Peters Speech - The New Breed Of Bank Robber
Excerpts from an address by the Rt Hon Winston Peters MP to a public meeting at the Invercargill Working Mens Club, 154 Esk Street, Invercargill at 1230pm, 10th November 1999.
Theme : “THE NEW BREED OF BANK ROBBER – THE BANK!”
The overseas banking cartels which control the New Zealand financial sector are profiteering at the expense of New Zealanders.
The latest survey of bank profits by Massey University show that the banks are making more than 22 per cent return on their investment.
This is an incredible rate - and confirms the suspicions of most New Zealanders that they are being robbed blind in the interests of foreign shareholders.
The Bank of New Zealand is a case in point.
After being bailed out by New Zealand taxpayers three times at a cost of billions of dollars it was hocked off cheap to the National Australia Bank for only $1.5 billion in 1992.
Since then it has already returned its Aussie owners nearly $1.8 billion.
It is literally a cash cow and its New Zealand customers are being milked to provide the profits.
What we are facing is an overseas owned financial bloc continually raising charges and reducing services.
Here are typical examples that affect all of us.
Take these so-called activity fees which the Banks charge for the privilege of using our money.
The Banks have continually and sneakily increased those activity fees from an average of 6 cents in 1981 to 16 cents in 1991 to 24 cents in 1999.
That represents a price increase of 400%.
There can be additional costs as high as 75 cents a cheque – they used to be fifteen cents a cheque (that’s a 300 per cent increase).
It will cost you $15 if you accidentally go into overdraft – that is even if you are only two dollars over.
$ 25 for a dishonored cheque, and an automatic payment charge of $5.
This is extortion given the efficiency of modern computer systems and the monopoly position enjoyed by the banks.
That of course is why we are all encouraged to use such payment systems.
And when you are encouraged to consolidate your accounts with one bank remember that that bank can shift your money around your accounts without telling you. It is all there in the small print.
While the banks have been racheting up their charges to the consumers, they have been busy slashing their own costs.
In the last decade,10,000 New Zealanders have lost their jobs in banks, while 555 bank branches have been shut around the country.
While doing this, the banks have fed a line that they are “improving efficiency and providing better customer services”.
Those bank closures are a huge price for our communities to pay for the apparent convenience and cheapness of plastic cards.
Let us not forget that these were distributed free in the first instance.
The banks gave us guarantees of nationwide coverage and all bank acceptance to get us to use this new and useful form of financial mechanism.
New Zealanders were flattered into believing that we were far ahead of the rest of the world in our uptake of new technology.
We were told New Zealand was going to be the financial capital of the South Pacific.
Now we see Westpac restricting the use of its ATM machines to its customers only.
That is a gross abuse of the position of market dominance it has achieved by simply buying out the opposition.
The Banks see New Zealand as no more or less than a Monopoly game, though played with real money. The problem is–it is our money being played with.
The sales process used on the New Zealand consumer by these overseas owned banks is little different to those used by a drug dealer in Los Angeles.
First, entice the user with a cheap and exciting product.
Second, when the user is hooked, raise the price to the limit the market will bear.
Third, buy up or frighten out the local competition.
Fourth, buy off the local heat.
Fifth, retire to Miami in respectable if very comfortable obscurity, and hope your sins won’t catch up with you.
Like the drug cartels, the bank cartels do not like competition, and we have seen how they remove it in New Zealand.
After a wave of mergers in the last decade 90% of banking assets are held by the five major trading banks, and 85% of life insurance and superannuation savings are held by six insurance based institutions.
The traditional barriers between the two are becoming increasingly blurred—it is today one huge financial services sector.
The power of this “ bankassurance” sector is of increasing concern to New Zealand First.
There has not been a concentration of private power like this since the 19th century.
And like the petroleum companies the financial companies demonstrate an uncanny almost telepathic ability to put their prices up at the same time.
The finance sector plays a critical role in the modern economy. It touches everyone’s lives intimately.
In order to survive, everybody from beneficiary to millionaire needs a bank account.
No other business being run for private gain has such a privilege. No other business is less regulated and no other business has so few rules to benefit its customers and consumers.
New Zealand is unique in the world in relying upon financial industry self- regulation.
It should be no surprise that the industry is overseas owned, asset rich, concentrated in a few hands and wealthy.
Whatever the jargon, however lovely the advertisements, those institutions have all their efforts focused on shareholder returns and management greed.
We used to look up to our local bank manager as a pinnacle of respectability- those days appear to have gone!
Recently the Australian Bankers Association Chairman, Frank Cicutto, had to apologise publicly for doing a back room deal worth $A 1.2 million with a leading talk show host to stop him attacking them for closing branches in country areas.
Mr Frank Cicutto also heads the National Australia National Bank which owns the Bank of New Zealand.
There is an ugly word for that sort of practice. It is called corruption.
That other great Australian bank robber, Ned Kelly, at least had the decency to wear a mask.
Not Mr Cicutto – perhaps he learned his banking practices in Sicily!
People who get involved in these sort of practices are nothing more than crooks, and New Zealanders should be getting better protection against them.
We do not have even a deposit protection system like that in the United Kingdom where the savings of the small investor are protected against bank collapse.
In that jurisdiction the financial industry pays through a fidelity system similar to that applying to our lawyers.
There is also minimal supervision of the financial sector by the Reserve Bank.
It relies upon a disclosure regime, and the tough regulatory regime that applies in other jurisdictions.
That is unacceptable. New Zealand First will:
1. Set up a full scale independent inquiry into Bank charges in New Zealand.
2. Set up an independent and on-going audit of institutions offering financial products to the public. That audit will catch problems before it is too late.
It is a sad day when we are dependent upon other countries to control our banks, and that the average consumer has few rights.
New Zealand First will put in place an even handed system that is fair to all.
That will include merging the Banking and Insurance Ombudsman offices into a Financial Services Commissioner, and giving that body serious legal teeth including criminal sanctions along Australian lines.
We will toughen up the disclosure legislation governing the insurance agents and financial planners and the like upon whom people rely for neutral and professional advice.
They will have to learn the lesson all over again. That lesson is called responsibility and accountability.
Banking is too important to be left to the Bankers