Clancy Yeates wrote in last Saturday’s SMH about three ways to level the playing field among the banks. If the federal government were serious about competition for the big four, as was the case before the GFC, they could:
- Extend the support for Residential Mortgage Backed Securitisation. Yeates wrote, “A proposal from the shadow treasurer, Joe Hockey, to extend the government’s credit rating to AAA-rated mortgage-backed securities is worth taking seriously. Banks already enjoy an implicit guarantee on their borrowing, after all.”
- Provide clarity about the bank deposit guarantee. “The government will review the guarantee next October but it is not clear what they will decide, and this uncertainty works against small lenders. As long as this remains up in the air, many savers cannot help but imagine their money is safer with the big banks – giving the majors another advantage over the smaller players.”
- Make it easier to switch banks. “The government is trying here, and unveiled a ”bank-switching” package two years ago. But the latest documents from July showed only 35 people a week had signed up to the scheme – a tiny share of the nation’s customers.”
The big four have had a dream run through the GFC, setting a ton of record profits, despite quite a few write-offs. They continue to make it difficult for SMEs, so why not help the smaller lenders compete for that and other markets with the changes above?