BAD BANKS

Activists send message to Key: “Make the banks pay!”

2010-05-12T18:33:00.000-07:00

Bad Banks media release
13 May 2010

Prominent New Zealand activists and unionists are among the 53 public signatories to a letter to prime minister John Key calling for action to curb banking power and protect grassroots people. The full list of public signatories is included below.

The letter, written on behalf of grassroots people in New Zealand, reads:

Dear Mr Key,

Why are you wanting to raise GST? Food and everything else will be more expensive. It's already hard to make ends meet. Why don't you tax the banks and other fat cats that have been ripping us off? We want justice Mr Key, make them pay.

Signed,
Grassroots people of NZ

“The global financial crisis has inflicted a lot of pain on New Zealanders, with job losses and widespread clamps on wages,” says Vaughan Gunson, Bad Banks spokesperson. “And this pain is being compounded by the Big Four Aussie banks looking after their own equity position. They’ve been forcing mortgagee sales and inflicting penalties on homeowners struggling to meet their mortgage payments.”

“We're sending a message to John Key and the government: it's the banks and other financial fats cats who must be made to pay, not grassroots New Zealanders," says Gunson.

With the letter Bad Banks campaigners are proposing three "common sense" measures that would rein in the banks and deliver real benefits to grassroots people. The three measures are:

1. Stop forced mortgagee sales
Regulatory muscle used to stop banks turfing people out of their homes. A government body to oversee the re-negotiation of mortgages based on current market values and ability of the homeowner to pay.

2. Turn Kiwibank into a proper public bank
Offering 3% interest loans to first home buyers, zero-fee banking for people on modest incomes, and low interest loans to local bodies for sustainable eco-projects in the public good.

3. Introduce a Robin Hood Tax (also known as a Financial Transaction Tax)
A small percentage tax on financial transactions would net billions of dollars from banks and global financial speculators. GST could be phased out.

“We’re inviting New Zealanders to sign on to the letter and support these three demands,” says Gunson. "They're doable, if there's the political will."

People can add their name online by visiting the Bad Banks website www.badbanks.co.nz, or by going directly to http://www.ipetitions.com/petition/badbanks/. People can also make a comment if they wish.

“In a month’s time we’ll be formally forwarding the letter and the full list of people who’ve signed, plus their comments, to the prime minister,” says Gunson.

“We would like to see a debate in New Zealand about why the government is planning to lift GST to 15% in the Budget on 20 May, while the big banks are being allowed to continue making their mega-profits,” says Gunson. “Bad Banks campaigners are up for the debate – is Mr Key?"

See also Bad Banks media release (25 April), Something missing from GST debate: a Robin Hood Tax.

A higher resolution image of the attached graphic for use in print and online publications is available.

For more information and comment, contact

Vaughan Gunson
Bad Banks spokesperson
svpl(at)xtra.co.nz
(09)433 8897
021-0415 082

The 53 public signatories to the letter to Mr Key and the accompanying proposals to rein in the banks and protect grassroots people are:

Moea Armstrong, co-convenor Green Party of Aotearoa/NZ, Whangarei.

James Barber, male co-convenor Greens@Vic, Wellington.

Potaua Biasiny-Tule, TangataWhenua.com, Rotorua.

Nikolasa Biasiny-Tule, TangataWhenua.com, Rotorua.

Victor Billot, communications officer Maritime Union, Dunedin.

Pat Bolster, secretary Unions Wellington.

Sue Bradford, community activist, Auckland.

Grant Brookes, union delegate, Wellington.

Paul Bruce, Greater Wellington Regional Councillor.

Andrew Campbell, union organiser, Wellington.

Joe Carolan, campaigns officer Unite Union & editor SocialistAotearoa.org

Laurence Clark, cartoonist & journalist, Whangarei.

David Colyer, editor UNITYblog, on-line journal of Socialist Worker-New Zealand.

Catherine Delahunty, Green Party List MP, Coromandel Peninsula.

Vincent Eastwood, Guerilla Media, Auckland.

Aaron Edwards, organiser Green Party, Whangarei.

Tony Fala, community worker, Manukau City.

Joe Fleetwood , general secretary Maritime Union of New Zealand, Wellington.

Quentin Findlay, economic development spokesperson Alliance Party, Christchurch.

Roger Fowler, manager Mangere East Community Learning Centre, Auckland.

Rob George, convenor Unions Waikato, Hamilton.

Vaughan Gunson, spokesperson Bad Banks & national chair Socialist Worker-New Zealand, Whangarei.

Omar Hamed, organiser Unite Union, Wellington.

Bernie Hornfeck, chairperson Rotorua Peoples’ Union.

Murray Horton, secretary/organiser for CAFCA (Campaign Against Foreign Control of Aotearoa), Christchurch.

Tim Howard, community worker, Whangarei.

Peter Hughes, union organiser, Auckland.

Prue Hyman, feminist economist Victoria University, Wellington.

Nik Janiurek, theatre lighting designer, Auckland.

Shafqat Kadri, student MA Applied Language Studies, University of Auckland.

Sydney Keepa, National Distribution Union Apiha Maori & co-convener Kaimahi Maori CTU Runanga,

Daphne Lawless, musician & writer, Auckland.

Dion Martin, organiser National Distribution Union, Palmerston North.

Paul Maunder, writer & community worker.

Matt McCarten, general secretary Unite Union, Auckland.

William (Billy) Mckee, director GreenCross NZ, Levin.

John Minto, community activist, Auckland.

Grant Morgan, international secretary Socialist Worker-New Zealand, Auckland.

Pat O'Dea, electrician & union activist, Auckland.

Hana el Ojeili, student LLB University of Auckland.

Dean Parker, NZ Writers' Guild, Auckland.

Len Parker, manager Socialist Centre, Auckland.

Kristy Pearson, student activist, Dunedin.

Paul Piesse, president Alliance Party, Christchurch.

Robert Popata, organiser Kotahitanga Union, Whangarei.

John Ryall, national secretary Service & Food Workers Union Nga Ringa Tota, Wellington.

Ross Scholes, Democracy activist, Auckland.

Tony Snelling-Berg, Socialist Worker activist, Tauranga.

Fran Strajnar, business owner, Auckland.

Owen Thompson, Unite Union, Auckland.

Mike Treen, national director Unite Union, Auckland.

Sarah Watson, writer & teacher, Wellington.

Oliver Woods, advertising manager, resident Singapore.

*All public signatories do so as individuals, with their positions or brief descriptors included for identification purposes.

**We welcome more community campaigners and prominent people becoming public signatories prior to the letter and accompanying demands being formally sent to the prime minister. Contact Vaughan, email svpl@xtra.co.nz or ph/txt 021-0415 082.

Something missing from GST debate: a Robin Hood Tax

2010-04-24T19:22:00.000-07:00

BAD BANKS media release
25 April 2010

"There’s something missing from the current debate about GST, and that’s a tax alternative, one that targets the banks and financial speculators," says Vaughan Gunson, Bad Banks spokesperson.

"Instead of making food and other basics more expensive for grassroots people, New Zealand needs to introduce a Financial Transaction Tax, or Robin Hood Tax as it’s been named by a popular British campaign," says Gunson.

"A small percentage tax on financial transactions would net billions annually from the big banks and financial speculators, who shift enormous amounts of money around everyday," says Gunson. "We could then remove GST from our food and begin to phase out this horrible regressive tax altogether. This is the circuit breaker that the GST debate needs."

"Following the global financial implosion, and the role played by the banks and financial speculators, the time is right to introduce a tax which hits the most hated global purveyors of greed and exploitation. Yet the government is heading in the other direction, wanting to give tax breaks to these parasites, while hitting us with a GST increase," says Gunson.

Prime minister John Key wants to reward international financial speculators with tax breaks and other incentives, as part of his dream of turning New Zealand into a financial hub. The plan rests on enticing global investors to New Zealand with the promise of tax breaks. A recent IRD report entitled ‘Allowing a zero per cent tax rate for non-residents investing in a PIE [portfolio investment entity]’ reveals what's being considered. Under this proposal, overseas investors would be allowed to operate in this country and not pay New Zealand tax on their international investments.

"John Key would say that removing GST from food is too complicated - yet it’s not too difficult to change the tax laws to gift more profits to international fat cats?" asks Gunson. "Whose side are you on Mr Key? Hardworking grassroots people or the financial parasites?"

The Bad Banks campaign has drafted a letter to the prime minister on behalf of the grassroots people of New Zealand. It reads:

Dear Mr Key,

Why are you wanting to raise GST? Food and everything else will be more expensive. It's already hard to make ends meet. Why don't you tax the banks and other fat cats that have been ripping us off? We want justice Mr Key, make them pay.

Signed,
Grassroots people of NZ

With the letter the Bad Banks campaign is raising three "common sense" measures to curb banking power and protect grassroots people, which includes introducing a Robin Hood Tax. They are:

1. Stop forced mortgagee sales
Regulatory muscle used to stop banks turfing people out of their homes. A government body to oversee the re-negotiation of mortgages based on current market values and ability of the homeowner to pay.

2. Turn Kiwibank into a proper public bank
Offering 3% interest loans to first home buyers, zero-fee banking for people on modest incomes, and low interest loans to local bodies for sustainable eco-projects in the public good.

3. Introduce a Robin Hood Tax (also known as a Financial Transaction Tax)
A small percentage tax on financial transactions would net billions of dollars from banks and global financial speculators. GST could be phased out.

"We’re inviting people to sign-on electronically to our letter to prime minister John Key via the Bad Banks website www.badbanks.co.nz (or go directly to http://www.ipetitions.com/petition/badbanks/). We think a clear message needs to be sent to the government and John Key that it's the banks and other financial fats cats who must be made to pay," says Gunson.

The cartoon by KLARC accompanying this media release is available to be reproduced in print and web publications. For a bigger resolution image contact Vaughan at the email below.

For more comment, contact

Vaughan Gunson
Bad Banks spokesperson
svpl(at)xtra.co.nz
(09)433 8897
021-0415 082

The Crisis of Credit Visualised

2010-04-13T02:55:00.000-07:00

The two animation videos below offer a very understandable explanation of the financial crisis sparked by the house price bust in the US. The representation of high risk mortgage borrowers is dodgy (you'll see what I mean), but on the whole their good. They show why the current strategy pursued by the global elites, basically pumping trillions of public money into the debt economy is doomed to fail. The big banks and other financial institutions want the party to continue of course - there's mega-profits to be made! So they aren't going to stop willingly. Hence the need for campaigns that target the banks and raises economic alternatives to a hyper-financialised economy that's one very big ticking bomb. To start building some public pressure against the banks sign the Make the Banks Pay online petition today, go to http://www.ipetitions.com/petition/badbanks/. Tell your friends.

The Crisis of Credit Visualised (Part 1)

The Crisis of Credit Visualised (Part 2)

Let’s Put an End to Public Debt Blackmail!

2010-04-08T18:31:00.000-07:00

by Damien Millet and Sophie Perchellet and Eric Toussaint
from Global Research
3 April 2009

There is a striking contrast in the most industrialized countries at the epicenter of the global crisis that broke out in 2007-2008: the governments and their friends running the major banks are congratulating themselves on having saved the financial sector and initiated limited economic recovery, but people’s living conditions continue to deteriorate. Furthermore, with stimulus packages for the economy of over 1000 billion dollars, the major financial institutions have received government aid in the form of bail out funds, but the different States have no say in the management of these companies or are not taking advantage of this opportunity to radically change the policies governing them.

The path chosen by governments to emerge from the private financial crisis caused by bankers has led to an explosion in public debt. For many years to come, this sudden growth in public debt will be used by governments as a form of blackmail to impose social cuts and to deduct from the wages of “those at the bottom” the money needed to repay the public debt now held over our heads by the financial markets. How will this scenario be played out? Direct taxes on high income earners and companies will be reduced, while indirect taxes, such as VAT, will increase. Yet, as a percentage of disposable income, VAT is mainly a burden on low income households, which makes it an extremely unfair tax. For example, with a 20% VAT tax, a poor household that spends all its income just to survive, pays the equivalent of a 20% tax on its income, whereas a well off household, which saves 90% of its income, and therefore only spends 10% of it on daily expenses, pays the equivalent of a 2% tax on its income.

Therefore, the richest win twice: as a percentage of their disposable income, they contribute the least amount to taxes, and with the sums they have saved, they buy stocks of public debt and make profit from the interest paid by the State. On the contrary, wage earners and pensioners are doubly penalized: their taxes increase while public services and their social security benefits deteriorate. The repayment of public debt is therefore a mechanism for transferring revenue from “those at the bottom” to “those at the top”, as well as an effective form of blackmail in order to pursue neo-liberal policies benefitting “those at the top”.

Meanwhile, profits and bonus distributions (in 2009, 1.75 billion euros in bonuses for the traders of French banks, and 20.3 billion dollars for Wall Street traders -- a 17% increase compared to 2008!) have returned to their mad ways while the people are called upon to tighten their belts. In addition, with the easy money central banks lend them, bankers and other institutional investors have launched into new speculative operations, which are highly dangerous for the rest of society, as we have seen with the Greek debt for example, not to mention the price of raw materials and the dollar. Not a word from the International Monetary Fund (IMF) or the Organization for Economic Cooperation and Development (OECD), and a refusal from the G20 to take measures on bonuses and speculation. Everyone agrees to intensify the race for profit based on the pretext that this will eventually lead to job creation.

The Finance Ministers’ overall objective is a return to growth, even if it turns out to be unequal and harmful to the environment. In no way do they question the system which has proven to be a failure. If they do not react, the dismantling of the State will be pushed to its limits, and the entire cost of the crisis will be borne by the very people who are its victims, while those responsible for it will emerge more powerful than ever before. Today, banks and hedge funds have been saved with public money without offering the slightest tangible compensation in return.

We believe public policy should be reformulated as follows: “You large creditors have greatly profited from public debt, but fundamental human rights are seriously threatened and inequalities are widening at an alarming rate. Our priority is to maintain and guarantee these fundamental rights and it is you, the large creditors, who should pay for this. We are going to tax you according to the amount that you loaned back to us: the money will not come out of your pockets but the loans will disappear. Count yourselves lucky that we are not demanding back the interest we have already paid you to the detriment of citizens’ interests!” In a nutshell, we support the idea of taxing the large creditors, such as banks, insurance companies, and hedge funds, as well as wealthy individuals according to the money owed to them. This tax revenue would give the State the means to increase social spending and create socially useful and economically sustainable employment. It would eliminate public debt in the North, without making the people who are the victims of this crisis pay. At the same time, it would place the entire burden on those who have caused or worsened the crisis, and have already greatly profited from this debt.

Our proposition would entail a radical change towards a policy of redistribution of wealth, benefiting those who produce wealth and not those who speculate on it. If coupled with the cancellation of foreign public debt of developing countries and a series of reforms (including wide ranging fiscal reform, a radical reduction in working hours without loss of wages and with compensatory hiring, and the transfer of the financial sector to the public domain with citizen control), these measures could enable us to emerge from the current crisis with social justice and in the interests of the people.

Translated by Francesca Denley in collaboration with Charles la Via.

