I'm sorry, I'm trying hard but I can't stop laughing.

Ok ok ok, I think I'm ok, haaaaaaaahaahahahahah oh gawd I'm off again.
Cunliffe and Goffee heheeeeeheeeeehe. I'm sorry, I tried hard honest.

Dear Hon Mr Cunliffe,

Please go ahead with your inquiry. I hope you make it as loud and as big as possible so as to show how much you care about our dear New Zealand Debtors who are paying every penny of their hard earn cash to big bad bankers. Show how all these evil foreign bankers (no longer Zurich gnomes, but shaped like kangaroos) are raping and pillaging our fair new zealand blood sweat and tears.

Best of all drive them away from our virgin shores and save us from ourselves...
Lead us not into financial temptations and deliver us from the evil foreign bankers.
Drive them all the way into "Gulch" valley and close the exits after that !!!

Goff has a problem,

Firstly he should stay quiet so the great unwashed forget that Labour had nine years to do stuff like this and didn't....but....if he does everyone is more likely to forget who he is.

Neven

this is a joke - and whats a bet they dont ask the most important question - WHY DONT YOU GIVE SAVERS BETTER RATES?? It will all be about our poor overindebted borrowers who are getting close to the best rates in history courtesy of an artificially low OCR.

I have to say I am in 2 minds when it comes to bank competition. On the one had I dont like to see people being screwed and banks making easy profits. On the other hand, increased competition has contributed to unsustainable lending practices and a housing bubble via:

- more 2nd tier banks oferring 0-5% loans, and in the process forcing tier 1 to follow suit
- cheaper rates for borrowing, makes it more attractive and increases amount people can borrow (the BNZ instigated mortgage war added another phase to our current housing bubble)
- fatter margins means banks can be profitable on smaller loans, you dont NEED to lend big and risky to make a profit

I would much rather see a return to the boring old staid banks of yesteryear, thats right - 30% deposits, show us your savings history, and no we will only lend 2-3* your income (and forget your wife's income). Consumers and the economy will be a lot better off. Thats way we can have a strong banking system AND a strong economy. It seems at present a strong banking system is dependant on a bubble economy.

The only way to achieve a much needed return is for the govt to provide decent regulation, and perhaps nationalisation of the whole lot. Neither party has the balls, the desire or the intellectual grasp of the real issues facing this country to take these steps. RESULT: either a massive depression to clear out the excess OR a worsening quality of life for NZers and fantastic life for bankers as the bubble remains propped up by govt policy, taxpayer largesse, horrendous immigration rates and general stupidity of new entrants to the market. Personally I am hoping for a depression, but I am waiting this out overseas so at least my quality of life aint being impacted in the meantime.

Did someone wake Labour up??? (That's incl. progessive and the Greens). Sounds like they have been asleep for the last nine years, they just got up and starts talking some sensible stuffs. But they aren't in control anymore and noone else is paying any attention. Just a buzzing annoyance noise they are making.

Productive Economy Council urges Labour to expand scope of banking inquiry

The Productive Economy Council has welcomed the announcement of an inquiry into bank profits by Labour, the Greens and the Progressives, but cautions that unless its terms of reference are broad enough, it may not get to the root of the problems the country faces with regards to banking and monetary policy.

"It's great to see some parliamentarians taking the issue seriously, after the Finance and Expenditure Select Committee choked on proceeding with its own inquiry," says PEC spokesman Selwyn Pellett, "but it seems that right now they are simply focusing on the relationship between the Official Cash Rate and short term interest rates. David Cunliffe says that the aim of the inquiry is for New Zealanders to have the opportunity to learn why banks are making the decisions they are making, and to discover if customers are getting a fair go or not. But there is much more at stake here than consumers getting a fair go from banks," he says.

