Banks' price gouging profit bonanza
"The Australia Institute has picked the week of another increase in mortgage rates to launch what it claims to be a comprehensive history of the price gouging habits of the big four banks.
"Not only have [the big four Australian banks] been able to take over 90 per cent of the lending market, but as the downturn passes their profits will rise exponentially. The National Australia Bank, the ANZ, the Commonwealth Bank and Westpac were able to turn billion dollar profits.
"Senior researcher with the Australia Institute David Richardson ... is convinced the banks are not only too profitable but their excess profits are being made at the expense of the Australian community.
"'At the moment the banks are making underlying profits of around $35 billion per annum in Australia, the equivalent of 3 per cent of GDP,' Mr Richardson said.
"'We estimate that around $20 billion of that is the additional profits they obtain through the exploitation of market power in Australia.'"
— March 5 ABC Online report.
But everyone else is doing it
"[Westpac,] which is already making about $18 million a day in profit — has written to hundreds of thousands of credit card holders that from June 'interest will also apply to interest charges and fees on your credit-card account'.
"But Westpac's spokeswoman defended the hike: 'We are only bringing our approach into line with industry practice ... it's no different to how any of the other banks do it.' ...
"Last month, Westpac chief executive Gail Kelly revealed the bank's profits were soaring. It made $1.6 billion for the three months to December — or $17.5 million a day — and a third more than it was making a year ago.
"The profit surge has been icing on the cake for Westpac, as it had already been named as the world's most profitable bank by the Boston Consulting Group."
— March 22 Daily Telegraph
Price gouging for Australia
[Australian Bankers's Association's David Bell responded:] "We think this is a very disappointing interpretation of the important role that Australia's banks played during the global financial crisis ...
"'In fact it completely ignores the social benefits of successful banks. In Australia we've had a very successful banking system right throughout the global financial crisis and that has helped us continue to lend, pay our taxes, contribute to superannuation and continue to employ people.'"
— ABC Online. The Australian Bankers' Association released a March 5 statement in response to the detailed evidence of bank profits being underpinned by price gouging, entitled "Profitable banks underpin our strong economy". We can sleep better knowing they are gouging us for our own good.