Eric Toussaint is Spokesman, vice-president of CADTM France and president of CADTM Belgium, Committee for the Abolition of Third World Debt, www.cadtm.org.

Rolling Stone: Looting Main Street

2010-04-08T18:02:00.000-07:00

by Matt Taibbi
from Rolling Stone
31 March 2009

If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.

As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears."

Continue

ANZ tops worst transnational list

2010-03-21T18:46:00.000-07:00

by Adrian Hatwell
from BusinessDay.co.nz

Australian-owned ANZ Bank has won the annual Roger Award for worst transnational company operating in New Zealand, due to its leading role in the nation’s financial sector strife.

A panel of five judges said foreign-owned banks in general were a large drain on New Zealand’s economy.

Allegations of distortions of lending margins, tax avoidance, risky lending practices, overcharging, and poor customer treatment were rife, the judges said.

However the ANZ’s behaviour during 2009, particularly its part in the ING funds fiasco, made the bank the unanimous pick for the top title, they said.

ANZ did not respond to requests for comment on its Roger Award win.

Murray Horton, secretary for Campaign Against Foreign Control of Aotearoa, the award’s organiser, describes the annual event as a sort of “people’s court” in which the public nominate candidates and a panel of experts weigh the facts and evidence before making a judgment.

Dr Joce Jesson, senior lecturer in critical studies at Auckland University and one of this year’s judges, believed the award blows apart the bank’s careful PR campaign and shows the public the company’s true face.

“The banks want you to believe that they are there for you, but no, the bank is there for [its foreign owners],” said Dr Jesson.

“We need to start recognising that these banks rip money out of New Zealand.”

Fellow judge, Dr Wayne Hope, associate professor of communications studies at AUT University, agreed that although ANZ had distinguished itself above its competition, the award indicated problems with the transnational-focus of the banking system in general.

“The judges’ report is important,” said Dr Hope, “because it contributes to the ongoing public debate about what it is that banks do, and the need for people to get a fair deal.”

One of the leading factors in ANZ’s win was its handling of last year’s ING affair, which saw 13,000 small investors misled into taking money out of safe term deposits and moving it into high-risk funds, which were then frozen as their value plummeted.

The Frozen Funds Group represents 1,100 of those affected in the ING fiasco, many of who are elderly and lost their entire savings in the funds.

FFG spokesperson Gerard Prinsen was delighted with ANZ’s Roger Award win.

"It’s fantastic,” Prinsen said. “They battled hard and did their utmost best, they deserved to win. Totally.”

He was particularly impressed with the way the bank had upset almost every party in parliament.

“[It put] Act, Labour, and the Greens all in the same boat to row against the ANZ.”

The Commerce Commission will conclude a 17-month investigation of ANZ’s handling of the ING matter at the end of the month. If the bank is found to have breached the law then compensation could be paid to investors.

Prinsen said that although the system may be slow and complex, the progress of the Frozen Funds Group shows that it does work.

The Roger Award judges were less confident in the current system’s ability to keep banks honest and urged further government regulation.

There was general agreement that one thing people can do to avoid the issues raised by this year’s award is to move their business from Australian-owned banks to local alternatives.

“Many of the people [burned in the ING affair] have been lifetime customers of the ANZ, for 50 to 60 years,” said Prinsen. “To see the bank treat you like this, it really hurts.”

Rio Tinto Aluminium was the runner-up for the 2009 award, with Telecom in third place. The Auckland City Council was awarded the Accomplice Award for its part in privatising the city’s waste management system through Transpacific Industries Group.

Bad Banks leaflet #6: MAKE THE BANKS PAY

2010-03-16T20:01:00.000-07:00

The latest Bad Banks leaflet is out now (leaflet #6). It features on the front a "letter" to prime minister John Key, which reads:

Dear Mr Key,

Why are you wanting to raise GST? Food and everything else will be more expensive. It's already hard to make ends meet. Why don't you tax the banks and other fat cats that have been ripping us off? We want justice Mr Key, make them pay.

Signed,
Grassroots people of NZ

On the back of the leaflet, under the headline 'Make the Banks Pay' are three demands:

1. Stop forced mortgagee sales
Regulatory muscle used to stop banks turfing people out of their homes. A government body to oversee the re-negotiation of mortgages based on current market values and ability of the homeowner to pay.

2. Turn Kiwibank into a proper public bank
Offering 3% interest loans to first home buyers, zero-fee banking for people on modest incomes, and low interest loans to local bodies for sustainable eco-projects in the public good.

3. Introduce a Robin Hood Tax
(also known as a Financial Transaction Tax)
A small percentage tax on financial transactions would net billions of dollars from banks and global financial speculators. GST could be phased out.

These "common sense" measures to curb banking power and protect grassroots people should hit the mark with people who already have negative attitudes towards the banks, which is the majority of New Zealanders. Early feedback from people on the street to the new leaflet has been positive.

SIGN ON TO OUR "LETTER" TO JOHN KEY

To go with the new leaflet, there's a 'Make the Banks Pay' sign-up sheet where people can give their support to our "letter" to John Key and the three demands.

If you would like bulk copies of Bad Banks leaflet #6 and the 'Make the Banks Pay' sign-up sheet, contact Vaughan svpl(at)xtra.co.nz or 021-0415 082.

Send all completed sign-up sheets to Socialist Worker/Bad Banks, PO Box 13-685, Auckland.

SIGN ON ONLINE

There's an online version of the 'Make the Banks Pay' sign-up. Go to http://www.ipetitions.com/petition/badbanks/ to add your signature. Tell your friends, family and workmates. We want to get as many signatures as possible, to grow the campaign and hopefully get crucial media coverage.

You can also join, and invite others to join, the 'Make the Banks Pay' Facebook group. Go to http://www.facebook.com/#!/group.php?gid=392390694275&ref=ts

IN THE MEDIA AT BUDGET TIME

There's going to be a lot of media coverage either side of the upcoming budget (20 May) about an almost certain hike in GST, as well as other policies the National government will be implementing in response to the global economic crisis. It's possible that the alternative message of the Bad Banks campaign: "make the banks pay, not grassroots people", could break through into the media. That possibility will be increased if we can build some campaign momentum on the ground and online over the next couple of months.

If we work hard we may be able to lift the Bad Banks campaign to the next level. The three "common sense" measures are necessary to curb banking power and protect grassroots people in New Zealand. If we act together we just might be able to deliver a blow to the banks.

In solidarity,

Vaughan Gunson
Bad Banks campaign manager
svpl(at)xtra.co.nz
021-0415 082

Bad Bank wins Roger Award

2010-03-13T23:48:00.000-08:00

ANZ has won the Roger Award for the worst transnational corporation operating in New Zealand in 2009. Below is the judge's statement relating to the winner, ANZ. The judges were Christine Dann, Bryan Gould, Joce Jesson, Paul Corliss and Wayne Hope.

The Roger Award is organised each year by CAFCA (Campaign against Foreign Control of Aotearoa).

From the judge's statement:

The Winner: ANZ

The judges all noted the generally egregious behaviour of the Australian-owned banks that were nominated (ANZ, BNZ and Westpac), and were unanimous in picking them as the worst TNCs operating in New Zealand in 2009.

As the Council of Trade Unions noted in its submission to the Independent Parliamentary Banking Inquiry, the foreign–owned banks are the Achilles heel of the New Zealand economy, given that they contribute to the lion’s share of the national debt. They account for nearly 70% of investment income debts on the national balance of payments and for 74% of the economy’s net overseas indebtedness.

During the 2009 year the banks were accused of:

1. Distorted lending margins in their favour and against their customers
2. Tax dodging on a grand scale
3. Poor lending and investment practices
4. Overcharging and profiteering
5. Poor employment and customer service practices

The banks behaved so badly in 2009 (and 2008) that they were the subject of a Parliamentary Select Committee investigation early in 2009. Despite receiving reports giving good reason to conclude that strong Government action was needed to rein in the bad behaviour of the banks, and to require them to deal with both customers (and the Government, which provided them with security during the 2008 financial crisis) more honestly and fairly, the National Party-dominated Select Committee did not recommend such actions to Government. This led to the Labour, Green and Progressive MPs setting up their own Independent Parliamentary Banking Inquiry. This Inquiry exposed more issues of concern, and called for better legislation and regulation to protect the public from predatory banks.

Also during 2009, bank after bank appeared before the High Court to answer allegations of tax evasion, amounting to billions of dollars. After high level negotiations they finally reached an out-of-court settlement that saw them collectively pay the Inland Revenue Department more than $2.2 billion. In a political climate where we are constantly being told that taxes are an evil imposition, rather than what they really are - the price we pay for a democratic and functional society - we think that a special Public Heroes award should go to the Government lawyers, IRD officials and others responsible for getting these slippery banking snakes to pay what they rightly owe the nation.

One of the Roger Award judges noted the banks were richly deserving of the Award since they have been ''...doing great damage for many years to the whole of the New Zealand economy …through irresponsible lending (thereby stoking inflation), and expatriating excessive profits … while all the time avoiding censure and pointing the finger at public spending as the cause of our economic problems…[While] this year we have seen the truly scandalous tax avoidance saga, from which the banks have again escaped remarkably lightly; if you or I had committed a similar offence of one thousandth the size we would have ended up in jail.”

However, it was a tough decision to pick the worst of the worst, considering that all the foreign-owned banks were guilty of some degree of tax dodging, overcharging on credit card fees and loans, not passing on reductions in interest rates, and treating customers and staff poorly. In the end the judges decided that ANZ deserved top place, with the ING scandal tipping the balance in its favour (for full details of the ING scandal, see the next section “Rattlesnakes In the Grass’).

In 2008 ANZ was also a finalist, with the 2008 judges noting the following ‘fine’ qualities for its inclusion:

“Evidence presented to the judges portrayed ANZ-National as the most rapacious, inept and irresponsible of the banks over the past couple of years, which assured it a good chance of securing the Roger Award. This bank was a distinguished finalist in 2007 also, for its despicable role in the saga of Godfrey Hirst and the Feltex carpet business”.

ANZ has succeeded in winning the 2009 Roger Award because the ING funds fiasco is simply and plainly ‘pure greed capitalism’ at its worst. This debacle saw the bank immorally misleading small investors into taking their money out of safe term deposits and putting it into highly risky investments, while assuring them that these investments were safe. In fact, most of them were highly dangerous and dodgy, and lost millions of investors' money. When the betrayed investors got organised and put pressure on the bank to repay what had been lost, ANZ's repayment offer came with big strings attached - investors who refused to sign a waiver agreeing not to take legal action against the bank would receive no compensation. In the words of the judges, this was ‘the most extreme case of anti-democratic manipulation by a transnational within New Zealand during 2009. Simply, ANZ was employing financial pressure to erase the legal rights of investors – a truly Roger winning performance.’

The ING debacle was, as one judge noted, ‘the icing on the already baked Roger cake.’ Thus ANZ is the winner of the 2009 Roger Award.

We could replace tax on essentials with one on destructive speculation

2010-03-02T13:54:00.000-08:00

by Barry Coates
from stuff.co.nz
2 March 2010

Some things seem too good to be true. But sometimes it's because they are good ideas whose time has come. One of those is the proposal to levy a tiny tax on the massive movements of money around the world. It's time our Government looked more closely at it.

Why? Because a financial transactions tax will raise significant revenue without adversely affecting most New Zealanders, support our international obligations and reduce the volatility of our currency. It's a win-win-win.

Instead, our Government's attention has been focused on incremental tax reforms that shuffle taxes from one pocket to the other - lower direct taxes and higher GST. The net effect inevitably seems to be that those on lower incomes bear a greater share of the burden. This is all "business as usual" ignoring some longer-term challenges that we face - reform of the financial sector to curb excessive risk-taking, making the transition to a low-carbon economy, and playing our part in the global effort to eradicate extreme poverty.

The proposed FTT is a levy of 0.05 per cent, on average, applied to the trading of a range of equities, bonds, derivatives and foreign exchange transactions (ie 5 cents for a transaction of $100). Such a tax is predicted to curb a lot of speculative activity, but would still raise NZ$570 billion a year globally.

It sounds like a radical proposal, but it is really like extending GST, at a much reduced rate, to wholesale financial transactions - they are currently exempt. It is supported by Japan and leaders of the three largest EU countries - Gordon Brown, Angela Merkel and Nicolas Sarkozy - along with hundreds of eminent economists, financial regulators like Lord Turner and Paul Volcker, financial traders like George Soros and investment guru Warren Buffet.

An international agreement for all countries to introduce a common FTT at the same time would be ideal. This approach is now being considered by the IMF and G20 countries. It should be supported by our Government. But difficulties in getting such a deal should not prevent countries from moving ahead themselves.

Belgium already runs a limited form of FTT and its banking sector has not suffered. A co-ordinated approach would be preferable, but any government can now introduce a levy on trading of their currency, no matter where the transactions take place. The high level of automation in the banking industry makes administration feasible at a low cost.

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This tax would miss the average bank customer completely, even those buying foreign currency to travel overseas. It is a tax on wholesale finance - it would apply to the high-volume, high-frequency trading and speculation that sees massive sums of money being transferred at a keystroke. The "casino economy" of global finance has grown rapidly in recent years - international financial transactions are now 60 times the level of world GDP. Unfortunately the real economy is not insulated from its collapses. The financial crisis cost the world a staggering US$11.9 trillion, according to the IMF.

The finance industry is a deliberate target for the FTT. It is the most profitable industry in the world, with profits per employee 26 times as high as other business sectors. And, as we have seen in New Zealand, banks are adept at using legal loopholes and tax havens to avoid paying their fair share of tax. The FTT could generate enough revenue to avoid raising GST, replacing taxes on life's essentials with a tax on socially destructive financial speculation. This is consistent with the principle of taxing activities that we want to discourage, as opposed to taxing productive work or basic necessities.

Nobel-prize-winning economist James Tobin described such a tax as "throwing sand in the wheels" of international currency trading. Some sand may well help reduce the volatility of the New Zealand dollar, which attracts massive trading and speculative attacks - according to the Bank of International Settlements, the Kiwi dollar is the 11th most traded currency, far beyond our role in the real economy.

The proposal put forward by a large coalition of groups internationally, under the banner of the "Robin Hood" tax, is that half of the funds raised would be used domestically to help fund public services and reduce government deficits resulting from the financial crisis. A quarter of the funds would be contributed to support international efforts to overcome extreme poverty in the developing world and support the countries that have suffered most from the financial crisis.

The balance would be used to tackle climate change. It could dramatically reduce the emissions from global deforestation and provide most of the funding that is needed by vulnerable countries, including our Pacific neighbours, to protect themselves and adapt to climate change impacts.

Before we dismiss the idea, consider this: just two minutes of a global FTT could pay for basic healthcare for 100,000 people. Two months of the FTT would provide the funds necessary to get every child on Earth into school.

Our Government should take a close look.

Barry Coates is the executive director of Oxfam New Zealand.

Robin Hood tax has Bono and co all a-quiver

2010-02-20T17:31:00.000-08:00

by Finlay MacDonald
from Sunday Star Times
14 February 2010

One should always be wary of seemingly simple solutions to seemingly intractable problems – especially solutions endorsed by Bono. Yet the idea of a "Robin Hood tax" on global financial transactions, despite appearing almost too good to be true and, yes, backed by U2's blathering messiah of world peace himself, really is hard to fault.

