Major banks not 'screwing borrowers'

by Mackenzie McCarty04 Mar 2013

Former RBA governor Bernie Fraser has lambasted the major banks, saying they're putting shareholder interests above those of their customers. But one economist says the real story is not quite so simple.

In a Fairfax interview published this morning, Fraser says that despite lenders claiming they’re striking the right balance when it comes to serving investors, savers and borrowers, when it comes to mortgage-holders, the majors are putting profits first.

''It's a question of the relative priority they attach to their shareholders and their customers. That's been the case right through the recent period when they haven't always passed on all the RBA moves. They've had scope then, they have scope now, to [move downwards on interest rates] independently of the Reserve Bank. They've got room in terms of profitability; it's a question of their priorities, really.''

However, Macrobusiness economist, Leith van Onselen, told Australian Broker the major banks are not solely to blame.

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  • by Jerry Gibb 4/03/2013 2:01:06 PM

    Good on Bernie. Banks have always screwed their clients and will continue to use any reason to protect profits over giving the consumer the full benefits of RBA cuts.

  • by Edgar 4/03/2013 5:26:00 PM

    What on earth is Van Onselen smoking? That sort of circular logicis qite frankly a load of manure. Unfortunately he's left a large clarifier off his claim that if the banks had passed on the full reduction the RBA wouldn't have dropped the rates as much and borrowers would still be paying the same rate [but the banks wouldn't be able to make as big a profit]. Sorry son but most Aussies could live with that rather than the feeling they're being screwed.

  • by Borrower 5/03/2013 11:47:37 AM

    Bernie's right. The Emperor has no clothes.
    Let the record profits and bleats about cost of funding continue...