Nationalise the Big Four banks

“Last week's parliamentary bank hearings were a roaring success — from a public relations standpoint,” ABC business reporter Michael Janda wrote on October 11.

Fairfax commentator Elizabeth Knight described the Turnbull government's bank inquiry on October 7 as “like a bad exercise in speed dating”.

“The bank executives ... proved boring enough, but with a suitable amount of contrition and just enough new information to stave off discussion of a royal commission,” Janda wrote.

The federal government will be hoping that its proposal for a banking tribunal will head off the growing pressure for a full-blown royal commission into the crimes of the big banks and the financial sector overall, as is being pushed by Labor and the Greens.

But a coalition of consumer groups and financial counsellors has warned in a submission to a review of external dispute resolution schemes in financial services: “We are very concerned that a new tribunal may in fact deliver worse outcomes for consumers. We are opposed to the establishment of a new banking tribunal. The consumer experience of tribunals has not been positive.”

Tribunals, like those that operate in the superannuation industry, are more legalistic than industry-funded ombudsman schemes. This can mean customers need to pay for lawyers on some occasions and it adds another layer of complexity. Far from resolving the problems faced by bank customers now, such a tribunal could leave them even more financially distressed.

Australia's Big Four banks — the Commonwealth, NAB, ANZ and Westpac — are the most concentrated and profitable set of banks in the world. These mega-banks are cutting their workforces, while paying their executives huge salaries and bonuses.

The scandals over fraudulent financial planning advice at the banks; exhorbitant credit card and home loan interest rates; the refusal of the banks to pass on Reserve Bank interest rate cuts in full; bank bill swap rates collusion; the culture of huge commissions and pressure on staff to sell shonky financial products to customers; the massive salaries and bonuses paid to bank CEOs; and related insurance industry malpractices require a thorough, independent investigation and exposure via a royal commission.

The biggest problem relates to home lending practices, where the Big Four issue 60% of their loans, and gain most of their inflated profits.

“This is why a royal commission is needed and why the banks will die in a ditch to avoid one — mortgages are their business and if it turns out that Australian home loans are a lot more sub-prime than global investors have been led to believe then there will be carnage for the Big Four's share prices, and probably the share market,” Janda noted.

The labour movement needs to move well beyond just supporting a royal commission into the banking industry.

As Socialist Alliance argues: Put the Big Banks in public hands. Nationalise the Big Four, under workers' and community control.

Place the massive assets they possess under public ownership, to be used for the good of the community. These funds could be used to build public works, and to fund public health, education and transport, instead of new coalmines and coal seam gas developments.

Banks in public hands, under community control, could provide essential services to ordinary people to meet human needs, not corporate profits. Executives would not be paid millions, jobs would stay, interest rates would not be manipulated for profit, fees could be cut and people would not face eviction by the banks, as they do now.

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