From a New Zealand perspective the launch of a fresh campaign for such a tax was beautifully timed, coinciding as it did with the timid revenue tinkering proposed by the prime minister. If you'd found yourself drifting off listening to John Key's uninspiring prescriptions, you could have hopped on YouTube and watched the snakily funny Bill Nighy video in which he plays a smarmy banker failing to justify his opposition to a Robin Hood tax.

Like most bankers and tax experts who thrive on the perceived complexity of their fields, simplicity and common sense is his enemy. The central genius of the Robin Hood idea is that it treats the global financial system for what it really is – an economic activity that can be taxed like anything else. Indeed, since so much of the world's total corporate profits now derive from unproductive speculative trades and other money-go-rounds – a phenomenon sometimes described as the "financialisation" of the economy – it's long overdue for scrutiny.

The idea is not particularly new, but it gained new impetus with the global financial crisis and the debate about longer-term remedies for reckless investment banking and foreign exchange dealing. The primary purpose of such a tax, in fact, would be to take some of the heat out of money markets and reduce exchange rate volatility. As its original proponent James Tobin put it, it would "put sand in the wheels of international finance" by creating a major disincentive to short-term speculative transactions.

One benefit of this – aside from curbing the sort of market panics that trigger major crises and ruin ordinary people's lives – would be the diversion of investment back towards the productive sectors. Also, and not least, it would raise the kind of money that makes a difference to the worthy goals humanity (and Bono) aspires to, like fighting poverty and climate change.

Of course, if successful, such a tax would reduce its own potential revenue base, which is why estimates of what it might generate are problematic. However, given that roughly $1.5 trillion is traded in world currency markets each day, even a significantly reduced amount would yield a hefty annual tax take. And it's not as if anyone is arguing for a regime so punitive it would put forex dealers out of work and shut Lamborghini showrooms. Suggestions of between 0.05 and 0.25 percent could raise between $90 and $300 billion a year, depending on the forecast. According to a report by liberal think tank The New Economics Foundation, quoting previous expert analysis including research by the IMF, a currency transactions tax is administratively and logistically feasible – albeit dependent on international political co-operation.

Well, there had to be a catch. Getting governments to agree on such a policy when they are so much in thrall to their domestic financial lobbies would be about as easy as achieving that other noble goal, world peace. British Prime Minister Gordon Brown advocated such a tax at the G20 meeting late last year and continues to promote the idea. Yet only last month the governor of the Bank of England humiliated him by dismissing the proposal as "bottom of the list" of reform options.

In the US, source of the present crisis (which is far from over), Wall Street has very effectively blocked all attempts at reform, historically and now. It's brazen and shameless – how else to explain a banking sector that could revive its morally obscene bonus culture within months of being bailed out with billions upon billions of public dollars? Expecting such creatures to act other than purely self-interestedly is futile.

Outside the banker bubble, though, there is plenty of support for a Robin Hood tax, including from industry leaders, who actually make and sell stuff.

As the boss of New Zealand fishing giant Sanford said to shareholders just the other day, "A tax on non-trade-related currency transactions could not only earn significant income for the government, it could also result in our exchange rate moving closer to its realistic value and thereby add significant value to the wealth of New Zealanders." Now there's a tax reform plan with genuine vision – precisely why this government and its former merchant banker boss could never come up with it.

finlay.macdonald@star-times.co.nz

The Robin Hood Tax - Video

2010-02-20T17:16:00.001-08:00

Bank wholesale guarantee could be ending – time for a new bank tax?

2010-02-20T17:10:00.000-08:00

from the gossip...
Finsec Union's unofficial weblog
11 Feb 2010

The New Zealand government is sending signals that its wholesale funding guarantee for banks could be winding down, following a decision to end the similar scheme in Australia.

Finsec Campaigns Director Tali Williams said that any end to the wholesale funding guarantee should be accompanied by a tax like that being discussed in Europe and America in order to ensure that banks are paying their fair share of taxes – given the huge influence and risks they pose to our global and national economies.

“A tax like Obama and other world leaders are proposing would give greater security to our economies. It would also provide much needed income to address both the impacts of the global financial crisis and pressing needs of many countries to do more to assist their citizens and taxpayers – not less.”

A campaign for a global tax on banks’ financial transactions, dubbed a “Robin Hood” tax, was launched last week by 50 organisations including Oxfam, aid agencies, unions, environmental groups and economists. Actor Bill Nighy fronts a promotional film for the tax – you can check it out at the link below:

http://robinhoodtax.org.uk/

Westpac chief treats herself

2010-02-09T13:24:00.000-08:00

from ...the gossip
Finsec Union's unofficial weblog
8 February 2010

Westpac CEO Gail Kelly recently spent $11.2 million on a new property in an affluent Sydney beach suburb. The two-hectare property features an indoor heated pool, a spa, a tennis court and incredibly, an Olympic equestrian arena! So extravagant was the price tag, it marked a record price for any property in the district.

Gail Kelly’s splurge looks even more out of place when many of the bank’s customers and staff (in New Zealand and Australia) are feeling the pinch of the recession. Nice for some!

Bad banks — New Zealand’s black sheep

2010-01-31T14:45:00.000-08:00

by Paola Harvey
from Green Left Weekly (Australia)
30 January 2010

Although New Zealand, like Australia, has not been as badly affected by the global economic crisis as the US or Europe, workers are facing hardship.

Bronwen Beechey, an activist from Socialist Worker New Zealand (SWNZ), told Green Left Weekly: “There’ have been a lot of redundancies, places have been closed down.”

Beechey and SWNZ activist Peter Hughes were in Sydney to attend the January 3-6 Socialist Alliance national conference. They spoke to GLW about the SWNZ’s “bad banks” campaign, which takes aim at the cause of the global financial crisis — neoliberal capitalism.

“For people on low incomes life’s just been getting tougher because [they are] losing their jobs and food prices and rents and all of it have not come down substantially”, Beechey said.

“All the indicators, the social services, people asking for assistance, for food parcels, people losing their homes — they’ve all skyrocketed.”

Hughes said employers have used the crisis to justify attacking workers’ wages and conditions. “In the last 12 months, there have been no less than eight lockouts of workers.

“One of the most shameful examples was a service provider for the elderly that insisted that if the workers in that field did not accept the minimum wage [NZ$12.50 per hour] they’d be locked out.

“That’s quite a serious indication of how they [the bosses] see the crisis being resolved to their advantage and workers’ disadvantage.”

The New Zealand government’s response has been the same as capitalist governments around the world — bail out the banks and the big capitalists, and make the workers pay.

But they are not getting it all their own way. The government’s attempt to impose an unofficial wage freeze in the public service was recently challenged. Support staff in the education sector won a small wage rise.

That win will set the tone for the upcoming nurses’ and general education unions’ wage negotiations. “No less than that, will be the call, I’m sure”, said Hughes. “So that’s a good sign.

“I heard at the [Socialist Alliance] conference, that [Australian Prime Minister Kevin Rudd] said that the recovery’s going to be worse than the recession.

“I’m quite sure that’s their intention for us in New Zealand as well, working people will be made to pay for the recovery — if there’s going to be one.

“But our assessment is that there can be no real recovery in the current market economy, not in the foreseeable future. That’s going to lead to all sorts of crises for them, which they will try to push on us.

“We have to organise people to resist that.”

The discussion about neoliberalism at the NZ Council of Trade Unions’ 2009 conference has opened up more space on the left to fight back against these future crises.

At the conference, union activists talked about workers’ cooperatives, building and strengthening the union movement and not accepting the neoliberal capitalist model as the only option.

Beechey said: “It also talk[ed] about climate change and the need for an alternative economic strategy which is an implicit criticism of neoliberal capitalism.”

Hughes added: “While it’s not a policy position as such, it’s a discussion that’s been opened up within the trade union movement.

“It’s not an accepted policy, it could be watered down significantly and it’ll come down to how different unions interpret that for building a broader perspective in the membership.

“[But] when you think about how closely linked the trade union movement has been to the Labour Party … this is a departure.

“The fact that they’re daring to criticise publicly this position opens up a space on the left for us to work with trade union activists in a much more healthy and progressive way.”

Many people in New Zealand continue to struggle with little indication of their situation improving in the near future.

There has been an increase in the number of houses sold due to people defaulting on their home loans. A large proportion of these have been people with one home — not property speculators.

Hughes said the defaulters “simply cannot pay because they’ve lost their job, they’ve been made redundant and they have reduced incomes”.

“That’s pretty devastating for families and has shown no sign of abating at all.”

The actions of the banks have been completely shameful. Before the crisis, banks were advertising loans for 100% of the price of a house.

But after the crisis, their ruthless approach to lending has meant many people who were lured into the property market by these loans have had their home repossessed.

“Our campaign around ‘bad banks’ is trying to make them pay really”, said Hughes. “Because they’re the ones that have played a big role [in the crisis] and they’re plundering the profits of working people.”

The bad banks campaign is focusing on demystifying what the banks actually do and how they caused the financial crisis. It is also calling for a financial transaction tax, as opposed to a goods and services tax.

A GST is a regressive tax, that is it affects the poorest the most, because the poor are taxed the same as the rich for goods despite having less ability to pay.

A financial transaction tax, on the other hand, would be a progressive tax. It would affect banks, corporations and the wealthy the most, because they account for the vast majority of financial transactions.

“We see the bad banks campaign as striking right to the heart of neo-liberalism”, Hughes said. “These banks have got their fingers in the lives of every working class person, whether it’s controlling their mortgage, their credit card, or their bank charges.

“They’re bloody pillaging basically. Their pockets are huge, they’re not paying their taxes.

“They’re not very popular with workers at the moment.”

Video: ASB Exposed as lying Banksters (MR NEWS)

2010-01-29T14:15:00.000-08:00

Latest Bad Banks cartoon by KLARC

2010-01-28T01:25:00.000-08:00

Banksters and the greatest crime against humanity

2010-01-11T13:01:00.000-08:00

The big global banks are key drivers of carbon emissions trading, which, as leading climate change scientist James Hanson argues, will increase carbon emissions, not decrease them. The role of the global banking class in sucking up trillions of dollars of "bailout money" to speculate in carbon trading (akin to derivatives trading) as the world approaches irreversible global warming tipping points has to be the greatest crime against humanity.

A necessary popular campaign against the banks is part of struggle to save the planet from the catastrophic climate change. See Bad Banks leaflet #3 on the pollution market.

Leading Global Warming Crusader: Cap and Trade May INCREASE CO2 Emissions

by Washington's Blog
from Global Research
6 January 2010

James Hansen - the world's leading climate scientist fighting against global warming - told Amy Goodman this morning that cap and trade not only won't reduce emissions, it may actually increase them:

"The problem is that the emissions just go someplace else. That’s what happened after Kyoto, and that’s what would happen again, if—as long as fossil fuels are the cheapest energy, they will be burned someplace. You know, the Europeans thought they actually reduced their emissions after Kyoto, but what happened was the products that had been made in their countries began to be made in other countries, which were burning the cheapest form of fossil fuel, so the total emissions actually increased..."

Environmental groups such as Friends of the Earth and Greenpeace are also against cap and trade, as is the head of California's cap and trade program for the EPA.

Hansen also told Goodman that (notwithstanding Paul Krugman's assertions) most economists say that cap and trade won't work:

"I’ve talked with many economists, and the majority of them agree that the cap and trade with offsets is not the way to address the problem.

As I have previously pointed out:
The economists who invented cap-and-trade say that it won't work for global warming
European criminal investigators have determined that there is a tremendous amount of fraud occurring in the carbon trading market. Indeed, organized crime has largely taken over the European cap and trade market.
Former U.S. Undersecretary of Commerce for Economic Affairs Robert Shapiro says that the proposed cap and trade law "has no provisions to prevent insider trading by utilities and energy companies or a financial meltdown from speculators trading frantically in the permits and their derivatives."
Our bailout buddies over at Goldman Sachs, JP Morgan, Morgan Stanley, Citigroup and the other Wall Street behemoths are buying heavily into carbon trading. As University of Maryland professor economics professor and former Chief Economist at the U.S. International Trade Commission Peter Morici writes:

"Obama must ensure that the banks use the trillions of dollars in federal bailout assistance to renegotiate mortgages and make new loans to worthy homebuyers and businesses. Obama must make certain that banks do not continue to squander federal largess by padding executive bonuses, acquiring other banks and pursuing new high-return, high-risk lines of businesses in merger activity, carbon trading and complex derivatives. Industry leaders like Citigroup have announced plans to move in those directions. Many of these bankers enjoyed influence in and contributed generously to the Obama campaign. Now it remains to be seen if a President Obama can stand up to these same bankers and persuade or compel them to act responsibly."

In other words, the same companies that made billions off of derivatives and other scams and are now getting bailed out on your dime are going to make billions from carbon trading.

One the largest boosters for cap and trade invented credit default swaps - which were supposed to increase financial stability, but instead were a large part of the reason that the world economy crashed last year.

Iceland: People power rises against financial overlords

2010-01-11T00:45:00.001-08:00

The people of Iceland are saying no to having the cost of the financial crisis dumped on them. A quarter of Iceland's voters have signed a petition rejecting a deal which would see Iceland, through an IMF loan, pay billions to overseas creditors who lost money when the Icelandic banks went belly-up following the global financial crisis. The deal was the result of pressure from the British and Dutch governments in support of their banking class, who had a major hand in the high risk profiteering of Iceland's banks prior to the crisis.

While the situation in Iceland is at an extreme, it shows that it's possible for people to mobilise against the kings of capital and the governments that act to protect the interests of the mega-rich. With no real change in the way the big global banks and financial institutions are operating, and with the world economy having an ever increasing debt overhang, it is inevitable that more countries will be thrown into extreme economic and political crisis. In New Zealand, we need to prepare for such an event by building a broad and multi-headed campaign against the banks and neo-liberalism. To join the Bad Banks campaign email Vaughan svpl(at)xtra.co.nz

Angry Iceland Defies the World

by Ambrose Evans-Pritchard
from Telegraph
6 January 2010

Iceland's president has blocked a Bill to pay Britain and Holland up to £3.4bn for Icesave depositors, acknowledging that popular feeling in the island nation is too strong to proceed without a referendum.  

The move reopens a bitter dispute and greatly complicates Iceland's loan agreement with the International Monetary Fund. It has already led to a fresh downgrade to BB+ by Fitch Ratings, which called the decision "a significant setback to Iceland's efforts to restore normal financial relations with the rest of the world."

The Icesave law was passed by Iceland's parliament in a knife-edge vote late last year, but a petition by the InDefense movement has changed the political landscape. The lobby collected 56,000 signatures – a quarter of voters. 

President Olafur Ragnar Grimsson said the "overwhelming majority" wanted a direct say over the matter, and that no settlement would hold without their assent.

"It is the cornerstone of the constitutional structure of the Republic of Iceland that the people are the supreme judge of the validity of the law," he said. "At this crucial juncture it is also important to emphasise that the recovery of the Icelandic economy is a matter of vital urgency".

