PRICE  FIXING  DROVE  SUPER PRICES    ? ? ? ?

and  LED  tO   EXCESSIVE   INFLATION    ? ? ? ?

and  HIGHLY  RISING  COST  OF  LIVING    ? ? ? ?

For the sake of the little guy ...

Banking reforms unveiled Down Under to boost bank competition

CANBERRA —

Treasurer Wayne Swan said the reforms aimed to help mutual credit unions and building societies become a fifth pillar of Australia's finance sector, by making it easier for customers to leave the big four banks which currently dominate the home loan market.

The reforms aim to help unlisted credit unions and building societies access funding and customers, but analysts say they are unlikely to seriously hurt the profitability and share values of the major banks.

“Most of what has been announced has been flagged or leaked. I don't think there is anything really new or earthshattering here, so I don't see a huge reaction,” said RBS bank analyst John Buonaccorsi.

“But certainly over time, it will lead to slightly cheaper housing loans, because covered bonds are cheaper funding. But it is not going to cause a dramatic difference.”

Australia's four major banks — the Commonwealth Bank of Australia, National Australia Bank, Australia and New Zealand Banking Group and Westpac — currently control around 87 per cent of Australia's A$1.1-trillion ($1.4 trillion) home loan market.

Shares in the top four banks have slightly underperformed compared to the benchmark index since plans for the bank reforms were mooted last month.

The Australian Bankers Association, which represents the major banks, said some of the reforms would increase competition, but warned some regulatory changes, such as scrapping loan exit fees, could hurt smaller lenders.

“Regulatory interventions may be politically popular but risk being counter-productive. Exit fees reflect legitimate costs of mortgages and banning them will hurt small lenders,” Association chief executive Steven Munchenberg said.

Mr Swan said the government would invest a further A$4 billion in residential backed mortgage securities, a key source of funding to small lenders, would allow more “bullet bonds” for small lenders, and would scrap mortgage exit fees charged by large banks.

He said the government would also increase the powers of the competition regulator to prosecute any collusion among banks through interest-rate price signalling, and will ask former Reserve Bank of Australia governor Bernie Fraser to examine whether it is possible to have portable bank account numbers.

“Vigorous competition is the best way to keep interest rates for borrowers lower over time and create a system that offers real choice,” Mr Swan said.

Mr Swan announced the move to reform the sector early last month in response to growing public anger at rising mortgage rates, with the main banks all lifting rates above official central bank rate hikes and citing the higher cost of funding on international markets. 

The reform plan is the first of several political attempts to clip the powers of the big banks. The Australian government unveiled reforms to boost bank competition yesterday, allowing lenders to issue covered bonds for the first time and cracking down on interest rate signalling under a package meant to calm voter anger over rising mortgage interest rates.Reuters