Bankers considering enquiry attendence

Three political parties -Labour, the Greens and the Progressive Party - are banding together to launch their own inquiry into the relationship between the official cash rate and short term interest rates after Parliament's Finance and Expenditure Select Committee decided against a similar inquiry several weeks ago.

"Kiwis believe they are paying higher interest rates than they should be paying," Labour finance spokesperson David Cunliffe says. "Banks believe interest costs are justified. The facts should be put on the table fairly and openly so that people can see whether they are receiving a fair deal,"

The NZBA has released a statement saying it is yet to receive "full clarity around the nature, scope and merit" of the proposed inquiry.

"Each bank will be making its own decision on the extent, if any, of participation in this review, while the association will canvass members as to what engagement, if any, it has on members' behalf," it says.

Green Party finance spokesperson Russel Norman believes there is an "immediate need" for such an inquiry and says the recent Reserve Bank report on Funding Costs and Margins highlighted the growing bank spreads, particularly for floating rate mortgages.

"It's time to stop playing cat and mouse with the banks. We need answers. As law and policy makers, we don't have the information to assess what's really happening with bank profitability, lending practice, or their exposure to risk. This enquiry will attempt to break that dangerous impasse," Norman says.

A spokesperson for finance minister Bill English says English believes an inquiry will achieve nothing and "is really just a meeting of opposition".

Comments from our readers

On 22 July 2009 at 11:13 am Stephen Chui said:

My support to the inquiry of interest rates by our Three parties to the effect to protect the depositors' assets and deposits. As a retired banker, I wish to remind the banks that the banks' assets mostly comprise other depositors' money. They are utilizing 'other people's money' to make the profit, while putting the risks to loss to the Government under their guaranttee.

On 23 July 2009 at 3:31 pm Floating rates Down said:

Nice comment Steve I Fully support this enquiry too especially that the difference between OCR and floating rates has doubled since August 08 to about 4% ! yep 4%!. Check it out on the table next door! I say Kiwi bank (our bank)should lead the charge & reduce floating rates by 2% to the August 08 level difference to the OCR and ALL of NZ can benefit, not just the banks as is happening at the moment. And by the way why when this "banks" lead reccession are they the ones creaming us?

On 31 July 2009 at 2:24 pm mark said:

I am always amused by Banks non response to reductions in interest rates and how quickly they increase rates when the interest rate goes up. They then call foul when the economy suffers but still post incredible levels of profitability. Its about time the consumer got some real indication of how much money the Banks make out of interest rates and how they can justify maintaining current profit levels whilst businesses and private individuals suffer.

Bankers considering enquiry attendence

The New Zealand Bankers' Association (NZBA) is to canvass members to gauge the level of involvement it should take in the proposed opposition inquiry into bank interest rates.

Tuesday, July 21st 2009, 8:55PM 3 Comments

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