If voters say "No" when the referendum takes place in a couple of months, the accord thrashed out with London and the Hague during months of wrangling will no longer have any credibility, whatever the legal niceties.

The reality is that Icelanders have erupted in collective rage at what they believe to be gross injustice and "gunboat diplomacy" by Downing Street. What rankles is Britain's use of anti-terrorism law to freeze Iceland's assets. The Icelandic central bank was listed besides al-Qaeda as a terrorist body – unprecedented treatment for a NATO ally. Holland was careful not to go so far.

"Importers couldn't get trade finance for food. We feel deeply wronged," said Johannes Skulason from InDefence. Shelves were bare for weeks in Icelandic shops as the banking system disintegrated.

Einars Már Gudmundsson, a novelist, said most citizens were unaware that Iceland's three leading banks –Landsbanki, Glitnir and Kaupthing – were operating as global hedge funds with exposure of 11 times Iceland's GDP.

"I had never heard of Icesave till this happened," said Mr Gudmundsson. "We were told that what these banks did abroad was nothing to do with us but when it all went wrong the responsibility fell back on us. Profits were privatised, but losses were nationalised."

He added: "We're told if we reject the terms, we will be the Cuba of the North. But if we accept, we'll be the Haiti of the North."

Both Britain and Holland expect Iceland to stick to its agreement, but the legal claims are far from watertight. Iceland accepted "political responsibility" for the 320,000 British and Dutch deposits in exchange for lenient terms (arguably denied) in November 2008, but never accepted the legal claim.

The UK has refunded private savers up to £50,000, but councils such as Kent are relying on the deal to recoup their money. They have retrieved £100m of the £900m put in Icelandic accounts.

Iceland's Left-wing coalition – which unseated free marketeers in February's "Saucepan Revolution" – has backed the Icesave terms, deeming it is the only way for Iceland to move beyond the disastrous episode. The petitioners said they accept that Iceland's people should foot part of the bill, but object to the "Versailles" terms: a loan at 5.55pc interest, to be repaid within 15 years. The central banks said this will increase Iceland's public debt by 20pc of GDP.

A report by Sweden's Riksbank said Britain and Europe share blame for the fiasco. It said "absurd" EU rules – which cover Iceland indirectly – told states to set up a "guarantee scheme" for banks, but never said taxpayers were liable for losses.

The reports added that the UK "hardly bothered" to inform savers that the schemes were ill-funded. "The conclusion is clear: the EU host countries (UK and Holland) are also to blame for Iceland's disaster. It would be reasonable that they carry some of the burden. It takes two to tango," it said.

The UK Financial Services Authority said it was unable to stop Icelandic banks raising deposits in the UK under the EU's "passport" system, even when they began milking UK customers to cover losses at home.

Whatever the rights and wrongs, Iceland was by then already being crushed by a financial tsunami. Britain's use of anti-terror laws at that moment will not sit pretty in diplomatic history.

Finsec Union slams Aussie-owned banks

2010-01-09T17:06:00.000-08:00

from TVNZ website

Australian-owned banks are being accused of looking after theiroverseas shareholders at the expense of local jobs and the NewZealand economy.

The bank workers' union FINSEC says huge dividends have beenhanded out while jobs are being cut or contracted out tooffshore operators.

Spokesman Andrew Campbell says he is also unhappy at wagefreezes and branch closures. He believes ANZ National is thebiggest offender.

Campbell says it's time the government got tough over what hecalls an immoral disregard to the local economy. He says allthrough the recession the banks have been turning healthyprofits.

“Time to hit the banks and international speculators with a Financial Transaction Tax”, say Bad Banks campaigners.

2009-12-23T14:31:00.000-08:00

Bad Banks media release
24 December 2009

“It’s great news that the Aussie-owned banks have to pay up their unpaid tax,” says Vaughan Gunson, Bad Banks campaign manager. “It’s a defeat for them.” [See NZ Herald article Banks to pay taxman billions]

“It shows that big corporations can be brought into line. While the IRD had the law on its side, we shouldn’t underestimate the role mass public opinion has played in getting the banks to cough up,” says Gunson.

Bad Banks campaigners have been on the streets over the last few months handing out leaflets with information on the banks and the world economic crisis. “We’ve found there’s a real bad mood against the banks,” says Gunson.

“People know the Aussie banks have been making exorbitant profits over the last decade by charging high interest rates for mortgages and credit cards, high fees, and through mega-scale tax avoidance,” says Gunson.

People have been telling us, “Yes, the banks are bad”, “They’re ripping us off big time”, “The banks want to turn us all into debt slaves”.

“And there’s a high level of awareness that it’s the global banking cartels who are responsible for the world economic crisis which is causing large-scale job losses in New Zealand, along with widespread clamps on wages and salaries,” says Gunson.

“The banks and other corporates are trying to make ordinary working people bear the cost of the crisis. We need to resist,” says Gunson.

“To make the big banks and financial speculators pay we’re campaigning for the introduction of a Financial Transaction Tax. A small percentage tax on every financial transaction would net hundreds of millions from banks and international speculators who shift billions and billions of dollars around every year,” says Gunson.

“A tax that targets the mega-rich would allow us to shift the tax burden off low and middle income earners,” says Gunson. “We could take GST off food, which would be a big help to grassroots New Zealanders struggling to pay the bills.”

“Just because the banks have been forced to pay their unpaid tax bill, doesn’t mean they should be let of the hook,” says Gunson. “To protect our people we urgently need major reform of the banking industry.”

To contribute to the national debate that we must have in New Zealand about the banking system, Bad Banks offers these suggestions for transforming the power relationship between banks and the people:

1. Immediate government intervention to stop banks chucking "mum and dad" homeowners out of their homes because of a job loss or income cut.

2. The establishment of a government regulatory body to oversee the renegotiation of mortgages based on realistic market values and the ability of the homeowner to pay.

3. Turn Kiwibank into a proper "public service" bank offering first-home buyers a 3% interest state loan.

4. Zero-fee banking offered to people on modest incomes. Facilitated by expanding the role of Kiwibank and forced regulation of all banks operating in New Zealand .

5. Introduction of a Financial Transaction Tax (FTT) that would net the banks and other financial speculators. A decisive step in shifting the tax burden off low and middle income people and onto the mega-rich.

6. All bank loans to big business over a fixed amount to be approved by a government regulatory body that acts to protect the environment and communities. Such a measure is essential to preventing powerful global banking interests from sabotaging the necessary emergency mobilisation against climate change.

7. A full public inquiry which looks at every aspect of banking operations in New Zealand , with public meetings held throughout the country, so that grassroots people can tell their stories.

For more comment, contact:

Vaughan Gunson
Bad Banks campaign manager
(09)433 8897
021-0415 082
svpl@xtra.co.nz

See also the media release from CAFCA, IRD Delivers Best Possible Xmas Present To Long Suffering Kiwi Taxpayers.

Latest UNITY Journal - Bad Banks: What are the alternatives?

2009-12-23T01:41:00.000-08:00

CONTENTS

5 A "public option" against the banks
DAPHNE LAWLESS, editor of UNITY

11 Targeting capitalism's exploitation of labour and nature
GRANT MORGAN, Socialist Worker (NZ)

15 The "collapse" of global capitalism
GRANT MORGAN

18 Target Bad Banks and you target neo-liberalism
VAUGHAN GUNSON, Socialist Worker (NZ)

22 Market volatility and profitability crisis
GRANT MORGAN

25 An end to private banks
SUE BRADFORD, former Green Party MP

32 Bank and tax systems due for overhaul
RUSSEL NORMAN MP, Green Party leader

33 Inquiry shows need for govt to act
FINSEC

34 Aussie tax-dodging robber banks
MURRAY HORTON, Campaign against Foreign Control of Aotearoa

35 Protecting New Zealand jobs through bank guarantee schemes
FINSEC

39 Is it "Kiwi" to be anti-union?
VAUGHAN GUNSON interviews Andrew Campbell

41 CTU conference 2009: can unions build an alternative?
GRANT BROOKES, New Zealand Nurses Organisation

45 What's a "fractional reserve"?
DAPHNE LAWLESS

47 Banks, money and thin air
ADAM BUICK, Socialist Party of Great Britain

50 Socialist Worker Appeal

55 Ron Paul: a right-wing alternative?
PETER De WAAL, Socialist Worker (NZ)

60 Why community currencies?
DEIDRE KENT, Living Economies

63 Financial Transactions Tax: making Wall Street pay
DEAN BAKER, Center for Economic and Policy Research

65 Our alternative to market madness
CHRIS HARMAN, Socialist Workers Party (Britain)

70 Is nationalization socialism?
YEN CHU, No-one Is Illegal (Canada)

74 Venezuela closes banks
BRONWEN BEECHEY, Socialist Worker (NZ)

78 Latin America's economic rebels
MARK WEISBROT, Center for Economic and Policy Research

81 Feedback: letters from David Frazer, Peter de Waal, Pat O'Dea and David Colyer

To purchase a copy of this issue ($5 plus postage) contact Len, email organiser@sworker.pl.net, or phone (09)634 3984.

To subscribe to UNITY Journal ($25 for four issues a year) contact Grant, grantmorgan@paradise.net.nz. Send a cheque made out to 'UNITY' to Box 13-685, Auckland, NZ, along with your postal details.

Société Générale Predicts Global Economic Collapse In Two Years Time

2009-12-23T00:56:00.000-08:00

by Ambrose Evans-Pritchard
22 December 2009
from Telegraph.co.uk

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.

In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.

Inflating debt away might be seen by some governments as a lesser of evils.

If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.

The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.

SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.

Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.

SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.

Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.

Bad Banks "exposures" of ASB - Auckland and Whangarei

2009-12-22T13:59:00.000-08:00

Bad Banks campaigners outside ASB Bank on Queen Street.

There have been two Bad Banks "exposures" of ASB's false claim to be a "Kiwi bank", in Auckland on 11 December and in Whangarei on 22 December. Bad Banks campaigners handed out the latest leaflet highlighting the bad things ASB has been doing.

The leaflet also linked this particular Bad Bank to the international bank cartels responsible for the global financial implosion and their role in blocking meaningful action on climate change. From the leaflet:

"This implosion sparked the world economic crisis which is today causing large-scale job losses in New Zealand, along with widespread clamps on wages and salaries.

The international bank cartels (to which ASB is affiliated) control global investment flows chasing after maximum profits, at the expense of social and ecological welfare. Thus the world’s bankers are choking off vital “green energy” investments needed to save humanity from climate chaos and oil depletion."

The leaflet was positively received, with a few hundred handed out in Auckland and close to a hundred in Whangarei. A dozen people filled out the contact sheet to keep in touch with the campaign.

Regular Bad Banks stalls or "leaflet drops" are essential. Being out on the street, in tandem with our media work, will raise the profile of the campaign. People will see us and remember us. They will respect us for doing the hard yards.

And by being active and handing out leaflets we're able to engage with people. We can then gauge what issues and ideas are really connecting with them. The questions people are ask, the conversations we have, can all be fed back into the campaign, so that it becomes a living and evolving thing. That way it has the best chance of becoming a popular movement.

Next year

If you would like to get involved with Bad Banks stalls next year contact Vaughan Gunson, email svpl@xtra.co.nz or ph/txt 021-0415 082. We can arrange for a bunch of leaflets and other campaign material to be sent to you.

It's possible to do a stall with just one or two people. Give it a go. You’ll get a positive reception from most people. And by getting out there you’ll inspire others to help out. Because of the simmering mood against the banks you’ll come into contact with people who are looking to get involved in a campaign like this.

It should be possible next year to get regular Bad Banks stalls and other campaign initiatives happening in a number of cities around New Zealand. That’s the goal.

A new person signs up to the Bad Banks campaign, while Peter and Len are engaged in conversations (about Bad Banks of course). Queen Street, Auckland.

Vaughan and Aaron (Green Party activist) outside an ASB in Whangarei. A positive reception to Bad Banks leaflets from most people. The ASB Regional Manager for Northland was not so keen.

Calling the bankers' bluff over tax

2009-12-21T10:16:00.000-08:00

by Ruth Sunderlund
from The Observer
22 December 2009

It's fortunate for a number of reasons that the British Airways cabin crew strike has been averted - not least because disenchanted London bankers can head for Heathrow airport right now, if that's what they really want.

The argument that banks and bankers are highly mobile and would leave London if provoked is endlessly deployed to defend bonuses, but it is not interrogated nearly enough. Now Andy Haldane, the Bank of England's head of financial stability, has called the bankers' bluff. He is on safe ground to suppose there will not be overspill in the departure lounge.

Hedge funds and small financial outfits might be reasonably footloose, but big banks are much less so. And where would the refugee bankers, fleeing cruel persecution in Britain, find sanctuary? If they really want to turn their backs on advantages such as the English language, the favourable time zone, the world-class cultural life and the honeypot of business services in London, they would have to find a jurisdiction prepared to underwrite their activities.

Tax havens such as the Cayman Islands have been overbalanced by the credit crunch and would not be capable of doing so. Traditional magnets such as Switzerland are stretched to breaking point by supporting their existing banks - they would not want to take on responsibility for any more. And why would the US, or China, contemplate burdening their taxpayers with institutions that define themselves as too buccaneering for Britain?

I'm not sure what the optimal size of the financial sector is, but given that taxpayer bailouts are an integral feature of the industry, occurring periodically and costing more each time, it is not in the least obvious that bigger is better. Proportionately, public sector interventions in Britain during the financial crisis were much larger than in the US or the euro area, reaching more than 70 per cent of GDP this year.

The problem with relying so heavily on financial services is that we are hanging our national fortunes on a sector that is potentially very lucrative, but also ruinously risky.

Health, not size, is key.

Haldane's comments are not only interesting in themselves, but because they appear to be a harbinger of a tougher stance. The Bank of England's latest financial stability report urges the banks to replenish their capital now, while the sun is, if not shining brightly, at least casting a few wintry rays.

It wants to see them start a virtuous circle, by retaining more capital instead of paying bonuses and dividends. That would send down the cost of funds, which in turn would get credit flowing through the economy. Non-financial companies would then perform better, resulting in lower loan losses for banks.

In the long term, everybody's happy. In the short term, bank shareholders will squeal - share prices have already fallen in response to the Chancellor Alistair Darling's bonus tax - and the bonus lobby will cry that it is infringing their basic human right to the moolah.

The bank's exhortations come against a background of international reform. The Basel committee on banking supervision is suggesting a series of measures, including proposals that would limit the ability of banks to pay bonuses and dividends if their capital dropped close to the minimum required.

The system looks more stable and more resilient than it did six months ago, but there is a very difficult road ahead. Next year, we can expect progress on an international level on improving the regulation of capital and liquidity.

It will take longer to resolve two parallel debates: The first is around dynamic provisioning - or whether central banks can let the air out of bubbles before they burst, by insisting that banks build up cushions of capital in the good times to soften their landings in the bad. The second is about firms that are too big to fail - how they can be wound up with the least possible damage, and whether there should be a separation of utility banking from the casino variety as I have advocated, and far more importantly, as has the bank's governor, Mervyn King.

