Top 10 at 10: Penalty fee feeding frenzy; Australian sperm drought; Hotchin Island; Cartoon bonanza; Dilbert
13th May 10, 10:04am
Here are my Top 10 links from around the Internet at 10am (shock/horror!). I welcome your additions and comments below or please send suggestions for Friday’s Top 10 at 10 to email@example.com 1. Feeding frenzy - There's only one thing less appealing than a banker. That's a lawyer who attacks bankers. (Or maybe the absolute worst thing is a journalist who attacks a lawyer who is attacking a banker...). IMF, the law firm in Australia that announced class action law suits against the big 4 banks 0ver penalty fees, has been overwhelmed with customers registering their complaints, the Sydney Morning Herald reported.
ONE thousand people an hour have swamped the hotlines at IMF Australia as the litigation firm confirmed it would fund a series of class action lawsuits against the big banks, which it claims have overcharged customers A$5 billion in penalty and late fees. The class action is set to be the biggest in corporate history and will target 12 banks, including the ANZ, Commonwealth Bank, National Australia Bank and Westpac, foreign banks and the regional banks. After news of the action broke on the Herald's website at noon yesterday, public interest in the case hit fever pitch. "It's been bedlam. The interest is huge because of the pent up anger these fees generate," the chief executive of IMF, Hugh McLernon, said.2. But will it succeed? - It turns out there isn't any precedent for Australian courts ruling against banks on penalty fees (which have now largely been dropped). Ian Rogers' excellent banking newsletter BankingDay reports that the only case that went before a court was won by the bank. As long as IMF is taking the risk, I suppose, but I wouldn't want to be the bank customer who spent money or time believing this case could be won.... And of course, in New Zealand, we rely on the Securities Commission and Commerce Commission to protect us and avoid these sort of law suits. Maybe the lawyers aren't so bad after all...
The essence of the Financial Redress case will be that the fees charged by banks (and credit card companies that IMF has also targeted) are out of all proportion to the true costs incurred by banks. This is a familiar line of argument and one that is not that well supported by case law. The only specific case on penalty fees resolved in Australian courts found in favour of the bank (or, in this case, Police Credit Union). The deputy chief magistrate in South Australia ruled in that case (late last year) that the plaintiff failed to prove that the fees were so disproportionate to the actual costs incurred by the credit union as a consequence of the breaches as to amount to penalties. The magistrate also found that while the account terms were not negotiable, there was no pressure upon the plaintiff to choose the credit union. He also found that the credit union’s contract terms and fee structures were “available and quite easy to understand.”Bank levy? - Bankers are public enemy number 1, particularly in nations where economies are in deep trouble because of greedy investment bankers running amok. That's much less of an issue here, but is certainly being jumped on by politicians in places like Britain, where the new Prime Minister David Cameron and his fresh-faced deputy Nick Clegg have announced a new bank levy and an investigation into separating Too Big to Fail banking behemoths into retail banks and investment banks.
"The parties agree that reform to the banking system is essential to avoid a repeat of Labour's financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs," the agreement between the Conservatives and the Liberal Democrats said. "We agree that a banking levy will be introduced. We will seek a detailed agreement on implementation." The pair said on Wednesday that they will seek to examine whether retail and investment banking divisions could be separated to lessen risk in the financial system -- which was a key plank of the Liberal Democrat manifesto. "The parties wish to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way," they said.Trademyhoe - Many thanks to MatS via email for pointing out this listing for a section on the Kapiti coast on TradeMe. Someone is promoting it as a "Dream Hoe". That's either a garden implement or...
Situated in exclusive Telford Way, Rosetta cove this sunny section will be perfect for your dream hoe - situated walking distance to Raumati Beach school & shops & Raumati Beach - You'll love the lifestyle here. Call Mike today5. Hotchin Island - Jenni McManus at Fairfax reports that Mark Hotchin is planning to build an 11 bedroom mansion on Waiheke Island. Has the man no shame? He certainly believes in his own personal housing shortage.
Across on Waiheke, locals say Hotchin wants to demolish the 20-year-old house standing on his beachfront properties at 46 and 46A Matapana Rd to make way for the planned new development. The two addresses have government valuations of $570,000 and $9.84m respectively. Designed by award-winning architect Andrew Patterson, the single-storey house will include a large swimming pool. Hotchin and interests associated with his family own about four hectares at Palm Beach. Recently, he has been buying up neighbouring properties to improve his beach access.Dropping like Estonia - The euro is on its knees, but still the Eurozone wants to expand and lock more countries into its death spiral. Estonia is next on the hit list, the NYTimes reports.
The European Commission on Wednesday recommended allowing Estonia to adopt the euro next year despite a critical report from the European Central Bank. The divergent views recall a similar split a decade ago over Greece’s readiness to join the euro zone, which is now struggling with a sovereign debt crisis sparked by — Greece. While the Baltic country is well within the limits on government spending and debt, it has a history of high inflation that raises concerns, the central bank said in an unusually blunt report.. It's coming - Royal Bank of Canada and Wells Fargo & Co reckon China may relax the yuan’s peg to dollar this month to head off criticism of its currency policy during May 24-25 talks with the U.S. and help tame inflation, Bloomberg reports. This would likely mean New Zealand's currency weakens a bit against the yuan too, which would help our exporters even more. 8. It couldn't happen to a nicer bunch of property owners - Buyers of homes in New South Wales worth more than A$500,000 are about to be hit by a teeny, weeny, itsy, bitsy, leettle tax that the government there announced in the dead of night, the Sydney Morning Herald reported. That's my kind of tax...Politicians. You gotta love 'em.
The announcement has outraged property groups, which branded it ''just another stamp duty increase'', while the opposition has criticised the timing of its release as ''sneaky''. Under the proposal, the portion of the sale amount between $500,000 and $1 million will attract a tax rate of 0.2 per cent, before the charge rises to 0.25 per cent for the portion of the sale above $1 million. The median Sydney house price is about $600,000, which would attract a charge of $200, while the tax on a property sold for $1.2 million would be $1500.9. Cue outrage - Compared to the American bankers, ours are a bunch of lily-livered pansies. NPR reports that the big four banks in America are often making US$100 million a day (!) from trading profits. This is after the Fed essentially gave them a government guarantee to go play on the casino and then lent them money for nothing. I still don't quite understand why the Americans aren't revolting (and rioting on the streets.) This November's elections will be interesting.
The near-zero short-term interest rate set by the Federal Reserve means that banks can borrow money essentially for free. When you can borrow for free, you can even lend money to the government and make a profit. Ten-year Treasury bonds paid an average interest rate of 3.7 percent last quarter, Bloomberg notes. "The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks," a guy from the co-founder of a company called Institutional Risk Analytics told Bloomberg. "It's a transfer from savers to banks."
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