"The banks' behaviour and policies have a direct effect on the economy, and that has implications for all of us. This country does not have a future without an export-led productive economy and that export sector has for a long time been the victim of our lack of a monetary policy that puts the interests of the economy, not the banks, first and foremost. Export businesses are perpetually at the mercy of our volatile currency, and if you follow the bread crumbs, the trail leads back to the Australian owned-banks and the currency traders. This isn't just about consumers paying less for money during a recession. It's about the long term health of our economy and the future of our country," says Pellett.

"We'd like to see the inquiry following the scope of the 1956 Royal Commission on Monetary, Banking, and Credit Systems. The country doesn't need a band-aid right now, it needs serious surgery if the economy is going to regain long-term health. That means establishing an appropriate Monetary Policy for New Zealand, getting control of our exchange rate and giving both the government and the Reserve Bank better tools to drive the economy in the right direction and prevent it being derailed by the self-interest of the banks and other third parties.

"The government is happy to set up a Productivity Taskforce, with what many assume to be a privatisation agenda, and yet they blocked an inquiry into the banking sector. If the government really wants to know why we lag behind Australia in productivity, then surely they need to look closely at all relevant factors, including how the banks influence the productive economy. And if Labour wants to gain widespread support for this inquiry then they need to delve deeper into the issue than just how banks affect the fortunes of home buyers. This issue is too important for the ideologies of left and right to simply use it as catalyst for trundling out the same old solutions. The country needs better than that from its politician and we hope that this inquiry can be a starting point for getting a real debate of all the issues and possible solutions out in the open," says Pellett.

Bring it on....

Cunliffe and Goff will be Morris dancing next week.

This site does get things moving - no need for a CIR to get em' going after all:

http://www.interest.co.nz/news/rbnz-says-fixed-mortgage-rates-ok-floatin...

Joe,

Good points. Its amazing how the stats are telling us we are wealthier than 30 years ago. I guess thats cos the stats are rigged - eg house prices are NOT included in our inflation index ... the most expensive and (aside from food) most important thing most people will buy is not considered an item worthy of putting in an inflation index.

Sal,

Robs point is that the more savings and less borrowing, the less houses cost, and the smaller our mortgages, teh better your kids lifestyles, and the less money paid overseas to foreigners as interest tribute and the more funds avaiable for businesses that build our economy OR to invest in overseas countries that reverses our CAcct deficit.

Its a very simple equation and a no brainer that NZ would be better off if we reduced our borrowings and dependance on housing. Its just that powerful groups (banks, property industry, investors, real estate agents and baby boomers) are opposed to anything that would interfere with their gravy train.

Funny I didnt see any enquiry from Labour when mortgage rates were 10.5% now the are 6%.

If they ever want a vote from anyone who is a saver they might want to just shut up. If we need our saving rates to increase lower interest rates are not the solution.

Inquiry good, but net must be cast wider

The New Zealand Manufacturers and Exporters Association (NZMEA) are supporting the opposition inquiry into the banking system, but say that the issues are much wider than banking margins. The failure of monetary policy to serve the interests of the tradeable economy lies at the heart of New Zealand's poor economic performance delivering uncompetitive interest rates, an overvalued exchange rate, and hindering real growth and wealth creation.

NZMEA Chief Executive John Walley says, "Proper debate on bank margins will be helpful because, as Alan Bollard has already noted, short term margins are too high and generally margins have increased since the financial crisis. However, the inquiry needs to go further than this and look at why New Zealand's interest rates are consistently higher than the rates of many of our competitors and how this is affecting our economic performance."

"Higher interest costs than our competitors and a high exchange rate caused by those high interest rates are the major reasons for the low investment and resulting low productivity that have caused the export sector to contract over the past seven years or so," says Mr. Walley.

"We saw high interest rates designed to curb inflation cause the New Zealand dollar to rise to over 80 US cents when the economy was in its "˜boom' period and now we are seeing comparatively high interest rates holding up the exchange rate even though our terms of trade have fallen away and the economy as a whole has faltered."