People are calling this an "ice age" for bankers, but it is blatantly premature for them to be receiving bonuses off the back of free money injected by central banks, at a time when there are still enormous risks.

Some individual households are very highly leveraged and vulnerable to a rise in interest rates. Potentially bad loans in the commercial property sector are looming like a black cloud: £160 billion ($364 billion) of loans are due to be refinanced by 2013. So far, we have only had a liquidity crisis - the real credit crisis is yet to happen.

Kiwibank should be turned into proper public bank

2009-12-20T14:58:00.000-08:00

Bad Banks media release
20 December 2009

An article in the Sunday Star Times, Anger at Kiwibank closures (20 Dec 2009), outlines plans by Kiwibank to close 20 branches nationwide. A cost saving initiative by the bank.

"This decision by Kiwibank bosses shows that when it comes to maintaining its "bottom line" there's not much difference between Kiwibank and the other banks, " says Vaughan Gunson, Bad Banks campaign manager.

"Kiwibank has tried to market its difference to the Aussie banks (ANZ National, BNZ, Westpac and ASB) who dominate the banking industry in New Zealand, but the reality is simply that Kiwibank currently doesn't offer much of an alternative," says Gunson. "That's because Kiwibank was founded by the government in 2002 to operate as a business, one that has to compete "fairly" with other banks, and at the same time deliver a return to the government."

The comment in the Sunday Star Times article by Jim Anderton, leader of the Progressive Party and proponent of Kiwibank, reveals the limits of the market model that Kiwibank operates under. Anderton justified the closures on the grounds that this is "what happens with a modern business".

"Anderton is right," says Gunson, "a modern business serves its own purpose, not the wider needs of the community. This is the whole problem with the banking sector in this country and internationally".

"The financial implosion that almost brought down the global economy last year, and which is continuing to wreck havoc on the lives of grassroots people, shows that we need to urgently rein in the power of the banks, " says Gunson. "Turning Kiwibank into a proper public bank would be a good start."

"A proper public bank", says Gunson, "could offer 3% state loans to first home buyers and zero-fee banking to low and middle income people. Such bold and sensible initiatives would transform banking in this country."

"Public service banking could easily be financed by raising the taxes on the wealthy, including the introduction of a Financial Transaction Tax (FTT) that nets the banks and other "fat cat" financial speculators that distort the NZ economy," says Gunson.

To contribute to the national debate that we must have in New Zealand about the banking system, Bad Banks offers these suggestions for transforming the power relationship between banks and the people:

1. Immediate government intervention to stop banks turfing "mum and dad" homeowners out of their homes because of a job loss or income cut.

2. The establishment of a government regulatory body to oversee the renegotiation of mortgages based on realistic market values and the ability of the homeowner to pay.

3. Turn Kiwibank into a proper "public service" bank offering first-home buyers a 3% interest state loan.

4. Zero-fee banking offered to people on modest incomes. Facilitated by expanding the role of Kiwibank and forced regulation of all banks operating in New Zealand.

5. Introduction of a Financial Transaction Tax (FTT) that would net the banks and other financial speculators. A decisive step in shifting the tax burden off low and middle income people and onto the mega-rich.

6. All bank loans to big business over a fixed amount to be approved by a government regulatory body that acts to protect the environment and communities. Such a measure is essential to preventing powerful global banking interests from sabotaging the necessary emergency mobilisation against climate change.

7. A full public inquiry which looks at every aspect of banking operations in New Zealand, with public meetings held throughout the country, so that grassroots people can tell their stories.

For more comment, contact:

Vaughan Gunson
Bad Banks campaign manager
(09)433 8897
021-0415 082
svpl@xtra.co.nz

-----------------------------------------------------
Backgrounder:

Anger at Kiwibank closures

from Sunday Star Times
20 December 2009

Kiwibank - the brand that brought local banking back into fashion - is axing more than 20 of its branches, angering customers who bought into its patriotism-based advertising.

The closures come as Kiwibank instigator, Jim Anderton, credits the bank with reversing a trend towards shutting small branches.

David Tripe, director of Massey University's Centre for Banking Studies, said Kiwibank was undermining its own public relations pitch. "Essentially they're looking to close branches for the same reason as all the other banks closed them in the 1990s."

Since launching in 2002, Kiwibank has attracted 650,000 customers. Its advertising uses World War II-era imagery to push a theme of resistance to foreign invaders - the overseas-owned banks, which shut more than 1300 New Zealand branches in the 1980s and 1990s.

Since January, Kiwibank's owner, New Zealand Post, has either shut, or announced plans to shut, at least 20 of its about 300 branches, prompting public meetings, petitions and demonstrations.

Kiwibank exists in two forms: either as a franchise, typically run by a small business owner out of a dairy or stationery shop, or as part of a corporate branch of NZ Post. In some cases, NZ Post has shut a Kiwibank franchise and directed customers to one of its corporate branches. In others, where a franchisee has opted out, customers have received letters from New Zealand Post blaming the closure on the franchisee, but has not said if it has sought a replacement.

Kiwibank spokesman Bruce Thompson said two branches had opened in the past year. Another 29 had been upgraded or relocated, or both.

Anderton said Kiwibank's network was still the biggest of any bank operating in New Zealand. That included more than 30 towns and suburbs where there were no other banks.

Since Kiwibank opened, not a single overseas-owned bank had shut a branch in New Zealand. The closures were "what happens with a modern business".

Tripe said Kiwibank faced the same challenge as any other bank in making branches work - generating enough revenue to surpass running costs. In the case of the 20 closures, Kiwibank had responded no differently to the major banks.

KIWIBANKS AXED

(Including closures of actual buildings, as well as downgrades of PostShops offering Kiwibank and bill payment services.)

Mahora, Hastings
Glendene, Auckland
Te Puni, Lower Hutt
Henderson, Auckland
Braid Rd, St Andrews, Hamilton
H&J Smith, Invercargill
Balmoral, Auckland
Sandringham, Auckland
Papatoetoe South, Auckland
Greenwoods Corner, Auckland
Redwood Downs, Christchurch
Onekawa, Napier
Beckenham, Christchurch
Hereford St, Christchurch
Waimairi Rd, Ilam, Christchurch
Hokowhitu, Palmerston North
Awapuni, Palmerston
North Books and More, High St, Lower Hutt
Linwood, Christchurch

No easing of mortgagee sales predicted

2009-12-20T00:53:00.000-08:00

20 December 2009
Source: NZPA

The number of people losing their homes to a mortgagee sale may have dipped according to the most recent data but numbers are still expected to remain high into the New Year.

Figures from land information company Terralink International show there were 298 registered mortgagee sales during October down 45 from September but still well above the 174 recorded in October 2008.

While the October figures showed a decline Terralink managing director Mike Donald expected numbers to remain high for a while yet.

"It's a mistake to think that a decrease this month means that mortgagee sales are set to return to pre-recession levels. There's a slight easing in October but when you look at the whole picture you'll see the numbers remain at an all time high. It's still a volatile situation and the numbers of mortgagee sales we have been seeing shows the length of time it takes to work through the financial stress of the recession."

The percentage of mortgagee sales from individual homeowners with only one property had been climbing, Mr Donald said.

"These are the people who we'd probably think of as the `Mum and Dad' homeowners. They now make up nearly one in four of the total mortgagee sales in New Zealand, or 24%.

"As the year has gone on, and spending has decreased, and redundancies have increased more and more ordinary New Zealanders have been affected by the recession. Forced sales of their homes has unfortunately been a consequence for some," Mr Donald said.

Regions hardest hit in October were Auckland and Waikato while Otago, Southland and Taranaki all experienced increases.

Mortgagee sales accounted for almost 5 percent of the total nationwide property sales in October.

Kiwibank needs to be turned into a proper public bank

2009-12-19T15:36:00.000-08:00

The article in the Sunday Star Times, Anger at Kiwibank closures (20 Dec 2009), outlines plans by Kiwibank to close 20 branches nationwide. A cost saving initiative by the bank.

While Kiwibank has tried to market its difference to the Australian owned banks who dominate the banking industry in New Zealand, the reality is that Kiwibank currently doesn't offer much of an alternative. That's because Kiwibank was founded by the government in 2002 to operate as a business, one that has to compete "fairly" with other banks, and at the same time deliver a profit to the government.

The comment in the Sunday Star Time article by Jim Anderton, leader of the Progressive Party and proponent of Kiwibank, reveals the limits of the market model of banking that Kiwibank operates under. Anderton justified the closures on the grounds that this is "what happens with a modern business".

The Bad Banks campaign advocates turning Kiwibank into a proper public bank, as part of major reform of banking in New Zealand. Kiwibank should offer 3% state loans to first home buyers and zero-fee banking to low and middle income people.

This could be financed by raising taxes on the rich, including the introduction of a Financial Transaction Tax (FTT) that nets the banks and other "fat cat" financial speculators that distort the NZ economy.

See Make Kiwibank Public.

Naughty banks need more than a slap on the wrist

2009-12-12T14:14:00.000-08:00

by Matt McCarten
from NZ Herald
13 December 2009

The Australian banks last week had their Prime Minister scolding them to take a hard look at themselves. That's because they snuck through an interest rate rise after their Reserve Bank raised its rates.

Westpac was the worst with a 45-point hike, even though the Reserve Bank raised the rate by only 25 points.

Westpac rubbed salt into its customers' wounds by sending them an email comparing the bank's profit-gouging decision to a situation when a tropical storm hits a banana plantation. Apparently, such an occurrence would increase the price of a banana smoothie.

Of course, the comparison was dishonest and patronising.

A bank's unethical profiteering that puts people in a situation of not being able to pay their mortgage is outrageous enough. But comparing it with paying more for a banana smoothie has caused a furore in Australia.

Westpac won't want that public relations disaster following it over here, given it has announced it is making over its New Zealand brand to show how much it cares about us.

The other Australian banks (ANZ, ASB, BNZ and National) have followed with a charm offensive, too. There are lots of soothing words about how they want to get closer to New Zealanders by opening more branch offices and offering more intimate services.

It's a bit hard to understand their strategy, given they recently sacked hundreds of Kiwi bank tellers and shipped their work offshore to call-centre factories. It seems only yesterday we were being told local bank branch closures would save us money.

Despite those rather inconvenient truths, the public relations campaign to win our goodwill is well under way. Recently, BNZ proudly promoted its public spirit credentials by closing its doors for a day and paying its employees to do community work for the day.

I'm not trying to piss on the parade, but the day after, I was in a BNZ bank and the staff were running ragged. One of them dryly noted that BNZ got good publicity, but it also meant the workers had to fit five days' work into four days that week.

One of the BNZ's main competitors, the ASB Bank, is now rebranded as the "caring bank". It also claims to have been a "Kiwi bank since 1847".

I doubt the Commonwealth Bank of Australia is aware of the new change of ownership.

It seems that the new initiatives to win our favour are twofold. Despite the widespread political opposition and scepticism to setting up a publicly owned community, Kiwibank has gone from strength to strength as many New Zealanders have swapped their bank accounts over. Nationalism and sovereignty are strong emotions.

The second reason is the public mood is going dog on them. There's been too much news about interest fixing, exorbitant fees and the outrageous tax evasion cases now before the courts.

That's on top of the increasing numbers of ordinary New Zealanders losing their homes as the banks start foreclosing on them.

Vaughan Gunson from the Bad Bank campaign claims the Australian bank owners are terrified that the public sentiments will lead to politicians on both sides of the Tasman following their American colleagues and regulating the industry to curb its excessive profiteering. Gunson blames the banks for causing the financial crisis that almost collapsed the global economy.

The Bad Bank supporters picketed a bank in downtown Auckland on Friday as part of their campaign to force the Government to hold a formal inquiry into the role of banks in this country.

Westpac ran a stupid banana campaign, says Gunson, but the whole world banking system has gone bananas. One slip on a skin and we're all gone.

The Government's siding with the Australian bank owners in not holding an inquiry makes me nervous.

ANZ's intricate tax dodging continues

2009-12-12T13:58:00.000-08:00

In an article that appeared in the Sunday Star Times, ANZ in intricate deal on eve of court battle (13 Dec), reporter Rob Stock details how ANZ (but not just not them) used shonky loan deals with foreign banks labelled "money go rounds" to avoid tax.

Rob Stock gives examples of one particular money go round set up within New Zealand:

The BNP Paribas transaction is not the only curious-looking structure on ANZ National Bank's books. There are several related-party loan deals that have a similar appearance to tax dodging money-go-rounds.

Cortland Finance, for example, was owed $437m by ANZ National Bank at the end of September 2008, though it is a wholly owned subsidiary of Arawata Finance, which is 100% owned by ANZ National Bank. In other words, ANZ had put capital into the company and then borrowed it back again.

Similarly, ANZ National Bank owes more than $2b to its wholly owned subsidiaries Tui Finance and Tui Endeavour, money that represents capital put in by the bank. Also at the end of September 2008, Arawata Finance was owed $717m by ANZ National Bank, but it owed the bank $533m.

"It's the whole banking system which is bananas", say Bad Banks campaigners

2009-12-10T09:18:00.000-08:00

Bad Banks media release
10 December 2009

Australian prime minister Kevin Rudd has just given a very public serve to Westpac for an email the bank sent to mortgage customers featuring a cartoon video about selling bananas to justify a big hike in its mortgage rates. (See Westpac goes bananas - http://www.news.com.au/couriermail/story/0,,26462786-3122,00.html.)

"This is just another example of the silly tricks that the Big Four Australian-owned banks (ANZ National, BNZ, Westpac and ASB) are pulling to try and "win over" the public", says Vaughan Gunson, Bad Banks campaign spokesperson.

In New Zealand, BNZ closed the doors of its branches and instructed staff to do community work for a day. And ASB Bank has been pushing an advertising campaign which tries to paint a picture of a "caring bank" that serves us.

"ASB have made the ridiculous claim that they've been a "Kiwi bank since 1847", when in fact they're fully owned by Commonwealth Bank of Australia", says Gunson.

"The banks are trying to "suck up" because they know there's a bad public mood against them, as a result of their interest gouging, fee charging, and tax dodging", says Gunson. "Many New Zealand homeowners are experiencing mortgage stress, thanks to the banks."

"What the Aussie banks are worried about is that the public mood against them will put pressure on governments on both sides of the Tasman to put in place tough regulations that curb their power and rein in their profits", says Gunson.

The Bad Banks campaign is doing its bit to keep the pressure on the banks. Tomorrow (Friday) at 12noon we're going to be outside ASB's Queen Street branch (cnr Wellesley St) with placards and a new leaflet exposing ASB.

"Our aim is to promote a nationwide and popular debate on the banks and their role in the economy", says Gunson. "It goes way beyond a few bad banks, we think the whole banking system is bananas."

"The financial implosion that almost brought down the global economy last year, and which is continuing to wreck havoc on the lives of grassroots people, shows that we need to urgently bring the banks under control", says Gunson.

There is momentum building even amongst the global financial elite for more regulation and control to be imposed on the banks. (See Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry - http://www.telegraph.co.uk/finance/economics/6764177/Ex-Fed-chief-Paul-Volckers-telling-words-on-derivatives-industry.html.)

