The extreme concentration of the banking and financial systems means that ordinary working people lose out on a big scale.
The scandal-ridden four big banks — WestPac, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and ANZ — profit-gouge because they can. There is little regulation or government control.
Australian banks are the most profitable in the OECD: bank profits represent 2.9% of GDP. (Australia Institute). This means that ordinary workers and small businesses are paying more than they would if there was effective competition.
The Reserve Bank of Australia has found that the loan guarantee being enjoyed by the big banks equates to an effective Commonwealth subsidy of up to $4 billion a year.
The following problems derive from the four big banks’ extreme power: fraudulent financial planning advice; exorbitant credit card and home loan interest rates; the refusal by banks to pass on Reserve Bank interest rate cuts in full; bank bill swap rates collusion; the culture of huge commissions and pressure on staff to sell shonky financial products to customers; the massive salaries and bonuses paid to bank CEOs; the outsourcing and offshoring of jobs to low wage countries; and related insurance industry malpractices.
A comprehensive solution to this includes much more than a thorough, independent investigation and exposure via a royal commission, although that is essential.
Such a commission could publicly exposing the profit-gouging of Australia's private financial sector and ensure that the books be opened. It could provide the evidence for charges to be brought against the banking moguls who profit from these crimes and lead to a campaign to nationalise (or re-nationalise in the case of the CBA) the entire banking and financial sector, under community and workers' control.
A push to take back our wealth and assets that have been stolen by the big banks and financial institutions needs to happen.
A comprehensive royal commission into the banking and financial sector, with full powers to enforce testimony and information from bank CEOs and managements.
Put the big banks into public hands. Nationalise the Big Four, under workers' and community control. Full compensation to ordinary small investors.
Place the banks’ massive assets under public ownership, to be used for the good of the community and the environment. These funds could be used to build public works, and to fund public health, housing, education and transportation.
Placing banks in public hands, under community control, could provide essential services to meet society’s needs. Executives would not be paid millions, jobs would stay, interest rates would not be manipulated for profit and fees could be cut.
Banks must provide accessible loans to first home-buyers, small business and small farmers at low interest rates. An end to evictions of home-buyers and small businesspeople who fall behind in payments; reasonable repayment schedules must be arranged.
Government assistance to communities for the formation and maintenance of co-operative banks, at low interest rates.
Major banks to be mandated to invest in socially useful public infrastructure, such as public transport, health, education and recreation facilities and to divest from fossil fuel and environmentally damaging industries.