Hindsight Wisdom from Frank Rich (NYT)

When will we ever learn that greed is the killer.

http://www.nytimes.com/2009/12/20/opinion/20rich.html?emc=eta1

Frank Rich: "only a few years after Enron's very public and extensively dissected crimes, the same bankers, federal regulatory agencies and securities-rating companies were giving toxic "assets" a pass. We were only too eager to go along for the lucrative ride until it crashed"

Frank Rich 2008

More grind directed at the Wank Bank

A fine summation from Ross Gittens.

http://www.smh.com.au/opinion/society-and-culture/a-fiveletter-word-for-banks-rush-to-fatten-profitability-20091208-khh3.html

Ross Gittens: "They were doing fine - even before they put through their extra rate rises. They did it not to keep their profitability, but to fatten it."

Mark my words the share price for Westpac will go up!

Banks still could be part of the solution. However, I'm not holding my breath.

Now where am I going with this?

I've reached the point there is nothing more to gain by whinging about Westpac's pleonexia. In a few days, as they know, they will be off the front page. The public and media will tire of vitriolic condemnations and return to their well worn head-holes in the sand. See no evil, hear no evil, basic apathy one can wager on. I'm confident the revolution is not going to happen this year 09. Be assured that nothing will change soon, certainly not from the governments perspective, at any rate.

Now that I have gotten banks off my chest it is time to go where I should have gone to from the beginning. I firmly believe the most important challenge we will face in our lifetime concerns the environment and our duty to stop our wasteful consumption and save the earth from ruination. So from this point forward I will concentrate on the Copenhagen talks and the global discourse on environment.

P.S. Don't worry banks will still be on the radar screen.

Banana Smoothies and Banana Bank Westpac

A beautiful bunch a' ripe banana

Daylight come and me wan' go home

Hide the deadly black tarantula

Daylight come and me wan' go home

- stanza from The Banana Boat Song, (Day-O)

Imagine, Harry Belafonte crooning this song with a blender grinding loudly in the background. At one point you are going to scream, "Stop, this racket is driving me crazy!"

One can only marvel at Westpac's latest unusual approach to serving the customer. With all due respect the jig is up, the daylight came and went days ago, and its now time to troddle home before that lurking tarantula turns into Sideshow Bob doing banana splits.

Unfortunately, I can't post the banana smoothie clip Westpac sent its customers. Hopefully you can still find it on this link.

http://www.smh.com.au/business/westpac-goes-bananas-with-email-on-rationale-behind-rate-rise-20091208-khog.html?autostart=1

Confused? I should get to the point.

Basically, Westpac sent an email with a clip/cartoon to their customers. It should have been titled Mortgages for Dummies.

The cartoon condescendingly explains how raising mortgage interest rates are like making smoothies from banana crops that have suffered damage from a severe storm. More expensive bananas translates into more expensive costs (ie. money), and since banks make money from virtually thin air (from other banks that borrow from other banks that keep a similar piddle of hard currency in their vaults) they are vulnerable to money that costs more to borrow. The dark clouds of competition frighten them that they will become bankrupt, but worse they feel for their customers who would suffer even greater harm should the banks be unable to turn over aberrant profit$. In other words without a tight-ass bank the dream of owning property is at risk.

Doesn't raising the interest rate, in fact, make it more difficult for clients to live day-0 and keep making their mortgage payments. How are average folk going to get a pay increase when banks are withholding credit to businesses, for example? Do workers overcome this by taking on additional stress, toiling longer hours or working more jobs? In the end people risk losing more than petty assets. What about health and happiness? Are these not important values? Frankly, is anything worth being a slave for? Is it just me, isn't there something perverse in their logic? Let's be honest, are there no other options? C'mon.

They are really something this bank. The more they try to justify their decision to gouge the customer the worse they appear. This business is now in the realm of silliness. The Sydney Morning Herald is like a pitbull on Westpac. I can't wait for tomorrow's news headline.

Be scared of the deadly black tarantula. It makes a mean banana smoothie.

Angst to Action

When banks turns the screws tighter the expected response from the serfs is to take it stoically by stuffing a rag in the mouth and biting down hard. There is little recourse but to submit to the inflicted pain. Extrication is not one of the options. When you're screwed you're really screwed.

In following the Westpac saga it is with some incredulity we find angst moving toward action, albeit more a ripple than a wave. Nonetheless we shall admire it for what it is worth.