To contribute to the national debate that we must have in New Zealand about the banking system, Bad Banks offers these suggestions for transforming the power relationship between banks and the people:

1. Immediate government intervention to stop banks turfing "mum and dad" homeowners out of their homes because of a job loss or income cut.

2. The establishment of a government regulatory body to oversee the renegotiation of mortgages based on realistic market values and the ability of the homeowner to pay.

3. Turn Kiwibank into a proper "public service" bank offering first-home buyers a 3% interest state loan.

4. Zero-fee banking offered to people on modest incomes. Facilitated by expanding the role of Kiwibank and forced regulation of all banks operating in New Zealand.

5. Introduction of a Financial Transaction Tax (FTT) that would net the banks and other financial speculators. A decisive step in shifting the tax burden off low and middle income people and onto the mega-rich.

6. All bank loans to big business over a fixed amount to be approved by a government regulatory body that acts to protect the environment and communities. Such a measure is essential to preventing powerful global banking interests from sabotaging the necessary emergency mobilisation against climate change.

7. A full public inquiry which looks at every aspect of banking operations in New Zealand, with public meetings held throughout the country, so that grassroots people can tell their stories.

Contact:

Vaughan Gunson
Bad Banks media spokesperson
(09)433 8897
021-0415 082
svpl@xtra.co.nz

Bad Banks exposure of ASB's "Kiwi bank" claim - 12noon, Friday 11 December

2009-12-10T09:14:00.000-08:00

Bad Banks media release
7 December 2009
http://www.badbanks.co.nz/

Bad Banks campaigners will be outside ASB Bank on Queen Street (cnr Wellesley St), Auckland, this Friday to expose ASB's claim that it's a "Kiwi bank".

"ASB ain't no Kiwi bank," says Vaughan Gunson, Bad Banks media spokesperson. "They're 100% owned by the Commonwealth Bank of Australia, one of the bigger banks in the world. They're misleading the New Zealand public, to say the least."

"We find their recent advertising campaign hard to stomach, and I'm sure many people feel the same," says Gunson, "because ASB and the other Aussie-owned banks (ANZ National, BNZ, and Westpac) aren't serving our interests at all. Their only goal is to make as much money as possible for bank bosses and corporate shareholders."

"The Aussie-owned banks have been making exorbitant profits for years from high interest rates on mortgages and credit cards, as well as imposing high fees and late penalties. They've been hurting grassroots New Zealanders," says Gunson.

"And now with the recession and people struggling to pay the bills, the banks are out to protect their own equity position by forcing mortgagee sales in record numbers," says Gunson.

On top of these injustices, ASB is refusing to pay an unpaid tax bill of $285 million. "Rather than big-budget advertising campaigns designed to mislead us, ASB bosses should just pay up the tax they owe," says Gunson.

"It's obvious that ASB and the other big banks are trying to suck up to us. Why? Because they're worried that the bad public mood against them will result in the government being forced to curb banking power and rein in their profits. Which is exactly what the Bad Banks campaign wants to see, " says Gunson.

"We've started a long term campaign to build pressure on the banks, which we hope will result in tougher regulations being placed on the banking and finance industries. Most people would say it can't happen too soon," says Gunson.

Bad Banks campaigners recently nominated ASB Bank for the 2009 Roger Award, given annually to the "Worst Transnational Corporation Operating in Aotearoa/New Zealand" (see Backgrounder #2 below).

"It was difficult to choose which bank to nominate for The Roger Award, because in the eyes of most New Zealanders all banks are bad," says Gunson. "But what tipped the balance in favour of ASB, was the fact that ASB bosses have been very hostile to the bank workers union, Finsec."

"Today, ASB is the only big bank which is not unionised. Which begs the question: is it "Kiwi" to be anti-union?" asks Gunson.

Bad Banks campaigners will be carrying placards, making some noise, and handing out leaflets to the public outside the Queen Street branch of ASB Bank at 12noon, this Friday, 11 December. Media are invited to attend to get more comment, plus photos/footage.

The cartoon image attached to this media release is by ex-NZ Herald cartoonist, KLARC. It is freely available for reproduction on websites or in print publications.

For more comment, contact:

Vaughan Gunson
Bad Banks media spokesperson
(09)433 8897
021-0415 082
svpl@xtra.co.nz

________________________________________

Backgrounder #1

The Bad Banks campaign has been initiated by Socialist Worker-New Zealand. We believe the banks in New Zealand and globally have grown to exercise enormous and dangerous power over the economy. The big banks and their government backers are driving forward economic policies that threaten people and planet.

There are a range of measures needed to stop the banks, from tough government regulations to establishing proper public banks which provide credit as a service rather than to make a profit.

The Bad Banks campaign also advocates measures like a Financial Transaction Tax (FTT) to net the banks and other financial speculators whose profits from wheeling and dealing goes largely untaxed. Such a tax would allow New Zealand to move towards a fairer tax system which shifts the tax burden off low and middle income people and onto the big wealthy corporates.

For more information on the Bad Banks campaign go to http://www.badbanks.co.nz/

Backgrounder #2

These were the 10 reasons given by Bad Banks campaigners for why ASB deserved to receive the 2009 Roger Award:

1. Interest gouging grassroots Kiwi homeowners.

Mortgage holders know it. Even the Reserve Bank in 2009 came out and said that the banks, including ASB, were keeping their interest rates too high. High interest rates on large mortgages put modest income earners under considerable financial stress in 2009, as many were affected by job losses, income cuts, and general financial insecurity. (See http://www.nzherald.co.nz/interest-rates/news/article.cfm?c_id=235&objectid=10582846)

2. Foreclosing on people's homes.

2009 saw record numbers of mortgagee sales, as banks moved to protect their own equity position by turfing increasing numbers of "mum and dad" mortgage holders out of their homes. Hundreds of homeowners were foreclosed in Auckland, ASB's home turf. (See http://business.scoop.co.nz/2009/09/28/record-high-for-mortgagee-sales-despite-recovery)

3. Continuing to make massive profits at the expense of grassroots people.

The recession of 2008/09 did not prevent ASB making a big profit, $238 million for the first six months of the financial year. Such a high profit in a recession points to the power the bank has to shift the burden of economic hard times on to ordinary New Zealanders. (See http://tvnz.co.nz/business-news/asb-tax-operating-profit-down-2477075)

4. Mega-scale tax dodging.

It came to public attention in 2009 the full extent of tax dodging by the Big Four Aussie-owned banks, over $2 billion. The IRD is after $285 million from ASB for unpaid tax between 2001 and 2004. Having been caught, ASB bosses are still refusing to pay up, and will likely use teams of expensive lawyers to drag the process through the courts, costing the IRD and the Crown millions. (See http://www.nbr.co.nz/article/asb-estimates-285-million-exposure-nz-tax-case-113373)

5. Failing to face up to public scrutiny.

Nobody from ASB Bank fronted up to the parliamentary inquiry into the operations of the banks organised by the Green, Labour and Progressive parties in 2009. While this inquiry had no teeth, because it was not supported by the National government, this disregard for the New Zealand public showed how arrogant and conceited is the position of the Aussie-owned banks. (See http://www.scoop.co.nz/stories/PA0909/S00049.htm)

6. Union busting.

The ASB Bank has determinedly used anti-union practices to stop Finsec Union from organising bank workers. To inquire more about ASB's union busting you could contact Finsec Union directly, phone 04 385 7723, email union@finsec.org.nz.

7. Imposing a wage freeze on workers.

All ASB Bank employees earning over $50,000 have been informed this year that they will be subject to a wage freeze. This will affect 3,500 of the bank's 4,700 staff nationwide. The low bar compares unfavourably with that being used by ASB's parent company in Australia, Commonwealth Bank, where the wage freeze is for staff earning over $100,000. (See http://finsec.wordpress.com/2009/04/24/asb-bank-freeze-staff-wages-%E2%80%93-no-union-members-to-stop-it/)

8. Deceiving New Zealanders by claiming to be a "Kiwi Bank".

ASB advertisements in October 2009 used the phrase "we've been a KIWI BANK since 1847", when in fact ASB is almost entirely Aussie owned. The phrase cynically seeks to convey the impression that the ASB Bank operates in the interests of New Zealanders, when its corporate practices plainly tell another story. (See http://www.nzherald.co.nz/sideswipe/news/article.cfm?c_id=702&objectid=10604600)

9. Cutting funding to community groups.

Just when many community organisations needed it most, to deal with the human fallout of the recession, ASB Bank, through its ASB Charitable Trust, froze grants for six months in 2009. This is despite continuing to make big profits. (See http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10603631)

10. Using the media to frame public debate in a way that's advantageous to banks.

Any search of news websites like NZ Herald or Stuff for "ASB" reveals just how often spokespeople for the bank are in the media. The bank produced a constant stream of statements and commentary on economic indicators, which are clearly designed to frame media debate on economic issues in a way that's favorable to banking operations.

For more information on CAFCA (Campaign Against Foreign Control of Aotearoa) and The Roger Award go to http://canterbury.cyberplace.co.nz/community/CAFCA/

(Note ASB was not one of The Roger Award finalists recently announced by CAFCA)

Interview with Andrew Campbell, campaigns director for the bank workers union, Finsec

2009-12-09T00:12:00.000-08:00

The back page of Bad Banks leaflet #5 features an interview with Andrew Campbell, campaigns director for the bank workers' union, Finsec. ASB Bank is the only major bank operating in NZ which is not unionised. ASB bosses have taken an anti-union stance. Andrew heads up Finsec's "Better Banks" campaign, which is about getting better pay and industry standards for bank workers, but is also about refoming the way the banks operate in New Zealand. Finsec wrote a submission to the parliamentary inquiry initiated by the Greens, Labour and Progressive parties. They still support a full public inquiry into the banks.

Is it "Kiwi" to be anti-union?

“ASB is a deunionised bank.” That’s the situation at ASB Bank according to Andrew Campbell, campaigns director for Finsec, the bank workers union.

“They’ve made it very difficult for ASB workers to be part of a union”, says Andrew. “Whilst Finsec hasn’t actively organised in there in recent years, the last time we did, we faced stiff opposition. They made it very very clear to people that they viewed the union as a negative.”

“People close to the union, or who joined the union, were spoken to by management. Anti-union information was circulated at the time. Even though it was made clear that you had the legal right to join, all evidence to the contrary was put up, so that joining the union was seen as an act of hostility to the employer. That’s a very scary situation to put people in”, says Andrew.

No union means that ASB bosses have more power over their staff. This year, all ASB employees earning over $50,000 have been subjected to a wage freeze. This will affect 3,500 of the bank’s 4,700 staff nationwide.

The low bar compares unfavourably with that being used by ASB’s parent company in Australia, Commonwealth Bank, where the wage freeze is for staff earning over $100,000.

“There’s evidence that workers at ASB are losing out because they aren’t able to collectively bargain”, says Andrew. He believes ASB can afford to pay more, “their profits are comparable to the other banks”.

Finsec have an ongoing campaign called “Better Banks”, which aims to achieve better pay and industry standards across the banking sector.

Better Banks is also about bringing the banks into line. “We think the banks need to change how they operate”, says Andrew, who heads up the campaign.

“They need to start operating in the interests of the NZ economy and their NZ customers, rather than in the interests of their Australian shareholders. They need to be more ethical, they need to be more regulated, and they need to stop taking the NZ taxpayer for granted.”

Andrew was disappointed the National government didn’t support calls for a full public inquiry into the banks: “We think the banks lobby got in Bill English’s ear, which shows which side National is on. They’re on the side of big banks, not NZ workers.”

Finsec still wants to see a full public inquiry, “but we want to see real changes”, says Andrew, “not just a talk fest”.

“Workers and customers will have to be active to pressure politicians to make the fundamental changes to the banking system we all need.”

Bad Banks leaflet #5: 'ASB misleads us'

2009-12-08T23:45:00.000-08:00

The latest Bad Banks leaflet has been produced to use at stalls and actions outside ASB banks. It targets ASB's misleading (to the say the least) claim that it's been a "Kiwi bank since 1847". ASB is currently 100% owned by the Commonwealth Bank of Australia.

ASB bosses are trying to "suck up" to us because they're worried that the bad public mood against the banks might force the government to curb their power and rein in their profits. Which is, of course, exactly what the the Bad Banks campaign would like to see.

The text on the front page exposes all the other bad things that ASB has been doing, including how the ASB is linked to the international bank cartels responsible for the global financial implosion.

The back page features an interview with Andrew Campbell from Finsec about ASB's anti-union stance. ASB is currently the only major bank that is not unionised. See Is it "Kiwi" to be anti-union?

If you would like bulk copies of the Bad Banks leaflet #5 sent to you, email Vaughan svpl@xtra.co.nz or ph/txt 021-0415 082. Invite other interested people in your area to do an "exposure" of ASB outside a local bank branch.

Pay for bank bosses needs to be regulated

2009-12-06T23:40:00.000-08:00

As the article below argues extreme levels of pay, topped up with obscene bonuses, are a factor in the banks taking extreme lending risks. Individuals within individual banks chasing "big bonuses" in competition with other banks has played its part in driving forward the expansion of credit to unsustainable levels, threatening the stability and continuation of the global market economy.

Any movement looking to curb banking power needs to include the demands for government regulation of bankers' salaries and bonuses. This demand would be popular with grassroots people wanting to see the banks brough into line.

Bankers had cashed in before the music stopped

by Lucian Bebchuk, Alma Cohen and Holger Spamann
from Financial Times (UK)
6 December 2009

According to the standard narrative, the meltdown of Bear Stearns and Lehman Brothers largely wiped out the wealth of their top executives. Many – in the media, academia and the financial sector – have used this account to dismiss the view that pay structures caused excessive risk-taking and that reforming such structures is important. That standard narrative, however, turns out to be incorrect.

It is true that the top executives at both banks suffered significant losses on shares they held when their companies collapsed. But our analysis, using data from Securities and Exchange Commission filings, shows the banks’ top five executives had cashed out such large amounts since the beginning of this decade that, even after the losses, their net pay-offs during this period were substantially positive.

In 2000-07, the top five executives at Bear and Lehman pocketed cash bonuses exceeding $300m and $150m respectively (adjusted to 2009 dollars). Although the financial results on which bonus payments were based were sharply reversed in 2008, pay arrangements allowed executives to keep past bonuses.

Furthermore, executives regularly took large amounts of money off the table by unloading shares and options. Overall, in 2000-08 the top-five teams at Bear and Lehman cashed out close to $2bn in this way: about $1.1bn at Bear and $850m at Lehman. Indeed, the teams sold more shares during the years preceding the firms’ collapse than they held when the music stopped in 2008.

Altogether, equity sales and bonuses over that period provided the top five at the two banks with cash of about $1.4bn and $1bn respectively (an average of almost $250m each). These cash proceeds considerably exceed the value of the executives’ holdings at the beginning of 2000 (which we estimate to be in the order of a respective $800m and $600m).

Of course, the executives would have made much more had the banks not blown up. By contrast to shareholders who stuck with the banks, however, the executives’ total pay-offs during the period were decidedly in the black.

