Banks 'need to explain' rates position

The banks have refused to give any detail as to why they can't pass on the benefits of an interest rate cut, opposition Treasury spokeswoman Julie Bishop says.
The Reserve Bank of Australia is expected to hand down an interest rate cut of half a percentage point Tuesday, but the banks have indicated they won't be able to pass on the cut because of costs.
"The banks have clearly convinced (federal Treasurer) Wayne Swan that they need the benefit of the rate cut rather than passing it onto say small business borrowers or mortgage holders, but we don't have any of that detail as to why the banks cannot afford to pass on the benefit of an interest rate cut," Ms Bishop told ABC radio.
"The banks did complain of higher borrowing costs earlier in the year and increased their margins on the official cash rate by half a percentage point.
"That margin has been maintained and the banks went on to make a record profit throughout this year."
There were also mixed messages coming from Prime Minister Kevin Rudd and Mr Swan, Ms Bishop said.
"Given that Kevin Rudd is talking of the need to pump-prime the economy, for a $20-billion infrastructure fund, it's confusing when Wayne Swan says that it's more important to protect the banks' profit than stimulate the economy, when he's talking of an interest rate cut."
It's important that the banks remain profitable, but at a time when the economy needed to be stimulated, the question was how much of the cut the banks could pass on, she said.
"And we've heard very little from the banks."
Ms Bishop said the opposition's offer to sit down with the government on a bipartisan level to discuss the economic situation was rejected.
"So we are dealing with the available evidence and the available evidence shows that the banks are highly profitable and could afford to pass on an interest rate cut to those people who desperately need it."

AAP 6 Oct 2008

The banks DO NOT and will NOT explain anything to ANYONE. Whilst interset rates rise they are quick to pass on the cost to the consumer, BUT when they fall the same transaction takes twice as long.

Banks make phenomenal profits, and in difficult financial times make similar high profits.

Common interest rates that banks give in Australia can be 8%, whilst overseas interest rates given to the public of 20% are NOT uncommon.