Statement:

At Westpac sustainability means 'doing the right thing'. It's our short-hand for what is complex, values-based agenda focused on doing the right thing for our customers, our employees, our shareholders, our communities and our business.

The Westpac bank utilises community dialogue to determine how they deal with 'material issues,' for their stakeholders (shareholders). I am not sure what 'material issues' mean. It is code for something.

A number of agencies make up Westpac's Community Consultative Council. This council provides community feedback so that Westpac can determine its priorities for its stakeholders. The Council is an integral element of their Stakeholder Engagement Framework.

In response to the latest furor over doubling the interest rates Sydney Morning Herald reported that the Finance Sector Union and Australian Council of Trade Unions (ACTU) resigned from Westpac's Community Consultative Council. I checked Westpac's list and did not see these agencies posted there. I presume they have already been removed from the web page.

Further, Graeme Samuel, the head for the Australian Competition and Consumer Commission, announced that he is considering withdrawing support for Westpac's takeover of St. George Bank.

The sabers clash. Who's to say if any serious action will come from this. What is significant though is that community outrage is being taken one step further than being simply expressed .

http://www.smh.com.au/business/walkouts-over-westpac-rate-rises-20091206-kcuy.html

"Westpac is disappointed," said a spokesman, David Lording. "But we respect that sometimes opinions diverge."

So how does Westpac Respond?

Spin, baby spin. Its all the global financial crisis's fault! Wow! how convenient. It's the universal answer guaranteed to be indefensible. It works too. How many times have I heard Wayne Swan use it? As a defence it has lost credibility.

"Westpac tries a new twist on rate rise"

http://www.smh.com.au/business/property/westpac-tries-new-twist-on-rate-rise-20091207-kfbs.html

Adele Fergusen: Are we living in a parallel universe?

Also, check out the comments section. There are plenty of satisfied bank sympathisers registering their support for Westpac. So what's the problem with the rest of us?

Gail Kelly, CEO of Westpac

This little piggy wants more... More!

http://www.guardian.co.uk/business/2009/dec/03/bankers-executive-pay-bonuses-criticised

"As tensions escalated between the banks and Whitehall, ministers condemned the industry for paying huge bonuses at a time when the economy was still in recession and the taxpayer had committed more than £100bn to prevent banks from collapsing."

It's a bit hypocritical coming from those ministers who recently were humiliated over their own peccadilloes, but nonetheless reassuring to have on side, today, in these trying times.

But what about tomorrow? Ah, that's the £100bn question...

Fun and Games

Something happened this week which doesn't happen very often. And no, it wasn't the news about another celebrity sportsman falling from grace. It was something else even more amazing.

A few days ago I mentioned that Westpac had raised its standard variable rate double the cash interest rate the RBA had passed on to them. It seems the other banks were more cautious about following Westpac's lead so soon after. They decided to wait and see how Westpac would fare from the backlash, which was sure to emanate via the media and those most unfortunate patrons who still have business with them. Of course the question begs, why did the other banks hold off? And as it looks today, why did they decide not to follow suit?

We have all seen that gesture when someone winks and taps their nose with their finger to denote they are withholding information. Well actually, everyone knows that collusion is happening, but nobody talks about it, unless they are recklessly fearless or an impotent small fry not worth dusting off. It's an unspoken rule we all get, don't we? What Elephant?

Picking a fight with oil companies over outrageous, unqualified holiday petrol price increases, for example, is a futile exercise. When one jumps they all jump. They have perfected the art of disguising collusive behaviour.

Anyway, we all expect if one major bank makes a move then the others will follow. Not to be too conspicuous banks take turns being the leader. They think we do not know (nudge, nudge, wink). The way they normally work is through some tacit agreement (stringently denied by the banks of course) that involves one bank sticking its neck out and advancing something sure to ire people and businesses.

What was unusual this time around was the National Australia Bank (NAB) actually bucked this time honoured trend. How Westpac feels about this traitorous act is probably the reason they are pretty much silent. It will be interesting to see how things pan out.