"Our monetary policy settings have proven to be ineffective at both ends of the economic cycle."

"The inquiry needs to look at how to create a financial sector that promotes rather than inhibits growth in the real economy."

Well said....

Excellent posts Les Rudd.

Whats happened here is... Labour, Greens & Progresive... have put their ear to the ground and heard the Buffalo coming.

Sadly, National has been too busy "Delivering the Pork" to their mates, to hear this.

I think "the Clash" once said "Fury of the Hour... Anger can be Power"... I just hope they know how to use it.

Jilll, Possibly Blind like... Jim was when he championed KiwiBank ?.

mouse how come Jims Bank, are less than competitive than the big 4 in some instances .Sorry again mouse could be the trap has gone off ,OUCH

Indeed George and that proves the point. We need a system which works for us and not the aussies. yanks, poms, and especially the Chinese. There are no quick fixes and there are plenty of other structual issues to address such as poor savings, over leveraged housing and farming, and weak monetary policy etc. But we need a banking system which is less dictated by the monetary policy of other nations regardless of who it is.

I agree with Les and Selwyn that we need a wider inquiry and a review of the entire system. Lets stop just poking holes and discuss real fundamental change so our childrens future is not owned by foreigners.

You and I are on the same hymn sheet, Israel, but I fear that the government that WE elected has seen the magnitude of our problems and knows that there is no easy way out, as you rightly allude to. The "let sleeping dogs lie" approach may be all that is left to us. WE have already sold our children's future to 'whoever' and WE are unwilling, or unable, to take an remedial actions necessary at this late stage. Further summits or enquiries by whichever body you care to mention are unlikely to produce a solution of any merit. Politics, eh..!! God Defend New Zealand, because........

Jill, I work for one of the 4 Big Banks.

In the last 12 months, Kiwibank have been writing 38% of the home loans in this country. This from a 4% market player! They are EXTREMELY competitive and have forced us to make pricing decisions that we wouldn't have to make if they weren't around.

I hate to admit it, but Kiwibank keep us on our toes. We are making a significant loss on our most popular TD rate right now because we have to match bloody Kiwibank to stay competitive.
As far as overall market share goes they are still small, but their growth over the last 2 years is nothing short of phenomonal. The next step for them will obviously be to start borrowing from overseas as domestic funding is basically tapped out. This will lengthen their loan book and make them an even stronger bank.

Regardless of whether you're a fan of Jim Anderton, you have to give them their due.

What a shame that this inquiry won't be extended to whether NZers are getting a good deal from Kiwibank; there's a few questions that could be usefully raised there, starting with:

Why is Kiwibank's all-up income - interest and fees - on a par with the major banks, when they were set up to be a low-fee operation?

Why has Kiwibank passed on less of the OCR cuts than the major banks?

How do taxpayers benefit from funding a business whose operating costs are wildly out of line with its competitors, including other small outfits such as TSB?

Miguel- taxpayers benefit through Kiwibank's profit ($38M) being bigger than it's expenditure. I would have thought that would be obvious....

It's fees are only on a par in 2009 because we have reduced our fees to match them!

I wouldn't want work for them at this stage but I'm interested in the anti-Kiwibank sentiment here.

Bank bashing the hot new game

http://www.mortgagerates.co.nz/blog/bank-bashing-the-hot-new-game/

"First up the government seemed vaguely interested in such an enquiry. Then it put the kybosh on it big time.

However, some of the government's key supporters such as Federated Farmers seem pretty keen on the idea.

This all leads to the observation while an enquiry may not amount to much the government is well and truly on the wrong side of the argument."

Yep, too true...

What we really need is an inquiry, into enquiry - is it allowed?