Our analysis undermines the claims that executives’ losses on shares during the collapses establish that they did not have incentives to take excessive risks. The fact that the executives did not sell all the shares they could prior to the meltdown does indicate that they did not anticipate collapse in the near future. But repeatedly cashing in large amounts of performance-based compensation based on short-term results did provide perverse incentives – incentives to improve short-term results even at the cost of an excessive rise in the risk of large losses at some (uncertain) point in the future.

To be sure, executives’ risk-taking might have been driven by a failure to recognise risks or by excessive optimism, and thus would have taken place even in the absence of these incentives. But given the structure of executive pay, the possibility that risk-taking was influenced by these incentives should be taken seriously.

The need to reform pay structures is not, as many have claimed, simply a politically convenient sideshow. Even if the type of incentives given to executives of Bear and Lehman – and others with similar pay structures – were not the cause of risk-taking in the past, they could be in future. Financial institutions, and the regulators overseeing them, should give the necessary priority to redesigning bonuses and equity-based compensation to avoid rewarding executives for short-term results that are subsequently reversed.

The stories of Lehman and Bear will undoubtedly remain in the annals of financial disaster for decades to come. To understand what has happened, and what lessons should be drawn, it is important to get the facts right. In contrast to what has been thus far largely assumed, the executives were richly rewarded for, not financially devastated by, their leadership of their banks during this decade.

Bad Banks Exposure of ASB - 12noon, Friday 11 December

2009-11-29T15:01:00.000-08:00

ASB ain’t no “Kiwi bank”, protest their •interest gouging •profit taking •tax dodging •union bashing •and for turfing people out of their homes.

12noon, Friday 11 December

Outside ASB Bank,

cnr Queen St and Wellesley St,

Auckland Central.

You will have noticed that the Big Four Aussie-owned banks have been trying to suck up to us lately. BNZ closed their doors for a day so staff could do community work. And ASB, well, they're trying to convince us that they’re a "Kiwi bank". But as John Minto said in his article for the Christchurch Press: "What a brazen lie – like hell it’s a kiwi bank". Because ASB is 100% owned by the Commonwealth Bank of Australia, one of the world's biggest banks.

Why are the banks trying to cuddle up to us? Because ANZ National, BNZ, Westpac and ASB Bank know there's a bad mood rising against them. And it's well deserved, here's a few reasons why people hate the banks:

• Despite the recession they’re continuing to make mega-profits by interest gouging grassroots Kiwis.
• They’re inflicting high fees and penalties on low and middle income people.
• They’re forcing mortgagee sales in increasing numbers.
• They’re hiring teams of lawyers to try and get out of paying $2.25 billion of unpaid tax.
• And in the case of ASB, they’ve used anti-union practices to drive Finsec, the bank workers union, out of ASB branches.

At 12noon on Friday 11 December we’re planning an “exposure” of ASB Bank. We’ll be handing out a leaflet that draws attention to ASB falsely claiming to be a “Kiwi bank”, as well as exposing the other bad things ASB and the rest of the Australian banks are up to.

To download a flyer advertising the action, click here.

Please come along to support this action. Bring your own placards and your grassroots voices. We’ll be inviting the media along, so the more people the better.

Hope to see you there.

Vaughan Gunson
Bad Banks publicity coordinator
svpl@xtra.co.nz
021-0415 082

Are New Zealand's major banks sound?

2009-11-26T12:45:00.000-08:00

by Grant Morgan

International credit rating agency Standard & Poor says that all Australian banks have "insufficient funds to cover their lending exposures", reports the Sydney Morning Herald on 25 November 2009.

No Australian banks were included in the handful that Standard & Poor believe meet the minimum threshold to be considered safe for depositors.

Given that Australian banks own all major New Zealand banks, this news is hugely significant for the Bad Banks campaign in Aotearoa.

The Standard & Poor analysis points towards the financial unsoundness of Australian-owned banks in New Zealand. See Australian banks fail new capital test.

Australian banks fail new capital test

by Eric Johnston
Sydney Morning Herald
25 November 2009

RATINGS agency Standard & Poor's has warned that nearly all the world's big banks - including Australia's major lenders - have insufficient funds to cover their lending exposures and risk a ratings downgrade unless they move to bolster their balance sheets over the next 18 months.

The warning follows the release of a tougher global measure of bank capital by Standard & Poor's, which has found that most large banks do not meet the minimum 8 per cent threshold under the credit ratings agency's new risk-adjusted capital ratio.

The findings appear to be out of step with claims by Australian banks that they are among the strongest in the world under the traditional measure of bank capital known as the tier 1 ratio.

Over the past year, Australian banks have raised more than $20 billion in new capital to strengthen their balance sheets. This has resulted in an increase in the average tier 1 ratio of the big four banks to 8.9 per cent from 7.8 per cent a year ago.

But critics warn that these measures of tier 1 can be misleading because they fail to distinguish between higher-risk and lower-risk forms of lending. As well, the tier 1 measure is not consistently calculated on an international level.

Australian banks argue that their capital ratios would increase by about 2 per cent on average if they were calculated under existing British rules.

Under the new measure, S&P gives a lower rating to hybrid capital because it behaves more like debt than equity. For Australian banks, hybrid securities can make up to a quarter of their total capital. Specific exposures including trading desks and private equity would require banks to significantly increase the level of capital.

S&P reviewed 45 banks around the world under its new risk-adjusted measure. No Australian banks were included in the handful that hit the minimum threshold to be considered safe.

Of three local lenders included in the review, ANZ scored the highest rating with 7.1 per cent. National Australia Bank was at 6.9 per cent and Commonwealth Bank at 6.3 per cent.

While Australian banks benefited from having a large exposure to low-risk residential mortgages, S&P said a narrow geographic and business base counted as a negative. It also noted that the capital raisings by the local banks had been used mainly to fund acquisitions or balance sheet growth.

Among the global banks considered most vulnerable are Mizuho Financial (2 per cent), Citigroup (2.1), UBS (2.2) and Sumitomo Mitsui (3.5). The global average came in at 6.7 per cent.

''The results to date appear to confirm our view that capital is a rating weakness for a majority of banks in our sample,'' S&P said.

The ratings agency said it expected banks to continue strengthening their capital ratios over the next 18 months to comply with tougher regulatory standards. ''Failure to achieve this could put renewed pressure on ratings,'' it said.

The top-rated global bank is HSBC on 9.2 per cent, followed by Dexia on 9 per cent and ING on 8.9 per cent.

The review of capital strength comes as Australian banks face a crackdown on rules related to liquidity.

Like hell it's a kiwi bank

2009-11-19T20:01:00.000-08:00

by John Minto
from stuff.co.nz
12 November 2009

The other night when I went out to get an ice-cream at a local dairy I was gobsmacked to be confronted with a wall of huge yellow advertising posters with heavy black lettering – “We’ve been a KIWI BANK since 1847” with the ASB logo at the bottom. What a brazen lie – like hell it’s a kiwi bank.

Back in the 1980s when it was a respected trustee bank, owned by its New Zealand account holders and serving their interests, it could legitimately make the claim. But in 1989 it was privatised and like our other big three banks – ANZ National, BNZ and Westpac – it’s owned by Australians.

And with the shift to private shareholder ownership the ASB’s first priority has changed to delivering dividends to its shareholders rather than service to its customers. No wonder the big four banks score so lowly in customer satisfaction surveys. The only thing keeping them going is the huge hassle and extra expense involved in changing banks. Without customer inertia these banks would be run out of town.

It’s no surprise to find yesterda'ys release of the multi-party Parliamentary Banking Inquiry’s report confirms the big banks did not pass on the full effect of reductions in the Official Cash Rate to New Zealanders in recent times. More billions into the banker’s coffers.

They have all been guilty of various customer and taxpayer rorts and have acted more like a cartel than competing businesses.

It’s not just the exorbitant fees and unjustified charges for all sorts of normal customer services but they have actively targeted their customers to go further into debt and have put a lot of pressure on bank employees to sell more debt to indebted customers.

They openly mocked Finance Minister Michael Cullen’s attempts to reduce lending for investment properties and will continue to undermine any government initiative which gets in the way of increasing their profits.

In most years these banks have taken $2 billion in profit across the ditch and we wonder why our current account deficit is so high.

And then there are the tax evasion cases where the High Court has found the banks guilty of screwing taxpayers through structured financial transactions which have been described as a sham to avoid tax.

The ASB owes us $280 million while the others (Westpac $961 million, ANZ National $562 million, BNZ $661 million) are even worse. It’s an appalling abuse - together these banks owe $500 in unpaid tax for every person living in New Zealand.

With such well-deserved bad publicity the banks are going on a charm offensive. As well as the ASB bank’s attempt to resurrect a nostalgic kiwi connection from its arrogant abuse of customers and taxpayers, the misnamed BNZ announced last week it was “Closed – for good” If only.

Most of the bank staff were out doing work in the community for a day to show what a good corporate citizen the bank is. The BNZ PR machine was working well because our local suburban newspaper (and I’m sure this was repeated throughout the country) had a story showing bank staff working hard clearing land for a garden for the families of cancer sufferers here in Auckland.

“Banks just genuinely believe that we need to be part of the community” said BNZ head of external communications Diana Maxwell.

She says the BNZ accepts there has been a loss of customer trust in the big banks “and we need to work hard to rebuild that trust”. They could start by paying back the $661 million they owe and apologising for their bad behaviour.

The latest charm offensive is just company spin. Former BNZ boss and now chief executive of BNZ parent bank, the National Australia Bank says the current hostility towards the major Australian banks is not tenable for viable businesses.

That’s the reason for the charm offensive – nothing to do with any genuine belief about needing to be part of the community.

Our economy has lots of parasites feeding on the wealth created by others. The ASB and its Aussie mates are the biggest bludgers.

I’m pleased these banks are having a harder time and I hope their spending of millions to buy kiwi goodwill is a failure.

Bad Banks leaflet #4: The Rich Have Stolen the Economy

2009-11-09T19:15:00.000-08:00

Bad Banks leaflet #4 is out now. It's been produced to use at stalls outside cinemas showing Michael Moore's new film, Capitalism: A Love Story, which has general release throughout the country.

The leaflet aims to connect with some of the issues raised in the film, in particular the massive government bailouts of the world's biggest banks, but it also points towards a more fundamental crisis of the system. On the back page of the leaflet is Grant Morgan's short-essay, 'Senior investment guru forecasts longrun damage to capitalism's profits'.

At the same time as we provide a "big picture" analysis of the global economic crisis and it's fallout, we need to be looking at what immediate demands the Bad Banks campaign can raise. This leaflet promotes a Financial Transaction Tax (FTT) to net the big banks and other financial speculators. A small percentage tax on financial transactions would easily make up for tax revenue lost as a result of removing GST tax off food, a demand made popular last year by RAM-Residents Action Movement (http://www.ram.org.nz/).

While the leaflet is intended to connect with people attending Michael Moore's new film, it can still be used on other Bad Banks stalls in combination with the leaflets already produced. If you would like bulk copies printed and sent to you, email Len office@sworker.pl.net.

Banks know there's a bad mood rising

2009-11-07T14:03:00.000-08:00

The Big Four Australian-owned banks know that the public mood is against them, because, well, they're interest gouging, profit-taking, tax dodgers - there's not much to like!

But they're trying to do the impossible and suck up to us anyway. See the NZ Herald article below, 'Banks: your new best friend'. In the article, the BNZ's person in charge of media spin, Dianne Maxwell, says "Banks just genuinely believe that we need to be a part of the community". That's a hard sell when you've just been caught avoiding $661 million of tax.

This clumsy attempt at sucking up to us could seriously backfire. Most people will see it for what it is, and if we can highlight the banks' deception, perhaps we can turn the mood even more sour against them. And in doing so we can seek to achieve a higher public profile for pro-grassroots policy demands like removing GST off food and introducing a Financial Transaction Tax instead, which would force the banks and other "fat cat" financial speculators to pay a greater share of the tax burden than they do now.

Banks: your new best friend

by Adam Bennett
from NZ Herald
7 November 2009

You may have noticed the big Australian-owned banks trying to cuddle up to you lately.

In one television commercial a big clumsy Westpac guy, prompted by wordless admonitions from a bunch of everyday Kiwis, eventually does the right thing by going to some inconvenience to retrieve his discarded icecream wrapper from the sea.

ASB Bank, on the other hand, is trying to convince people it is one of us, running adverts telling us it has been a "Kiwi bank" since 1847.

Continue

Free public transport instead of bailouts for the banks

2009-11-03T12:42:00.000-08:00

Rather than bailing out the banks with trillions of dollars of public money, which governments in Europe and North America have been doing, ecosocialists in Britain are calling for "environmentally friendly job creation" and "a massively expanded public transport system that is fully integrated, publicly owned and free".

£40bn more to be added to banking bail-out ‘fiddle’

from Socialist Resistance
3 November 2009

Today, it has been announced that another £40 billion is to go into the Lloyds/HBOS & RBS Bank bail-outs. Alastair Darling says it represents a “better deal for the taxpayer”. But “better deal for the taxpayer” than what?

The reality in fact is that best deal for the tax payer would be the complete nationalisation of all these banks without compensation, this since without the state’s intervention they’d all already be bankrupt and likely have dragged down the entire UK banking system with them. This would have made most shares and not only those of the Banks completely worthless.

Given the Government stepped in precisely to avoid the latter, and indeed to avoid the possible collapse of the entire Capitalist system as a whole, surely the very least a due diligent, astute and businessman-like ‘taxpayer’ should have expected is for ‘the state’ to have picked up these bankrupt businesses lock stock and barrel for absolutely nothing - especially given the unknown liabilities being taken on. That’s usually what happens in the real ‘free market’ world, and in some cases with criminal/civil proceedings being taken out against those responsible for the bankruptcy.

However, instead of taking over these banks entirely as it did with Northern Rock, the Government decided instead to allow these banks’ shareholders to keep their shares, giving them a financial value they wouldn’t otherwise possess. In so doing the Government effectively unnecessarily transferred many £billions of ‘taxpayers’ money directly to the value of the share portfolios of those banks’ current and former investors.

Furthermore, if the Government’s plans work out and the share-value of these banks rise and the banks themselves can be re-floated (i.e. re-privatised) the biggest beneficiary won’t be so much the taxpayer who has effectively taken on all of these banks’ entire liabilities and the ‘risks’ associated with them (and will likely continue to do so), but their existing private shareholders i.e the very same people who had they invested in other sectors of the economy would have lost their shirts and have nothing to show for their investment whatsoever!

The part nationalisation of Lloyds/HBOS/RBS is one humongous fiddle that needs exposing. It’s not the nationalisation part that’s wrong but that the state has decided to reward the shareholders of these otherwise bankrupt banks with anything (i.e. a part share in a nationalised bank) and is currently directing huge resources to their re-privatisation.

Also, if state intervention including nationalisation is right for the banks (and/or under certain circumstances) why not other sectors of the economy in other circumstances? And if such huge sums of money can be found almost at a drop of a hat to ’sort out the banks’ (the £40 billion injection today just further shores up existing investors, will not create any new jobs, but rather is to be accompanied with staff cuts) why not much smaller amounts for environmentally ‘friendly’, job creation and economically more reflationary measures such as a massively expanded public transport system that is fully integrated, publicly owned and free to everyone at the point of use, such as is being advocated by the Campaign for Free Public Transport?

