Time for banks to take one for the team

Time for banks to take one for the team

> Preparations for a new record high of one billion dollars in profits the big banks proclaim … Photos:. Douvis Louie / p> The contrast could not be more striking, as the Reserve Bank prepares to cut interest rates in order to kick start next week, an economy in rapid cooling, the big banks are always willing to give new record profits of billions dollar . Talk

is already turning on how much of the RBA rate cut, the big banks mortgage holders will

go Make no mistake:… profits are a good thing, and Australia needs a system of strong banks, and healthy, but there are more and more an argument that banks must play their part, start the economy . play should begin to pass the rate cut in full next Tuesday.

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In a post-financial crisis to tighten their belts, the banks seem the only forms including cast along as if nothing is changed.

has changed , but their market power, which is now stronger than ever before.

While it is clear that the RBA is a difficult time juggling the competing forces of an inflationary boom in the mining West Nullarbor with the funk of the recession on the East Coast, banks behave as if they were determined to keep their profit trajectory.

Other industries such as retail trade and services has been arguing for months that they need the stimulus of an interest rate reduction for private consumption.

Also, miners, in the midst of a once-in-a-lifetime boom in China pull the head cools. Commodity prices fall. A decline in coal prices has seen the investment expectations in terms of ease of mining.

bands are tightened around the world. The families are paying the debt. Companies seek to cut costs wherever possible.

Fr om the banks’ behavior, however, seems to believe that bank profits are sacred. Any criticism is the answer” about the need for a healthy banking system” and the need to pass on their higher cost of funding met.

banks are

their own worst enemies when it comes to public relations is: transfer rate rises to borrowers in full within days after its effective date, and often do not raise interest rates, deposit to account the total amount to delay rate cuts of weeks or months and then not spend all their profit margins increase.

The core of the problem banks at the moment is that you write very little new business, because no one to borrow.

Banks lend money to make money. And since no one is borrowing, the banks tightening their existing customer base to increase to profits and appease their bosses, the shareholders.

Banks act as if they are not willing to accept any crimping profits. Such short-term thinking stinks managers use their market power to cover the cracks with boards and investors.

But their position is so dominant in the market have a greater impact on the economy. It is likely that the banks make billions of dollars in profit yet, do their part to lift the broa der economy.

Analysts have pointed out that the upcoming reporting season for banks to be exciting for a sector, the price they received was for years – a low point before the shooting things. While net cash is unlikely to impress investors, the figure is entitled billion record profits.

banks try to protect their margins and, most importantly, have the market power to push through higher interest rates.

But as a result of low inflation into the markets this week, the price cuts in interest rates of four to the end of the year. Those economists who until this week, we thought it might be a rate cut only fear now the economic slowdown will have at least two interest rate cuts to stimulate the growth going.

Some analysts say this will keep a greater leverage of banks, some “parts of its own.

banks have recently discovered that the cost of financing is increasingly argued. This is true. But Not all the money that is raised in the open sea with high rates, is used for mortgage financing. Someone finance needs of companies. banks are increasingly relying on their deposits Australian operations to finance.

While their average cost increases have to feel mortgage holders remains with the can. The belt is further exacerbated.

E ‘in the interest of banks to lend money and create to borrow an environment and invest.

It would not be the worst thing to solve the ropes and to help the economy in general can be found on the feet.

Michael Evans is an experienced writer business day.