Thanks Michael Sharpe for your open book comments ,i am a home executive who since the change of government am $200 per week better off on my mortgage repayments ,one dosn't need too much perception to understand money in money out is the bottom line.I just get so agitated when i read that the 3shiver parties looking for a spine to crawl up,never made a sound when interest rates were sky high,i also recall when DON BRASH in the late 80s and early 90s got interest rates down from late teens early 20s under Labours FINANCIAL MISMANAGEMENT,seems to me to quote that lot they are the enemy within ,the 3 Blind mice parties,call it as you see it Michael its all perception.

Les: "Don't forget our real problem is not Bill E, John K, David C, Phil G, Alan A, the 4 Auzzie Banks - it is our own APATHY." So hang in there, don't give up, keep the iron sharpening the iron, say your stuff, but consider reprogramming yourself with hope that things can be different." - I couldn't agree with you more.

Doug: "Given the enormity of the global credit crisis, I like where we are at." - It is worry you think this. Indeed we are much much better off than many, but we could be and can be even more soundly positioned. You are right the banks exist to make a profit, and they should be encouraged to do so. The deeper issues are who the banks are owned by, the effect they have on our exchange rate, the pressure this then puts on our exporters, and ultimately the continued deterioration of our standard of living. I agree we have borrowed way too much and are now paying the price "“ but that is another issue. We must fight for the sovereignty of our financial system otherwise it will continued to be squirreled away by foreigners and we will ultimately end up like Iceland "“ bankrupt, and with no financial future. Our entire monetary system and consequently our economy is determined not by the Government we elected, or the Reserve bank or hard working kiwis "“ instead it is largely a product of a "fractional reserve" banking system owned and dictated by foreigners. Please watch this if you have time: http://video.google.com/videoplay?docid=-4179505350194809051

waymad - "chucking out the banksters and the entrepreneurial types is not a winning proposition."

chucking out - don't undestand?

banksters = entrepreneurial types - don't undestand?

Africa = NZ - don't understand? (Maybe Argentina, Iceland?)

waymad - can't disagree with us suffering a, "...shipload of debt owed offshore, a very bad productivity record, a decade of thoroughly misallocated Gubmint expenditure," but do we really have this, (yet?) "..and an underclass which is one welfare cheque away from rioting."

My take is that we can improve on all those, IF, this inquiry is broad enough and leads to some appropriate discussion and policy responses. But not inquiring, broadly enough, certainly won't. (See PEC and NZMEA press releases I pasted into my comments above.)

You say, "I'm very leary of letting too much of this demonisation out into public discourse, because, etc, etc". I disagree, it's a democracy, we don't have the facility of a second house, sel.committees it appears can be squashed like bugs and the issues are fundamental to appropriate outcomes on all four of your points:-

wider support for govt. - nothing to stop them supporting this, aside from.... I wonder if Bill E will give AB permission?

raises expectations - we do need to understand if we maintain the status quo we are screwed.

change in the real economy - we are desperate for it ("shipload of, etc, etc..")

business confidence - read around the site here about the cross-subbing of fixed to floating and bbr, and issues on monetary policy reform - exporters need confidence too!

Cheers, Les.

waymad - I agree with you on, "the very same crew who wasted nine good years, infantilised and enslaved an entire cohort by creating unsustainable dependencies of all stripes, and are now in deep denial about all that. Other peoples' money kept them in office. And now, quelle surprise, it's Other Peoples' Fault."

However, I don't see things as, "taking the banks outside the bar door for a little roughing up by the local yobbos". Are FedF, PEC, NZMEA and indeed AB yobbos? Nope, not in my view.

Supporting a lack of transparency, secrecy is surely where 'totalitarianism' starts? That wasn't Churchill's kind of democracy, was it? Practical, yes, but totalitarian, no - we may be in the pooh, but we are not at war, so I don't see this kind of investigation subverting the good ship NZ and grinding things to a halt. If any thing it might pump a few bilges, seal a few leaks and help set us on back on course.

If it really is that bad, and the risk is serious as, "managing to saw off the very thin branch" - then that justifies the inquiry in itself - in other words, NZ needs to affirm and develop it's economic sovereignty.

Cheers, Les.