Whether we believe it or not banks are sensitive to public scrutiny. Shamed and pressed, they can accommodate change. They do manage to recoup their losses in other ways, however, so don't fret too much for them. They are resilient in this regard. You can bet your mother's life that they will never put people over profits.

http://www.smh.com.au/business/commbank-takes-middle-ground-on-rates-20091204-k9x1.html

http://www.theage.com.au/opinion/westpac-executives-are-jumpy-20091202-k6fo.html

Peter Martin: "It's called, "the mating call of banks.""

http://www.smh.com.au/business/media-and-marketing/the-day-the-lights-went-out-at-westpac-20091203-k8sb.html

Julian Lee: "Whatever you may think about Westpac's decision to jump ahead of the market, it is guilty of displaying a breathtaking lack of nous when it comes to marketing."

You think?

Double the pleasure

As I was saying earlier about the greed of banks we have this Christmas tiding to uplift us. I am referring to Westpac Bank NSW. Within hours of the Reserve Bank of Australia (RBA) raising the official cash rate by 25 points Westpac announced an increase of their standard variable mortgage rate by 50 points. Not bad profit if one can get it. Not very ethical, but there you go.

Of course the bank profusely defended this action, citing continuing cost pressures from wholesale funding markets and the RBA's increase in the cash rate. Naturally, the bank feels regret that they have to take this action. I watched their television spokesman, Bill Evans, this morning fuddle his way through trying to justify the increase. On the ABC radio report the Westpac spokesperson read a statement basically saying that he could not comment on the bank's decision. Duh!

Well there are a number of not happy Jans and Jeffs running around town today crying foul. Of course, the Treasurer, Wayne Swan, can't see the justification for Westpac's reaction. The main banks have made outstanding profits during this supposed economic crisis. The banks received government support in the form of the bank deposit guarantee. Do you think the banks would see it to support the people in these difficult circumstances? Nnnnnope!

I think our government is so beholden to the banks they haven't the nerve to regulate them. We're cooked.

If the shoe fits...

http://www.smh.com.au/business/bank-doubles-rba-increase-to-recoup-costs-20091201-k3ts.html

Westpac's chief executive Gail Kelly: "This is bank bashing, isn't it?"

We're in the money, we're in the money, da da da

http://www.guardian.co.uk/business/2009/oct/15/goldman-sachs-record-bonus-pot

http://www.smh.com.au/business/westpac-could-reap-230m-from-early-rate-move-20091202-k6c8.html

We're following the leader, the leader, ... where ever it may go, dadum, dadum

http://www.smh.com.au/business/banks-reap-gains-on-reserve-hike-20091202-k6ba.html

The World Wide Story of our age - Bankers Win

The Times Online headline reads "Britain's bankers win double victory on bonuses and charges"

While this news is local to the U.K. this phenomena is veritably international in scope. Where I hail from, Australia, banks are effectively an unelected, unaccountable branch of government. Our feckless elected leaders, as we all are in substantial debt to these lending institutions, are at the mercy of the federal reserve and four major banks. Even better than interest debt they especially like how fees earn tonnes of money for them and they almost always get what they want when they want it. After all the laws were made for these guys. Some really reckless banks could crash but as we have learnt taxpayers can be forced to pick up the tab and then $ome when these captains of capitalism make, how does one say it delicately, errors of judgement. We bow to Wall Street - lest we offend them! Don't take my house away!

http://www.timesonline.co.uk/tol/money/consumer_affairs/article6932637.ece

Britain's bankers received a double boost yesterday as they celebrated a landmark victory over unauthorised overdraft fees and saw off the threat of a crackdown on pay. (more...)

National interest and policy making vs. the banking sector

The idea that banks can be regulated is ludicrous. Does anyone seriously believe our politicians and governments will stand up to them? If there is any doubt about this think how much our Australian government, for example, bends knee to the fossil energy lobbyists. We are in so much debt to banks that it scares me, and to be honest we do not have a strong track record when it comes to making bold decisions for the long term. Let's face it. We really don't like change at all, and that's because on the whole we tend to be a reluctant, apathetic and procrastinatory lot. Change will come whether we like it or not. I'd like to think we could be smart and make the hard choices that inevitably have to be made, preferably sooner than later.

http://www.abc.net.au/7.30/content/2009/s2712070.htm

Professor Ross Garnaut: "I think that Obama and the people closest to him know that that the influence has to be unwound, but Wall Street is taking nothing for granted, it's vesting more heavily in the political process now than ever before, and so you'd be an optimist to think that first best regulatory arrangements will be introduced."