gangrenes.
This shit is turning into a circus.
JC
21 Oct 10 at 1:08 pm
The RBA is quite explicit about taking retail lending spreads into account when setting monetary policy. They have to be, the cash rate is only one component of overall monetary conditions.
It is disappointing to see you gentlemen falling for the Fairfax beatup.
New Gold Dream
21 Oct 10 at 1:13 pm
what the hell does any of this have to do with whether setting a precedent for micromanagement of banks is a good thing, New Gold?
jtfsoon
21 Oct 10 at 1:15 pm
There is a good prima facie case for policy measures designed to enhance the level of competition in the banking sector if the industry can collectively raise retail lending rates irrespective of what their cost of funds have been doing.
New Gold Dream
21 Oct 10 at 1:21 pm
Then use competition policy, not regulation.
The same could be said about many sectors of the economy which are imperfectly competitive but doesn’t imply reintroducing a prices justification tribunal
jtfsoon
21 Oct 10 at 1:24 pm
Is this wrong then?
Look dude, the reason why banks spreads are going up is because regulation is strangling competition in that sector.
Bank balance sheets on the asset side can only increase by the size of capital. Seeing that nearly all of shadow lenders were taken out in the GFC the role of funding has now gone back to the banks in a much larger way.
As they increase lending their asset side of the balance sheet goes up naturally and they get closer to the various prudential/capital limits. They have no choice but to raise spreads.
In fact in a normalized market increasing spreads would lure more participants but because lending has become even more regulated than before this is no longer possible.
Banks are doing what is normal in a market where the number of participants have fallen and demand has increased or remained the same.
Hockey should go back to school and learn some economics or let Turnbull take over the role.
The last fucking thing we need is the conservatives doing the bidding for the Gangrenes.
JC
21 Oct 10 at 1:27 pm
Gold:
Capital used to anchor lending has fallen drastically since the GFC seeing that numerous shadow lenders are no longer around and the CP market is essentially closed.
If demand of loans is increasing and capital in that sector has fallen what do you think ought to be happening with spreads?
What does Hockey think?
Seriously.
JC
21 Oct 10 at 1:30 pm
Well that’s all I’ve been suggesting and my original point still stands.
The only person claiming the Coalition wants to set retail lending rates has been Wayne Swan.
It is a sad reflection on Australian democracy that his media handlers have been successful in boosting this story all day.
New Gold Dream
21 Oct 10 at 1:32 pm
I heard hockey on the radio and the buffoon clearly threatened to punish the banks for changing their prices. The sooner he moves to a new portfolio the better. Who really thinks that the govt could have survived the election with a half-decent economic critique from the opposition.
New Gold Dream must be from the CEC. It’s a katterite claim to suggest that govt price fixing and manipulation enhances competition. I suppose he wants to protect the corner store from woolies and coles too.
pedro
21 Oct 10 at 1:37 pm
And I’ll repeat, let Hockey come out and say Swandive is a lying little turd. No one would doubt that.
JC
21 Oct 10 at 1:37 pm
“The only person claiming the Coalition wants to set retail lending rates has been Wayne Swan.”
strawman alert!
pedro
21 Oct 10 at 1:39 pm
From the Oz:
“Opposition treasury spokesman Joe Hockey today suggested four measures, including the possibility of setting higher fees that banks pay to the industry regulator APRA, and using new global rules on capital and liquidity, intended to make banks safer, to reduce bank profits.
Mr Hockey said his plan did not represent a re-regulation of banks, as they were already subject to strict regulation, but the government had a “range of levers” available to it to put a check on profiteering.”
There’s that word: “profiteering”. Isn’t it time someone reminded the fat fool that increases in profits in the status quo helps create the future competition that brings prices back down again. Mr Hockey’s version of sovereign risk will be a discouragement to new entrants.
pedro
21 Oct 10 at 1:45 pm
Complete idiocy feeding on itself, Fairfax are a disgrace.
http://www.smh.com.au/business/never-let-facts-get-in-the-way-of-good-demagoguery-20101021-16va7.html?autostart=1
New Gold Dream
21 Oct 10 at 1:58 pm
hey hockey staffer, joe hasn’t backed down from his comments. where’s the beatup?
jtfsoon
21 Oct 10 at 2:05 pm
Why should anyone be press-ganged into backing down from comments they haven’t made?
The ABC and ABA have joined the axis of retardation.
I guess if Wayne Swan says something it must be true.
http://www.bankers.asn.au/default.aspx?ArticleID=1507
http://www.abc.net.au/news/stories/2010/10/21/3044519.htm?section=business
New Gold Dream
21 Oct 10 at 2:14 pm
New Gold
Do you often defend rocks or those as dumb as one?
Peter Patton
21 Oct 10 at 2:15 pm
New Gold
Did you write the bimbo’s “idea” perhaps?
Peter Patton
21 Oct 10 at 2:15 pm
New Gold
wanting to retrospectively punish banks by cutting their profits for making a decision you don’t agree with is just as bad as regulating margins.
jtfsoon
21 Oct 10 at 2:22 pm
Better add the Australian to your Axis of retardation list. Obvioulsy they are part of the Fairfax beat up as well.
http://www.theaustralian.com.au/national-affairs/treasury/banks-say-coalition-call-they-be-punished-for-lifting-interest-rates-is-not-justified/story-fn59nsif-1225941714852
Steve Edney
21 Oct 10 at 2:24 pm
NGD, perhaps the answer is to ban fractional reserve banking?
Steve Edney
21 Oct 10 at 2:27 pm
Ensuring an adequate level of competition exists in the banking sector and that they pay for the implicit guarantees they receive from the taxpayer is first rate public policy.
How many of you guys put your hand up for letting the global financial system collapse after Lehman Brothers finally tipped over?
New Gold Dream
21 Oct 10 at 2:29 pm
Joe’s wife works for a bank.
Well – Deutsche Bank, but they sort of roll along in the banking space.
Should make for some interesting pillow talk when Joe gets home next !
Myrddin Seren
21 Oct 10 at 2:32 pm
actually a lot of us here didn’t support guarantees for the banks.
but more to the point if you’re only forcing banks to pay more because they have made a pricing decision you disagree with, then that additional payment has nothing to do with repaying their g’tees. it sends a signal that you are willing to micromanage bank conduct.
jtfsoon
21 Oct 10 at 2:32 pm
How many of you guys put your hand up for letting the global financial system collapse after Lehman Brothers finally tipped over?
I did.
Infidel Tiger
21 Oct 10 at 2:34 pm
Steve -
*I summon thee Fire-Djinn of the Southern Quarter, be the torch which would ignite me, immolate me in your presence…*
“#
Ensuring an adequate level of competition exists in the banking sector and that they pay for the implicit guarantees they receive from the taxpayer is first rate public policy.
How many of you guys put your hand up for letting the global financial system collapse after Lehman Brothers finally tipped over?”
So Barney Frank being bribed by Countrywide was good public policy, but it’s our fault (not Bush, Clinton or Greenspan’s) that the US had a banking crisis?
Dude. What are you on? I need some of that shit BAD!
.
21 Oct 10 at 2:34 pm
On the contrary, The Australian actually reported what Hockey proposed which put Swan’s absurd remarks in the proper context.
New Gold Dream
21 Oct 10 at 2:36 pm
Well come on, explain in full what they really said.
.
21 Oct 10 at 2:37 pm
Stop being an idiot, Edney.
There is no question for which the answer is not “ban fractional reserve banking”.
Tillman
21 Oct 10 at 2:46 pm
I reckon the demon summoning gag is better. But of course growth deflation would keep satanic rituals to a bare minimum. Men over 35 could form posses of armed vigilantes to mop up the recalcitrants. We could reward them with arranged marriages with beautiful kidnapped women from the mid east.
.
21 Oct 10 at 2:48 pm
How many of you guys put your hand up for letting the global financial system collapse after Lehman Brothers finally tipped over?
likewise.
daddy dave
21 Oct 10 at 3:04 pm
Fine, but how does one properly price that if the government is trying to price it.
It’s not market driven and therefore very difficult to price.
No, I took the view that the government fucked it up through bad monetary policy and it was their job to put it back together again seeing they caused it.
JC
21 Oct 10 at 3:10 pm
NGD,
In the version you apparently agree with he wants to punish the banks for not setting the price he wants. He has various ideas from punitively increasing capital charges, or charging fees, to binding them in red tape. Whatever it is it is still price fixing.
So stop arguing over wording, do you agree with the measures as outlined in the Australian?
Steve Edney
21 Oct 10 at 3:23 pm
The only legitimate criticism that Joe Hockey could have made is to ask the question whether the big banks have been ‘signalling’ to each other when they talk publicly about the need to lift mortgage rates above the cash rate increases because of the increased cost of funds. Signalling is an offence in the TPA.
Judith Sloan
21 Oct 10 at 5:33 pm
Hockey has been subject to media crucifixion on the basis of comments he never made and a policy position he never advocated. Swan has gotten away with murder here and the journalists played along uncritically.
Today was a master class in how this government works the media, who in some sectors are pathologically biased. Attacking straw men was Rudd’s modus operandi during his entire term in office and Swan has learnt those lessons well.
I don’t give two bean about what Hockey said – most of which was quite reasonable in any case – it is the fact that WHAT HE NEVER SAID has become the story that I find absurd. This is not a democracy, this is a sideshow run by propagandists.
New Gold Dream
21 Oct 10 at 6:01 pm
“I don’t give two bean about what Hockey said – most of which was quite reasonable in any case”
I cannot agree. His 2nd press conference today had shades of monetary crank, Major Douglass.
Does Hockey now support social credit?
“Swan has gotten away with murder here and the journalists played along uncritically.”
Out with it then! You keep saying this but won’t specify what you’re talking about.
.
21 Oct 10 at 6:51 pm
How many of you guys put your hand up for letting the global financial system collapse after Lehman Brothers finally tipped over?
And me.
.
To me a real problem here is that if Swan or a future Treasurer gets it in their head to do something even sillier than usual with regulating banks (like price controls) this would be a good one to point back at and say “See – you supported it then!”
Bloody stupid populist nonsense at best.
Andrew Reynolds
21 Oct 10 at 7:25 pm
Gold:
It’s his fault for being an idiot. His only response should be that banks set market rates, not the government. Period.
JC
21 Oct 10 at 7:28 pm
See here.
Sinclair Davidson
21 Oct 10 at 7:43 pm
New Gold
I voted Libs in the House – I live in Wentworth. However, if Hockey and Abbott are still leading them at the next election, Turnbull will be right at the very bottom of my ballot paper. FFS. Get rid of these morons.
Peter Patton
22 Oct 10 at 3:59 am
Hockey has a suicide pact with himself. Today he is in the Oz trying to cover up but really digging the hole deeper. He should just shut the fuck up. I don’t see how he can survive.
One thing seems certain, that CEC dude new gold dream seems to be writing the script Hockey is trying to hide under.
http://www.theaustralian.com.au/news/opinion/new-era-finance-sector-must-be-held-accountable/story-e6frg6zo-1225941954054
pedro
22 Oct 10 at 7:17 am
Patton, we know you’re a Turnbull man… therefore you’ll never put him last on the ballot.
daddy dave
22 Oct 10 at 7:29 am
Hockey is getting some support other than from NGD and Bob Brown, Deb Cameron on ABC radio usually strongly critical of the Liberal party was this morning was very excited, and seemed to be saying that Hockey had copped a lot of criticism from the media but had really “put his finger on something”.
Steve Edney
22 Oct 10 at 8:35 am
there are two points here.
Firstly Hockey is obviously sprouting nonsense.
Secondly we have seen from two RBA publications that interest margins have not been affected by higher borrowing costs banks spokesman attempting to justify raising their rates higher than the cash rate have been at their usual pathetic level.
Wayne Swan has been consistent on this . He did not criticise increasing rates to boost margins in the GFC and just after the GFC however he has of late been highly critical because their interest margins have been very ‘healthy’.
What he needs to do is introduce competition into the sector
Life on Mars
22 Oct 10 at 8:41 am
SE
Agreed, that the bumbling buffoon HAS put his finger on something, but fucked if he could ever work it out!
Peter Patton
22 Oct 10 at 8:47 am
He COULD try a populist bank-bashing wedge of the neoliberal ALP, but he is not Howard; he’d fuck it up big time.
Peter Patton
22 Oct 10 at 8:47 am
“Agreed, that the bumbling buffoon HAS put his finger on something”
It’s not “on”, it’s “in”, his own arse.
pedro
22 Oct 10 at 1:54 pm