Along with the complete nationalisation of Lloyds/HBOS/RBS without compensation, free and better public transport and many other similar ideas would be much ‘better value’ to the taxpayer, whatever they cost, than the £40bn being used to re-capitalise these otherwise ‘bankrupt’ banks today, and the ultimate purpose of which as already indicated, is to nothing other than to assist in their future re-privatisation.

We really should be making the bankers and bank shareholders pay for the financial shit we’re in rather than rewarding them! Plus if we can find the money to bail-out and re-capitalise the banks, which we wouldn’t actually need if we owned them outright, then that should be being used to defend existing jobs and to create new ones and/or avoiding us ordinary folk having to pay for it.

US protest against the banksters

2009-11-01T13:11:00.000-08:00

by Mary Bottari
from PR Watch.org
26 October 2009

With the newspapers full of talk about “zombie” banks and parasitic “vampire squid” financial institutions, it was particularly fitting that the “Showdown in Chicago” started with a ghoulish group of zombies rocking out to Michael Jackson's “Thriller.” Chicago's own South Shore Drill Team opened the three days of banks protests with a bang and had the crowd of thousands of activists dancing in no time.

The Showdown promises to be the first major American protest against the banks since the financial meltdown in September 2008. Thousands are expected to join three days of educational activities and the large march on Tuesday to the American Bankers Association (ABA) convention at the downtown Sheraton hotel.

The Reverend Eugene Barnes of the Central Illinois Organizing Project opened the evening’s festivities, stating:

“Welcome to the Showdown in Chicago, we have come together to reclaim America and hold Wall Street accountable. Imagine a story as terrible as this, the same financial institutions that created the crisis, sent the economy into a tailspin, handed out bonuses on top of bonuses, and needed hundreds of billions of dollars of taxpayers money, are back in business as usual. They are spending millions on Capitol Hill trying to defeat legislation that would help ordinary people and strengthen our economy. Each of us has traveled here to Chicago today because we will not stand what is being done to our families and communities. If we needed confirmation that we are all in this together, the financial crisis caused by Wall Street is living proof. Everyone has been impacted by the greed of the big banks. Bank-owned properties are littering our communities, rising unemployment, sky-high credit card interest rates, payday loans at 1,000% interest, and not to mention billions of dollars in lost pensions. It is a sad fact when you are 65 years old and you realize you have to go back to work. We have come here in Chicago because we are sick and tired of being sick and tired, but we are also here because we have hope because we know America can do better. It is time to put people first.”

Here is a smattering of the speakers who followed:

* Tom Balanoff, the President of Service Employees International Union (SEIU) Illinois, noted that not a single person in this room caused the economic crisis. He reminded the crowd that it was appropriate that they were are starting this movement for reform of the financial system in the same city where the push for an eight-hour workday began and spread around the globe, referring to the 1886 Haymarket massacre.

* U.S. Senator Dick Durbin of Illinois demonstrated that he was in touch by showing up and telling harrowing tales of hard-working constituents who had been scammed by adjustable rate mortgage firms. Even though the Senate failed to pass legislation that would have allowed judges the discretion to modify mortgages to help keep people in their homes, Senator Durbin said he had not giving up the fight. He also hinted that he working on some new approaches, including an idea that would allow families whose homes have been foreclosed on to rent their own homes from the banks, keeping them off the streets and keeping the homes occupied and cared for. He noted, “We are working on this idea, and it would be helpful if one bank would step up to the idea.”

* And, the audience heard from regular folks as well: people caught in the payday loan trap, like Mitzi Rivers-Singleton of Witchita, Kansas, who finally worked her way our of crippling debt with the help of a credit union and a local community group. She said, “I stand with you toe to toe up against big banks. I want to let the know that enough is enough, so I tell my friends and family you don't go there. You have other options.”

But this was the warm up act. After the welcoming comments, the activists took to the streets. Carrying signs featuring Dorothea Lange’s famous photo of a Depression Era mom with her two children. The activists marched through the streets to the Sheraton where the ABA was meeting, chanting: “ABA, you’re the worst! It’s time to put people first!” And, “Bailout? No, thanks! Bust up big banks!” And, “Enough is enough!” Huge posters portraying Jamie Dimon of JPMorgan and Citigroup’s Vikram Pandit were part of the crowd.

The rambunctious, but peaceful, crowd gathered outside the hotel, quickly attracting a large police presence. At least seven luxurious limousines pulled up in front of the Sheraton, but their parties seemed reluctant to appear and face the crowd. Soon a large group of well-dressed people exited the Sheraton chanting. At first, this reporter was confused. Could this be the bankers rushing their own limos? But when I recognized Hugh Espey of Iowa Citizens for Community Improvement, it became clear that these were protestors, too. They were chanting: “We’ll be back!” Later, “We laid low in the building all day until we simultaneously converged on the lobby and burst into changes. It was all very quiet and then all of a sudden it was very loud,” Espey said with a grin on his face.

Aretha Franklin was a theme of the evening as a singer performed “Think” at the Showdown conference, and one activist sang “Shame, shame, shame on you,” to the tune of her song “Chain of Fools” in front of the Sheraton. Oddly enough, none of the Banksters seemed to share the sentiment.

The protestors attempted to deliver a letter to ABA President Edward Yingling listing their concerns and demands, but no representative of the ABA would come out to accept the letter, guaranteeing that the protestors would try again later.

See also moves in Britain to break up big banks, go to Government to break up the banks.

Follow my lead: ditch that tax-dodging bank

2009-10-28T02:12:00.000-07:00

by Finlay MacDonald
from Sunday Star Times
18 October 2009

IT'S EARLY for New Year's resolutions, I know, but here's a suggestion in advance: fire your Australian-owned bank. If you need a reason, look no further than the recent billion-dollar judgement against Westpac for tax avoidance. That came on the back of a similar judgement against the BNZ for half a billion. Tell your Aussie bank you're mad as hell and you're not going to take this any more!

Continue

Why Do Bankers Make So Much Money?

2009-10-28T01:44:00.000-07:00

Below are some instructive comments from Rick Bookstaber, formerly a senior risk manager and derivatives creator for big banks in America.

Speaking from the point of view of a somewhat cynical insider who retains his essential faith in "free markets", Bookstaber comments: "I think the invocations of talent for money producers in finance are akin to those that, in times past, were set aside for the mystical powers of saints and witches."

Why Do Bankers Make So Much Money?

by Rick Bookstaber
23 October 2009

A tenet of economics is that in competitive markets there are no economic rents. That is, people get fairly paid for their efforts, their capital input, and for bearing risk. They are not paid any more than is necessary as an incentive for production. In trying to understand the reason for the huge pay scale within the finance industry, we can either try to justify the pay level as being a fair one in terms of the competitive market place, or ask in what ways the financial industry deviates from the competitive economic model in order to allow economic rents.

Do the banks operate in a competitive market?

No one expects competitive levels of compensation when there are deviations from a competitive market. In what ways might the banks – and here I mean the largest banks and those banks that morphed over the past year from being investment banks – fall away from the model of pure competition?

One way is through creating inefficiencies to keep competitive forces at bay. Banks can do this, for example, by constructing informational asymmetries between themselves and their clients. This gets into those pages of small print that you see in various investment and loan contracts. What we might call gotcha clauses and what the banks call revenue enhancers. And it also gets into the use of complex derivatives and other “innovative products” that are hard for the clients to understand, much less price.

Another way is to misprice risk and push it into other parts of the economy. The fair economic payoff increases with the amount of risk taken. If a bank takes on more risk it should get a higher expected payoff. If the bank can get paid as if it is taking on risk while actually pushing the risk onto someone else, then it will start to pull in economic rents. The use of innovative products comes up again in this context. They provide a vehicle for the banks to push risk to others at a less than fair price. Or, they can push the risk onto the taxpayers by hiding the risk and then invoking the too-big-to-fail protections when it comes to be realized. The current “heads I win, tails you lose” debate centers precisely on this point.

A third, and most obvious reason banks might not be economically competitive entities is the organization of the industry. There are barriers to entry. No one can just decide to set up a major bank. And there are constraint in the amount of business any one bank can do. As we have seen with Citigroup, there finally are diseconomies of scale – after a point the communication and management issues make the bank less efficient and more prone to crisis. If there is fixed supply, then the banks can push up the price of their services. The crisis over this past year has made matters worse. If you are one of those still standing, you are a beneficiary of that crisis, which has choked off the supply even further.

Are the workers getting paid fairly for their efforts?

An alternative to the idea that the industry is not competitive is that the industry really is competitive and those who are getting these outsized paychecks are being fairly compensated for their efforts. This comes back to the term we hear bandied about in conversations on banker compensation: talent.

There is no denying there are many smart people in the banking industry. (Though I think from a social welfare standpoint, we might have done better if some of those physicist and mathematicians that populate the ranks of the banks had found greener pastures in, say, the biological sciences). But I don’t buy the notion that there are so many who have the level of talent that justifies tens and even hundreds of million in compensation. I think this level of compensation, and the notion of talent behind it, is the result of the inherent uncertainty in the financial enterprise, one that makes it very difficult to assess talent. Indeed, I think the invocations of talent for money producers in finance are akin to those that, in times past, were set aside for the mystical powers of saints and witches.

Far more than other fields of endeavor, it is difficult in finance to tell if someone is good or lucky. A top trader or hedge fund manager might have a Sharpe Ratio of 1.0 or 2.0.But that Sharpe Ratio is nothing less that a statement that if you get a hundred people trading, a few will do well just by luck. (And it doesn’t matter if that Sharpe Ratio occurred over the period of one year or twenty – though the greater sample size helps, it is still the same point in terms of statistical inference, so a long track record does not get you away from this problem).

How does this tie in with saints and witches? People want certainty, and if they can’t get the certainty they want from the empirical, they fall back on superstition and witchcraft, or at least they used to way back when. In some medieval village, a priest prayed and a supplicant was healed. The odds that the supplicant would have healed spontaneously was whatever it was, but there was more of a sense of certainty to feel that it was the manifestation of healing power.

There were false saints and true saints. The difference between them became manifest over time by how frequently the prayers were answered with affirmative results. Not that any saint had to bat a thousand. Sometimes there were understandable, exogenous circumstances that inhibited the saint’s healing talents from being operative, most commonly a lack of righteousness on the part of the supplicant, occasionally an inevitability, a higher power that overshadowed that of the saint. Maybe the will of God, maybe an unknown, evil curse.

I hope the analogy is apparent. And there is a related one, an analogy to Pascal's Wager. The bank should wager that the talent of its star employee exists, because it has much to gain over time if it does, while if it does not exist, the bank will lose little in expected terms. And in a competitive world, it is even worse if they incorrectly let the talent go for lack of proper compensation, because then some competitor will pick it up.

BAD BANKS leaflet #3: 'Their Pollution Market Stinks!'

2009-10-22T14:53:00.000-07:00

Bad Banks leaflet #3 is available now. It addresses the link between global banking power and the ecological crisis, specifically focusing on the finance class's prosposed "solution" to climate change, pollution markets (or as they're calling them, emission trading schemes).

This leaflet has contributions on the back page from David Parker (writer for http://www.wellsharp.wordpress.com/), Mike Treen (Unite Union National Director), Omar Hamed (Unite Union organiser & Rainforest Action co-ordinator), and Roger Fowler (editor of http://www.farefreenz.blogspot.com/).

Aussie tax dodging robber banks make bank robbers look like amateurs

2009-10-10T12:55:00.000-07:00

by Murray Horton
from CAFCA

The Australian-owned banks have been congratulating themselves on what a good recession they’ve been having and how it was all down to their prudence in not getting involved in any exotic financial transactions. Quite right, there’s nothing exotic about good old fashioned tax dodging, even if it was done via deliberately complicated structured financial transactions. So that’s how they rode out the recession, by not paying nuisance costs such as taxes. Not an option for the rest of us mugs, though.

So far the courts have ruled that two of the Aussie banks (BNZ and Westpac) avoided taxes totaling more than $1.5 billion. The IRD’s cases pending against the ANZ and National Bank, if successful, could push that well over $2 billion. This is theft from the NZ taxpayer on a truly monumental scale, particularly at a time when the Government is cutting back public spending. This huge shortfall in tax could be used for health and education.

NZ taxpayers are the guarantors of the deposits of these banks. Yet we get no say in their running, let alone ownership. Massive tax dodging can be added to the list of recidivist corporate crimes committed by these robber banks who make bank robbers look like rank amateurs. How come we never hear from the Sensible Sentencing Trust about locking up these criminals and throwing away the keys? Where are the judges who sermonise about beneficiaries stealing from the taxpayer?

The taxpayer needs to be directly represented on the boards of each one of these Aussie banks that we’re underwriting with our money. And, if that doesn’t do the trick, nationalise them.

And why is the Government still using Westpac as its bank? As Bill English would say, “it’s not a good look”. Too right, Bill, and you’d know all about that. How about only using a bank that actually pays its taxes, just like everybody else has to?

Download Bad Banks leaflet #2

2009-10-07T15:06:00.000-07:00

Click here Bad Banks leaflet # 2.

Sue Bradford speaks on Bad Banks

2009-09-26T15:11:00.000-07:00

Sue Bradford's first key grassroots meeting after resigning as Green Party MP

Socialist Worker Forum on
B A D B A N K S

KEYNOTE SPEAKERS:

SUE BRADFORD
("I'm still a radical" after a decade in Parliament)

DAPHNE LAWLESS
(UNITY journal editor)

7.30pm this Thursday, 1st October
Socialist Centre, 86 Princes Street, Onehunga, Auckland

This educational forum is part of building a broad campaign against the undemocratic power of big banks, investment drivers of the global economy and, therefore, of the politics of late capitalism. All leftists welcome.

For more information, contact Bronwen i_c_red@slingshot.co.nz or phone the Socialist Centre (09) 634 3984.

BAD BANKS: Targeting late capitalism's exploitation of labour and nature

2009-09-24T04:21:00.000-07:00

by GRANT MORGAN
Socialist Worker-New Zealand

World capitalism's boosters, led by US Federal Reserve chair Ben Bernanke, are welcoming economic "green shoots" and proclaiming "the end of recession".

Nobody has a crystal ball, and yes, at some stage the global economy will start to recover, even if only partially and temporarily. But we need to look at the bigger picture if we are to have any idea of what might lie ahead.

SHARE MARKET BUBBLE

At present, the economic "recovery" is first and foremost a recovery in share market prices, while global unemployment continues to rise and real wages are being driven down.

The levels of unemployment and wages are a much safer way to assess the real state of the real economy than share market fluctuations. What we are now seeing is a share market bubble disconnected from rising unemployment and falling real wages.

Late capitalism increasingly depends on financial and asset bubbles which are disconnected from the real economy.

PROFITABILITY CRISIS

Obviously, that means financial and economic instability is going to be not only more endemic than during early or middle capitalism, but also more catastrophic in its effects. That we saw during the Great Implosion of September 2008 which came close to collapsing the world system's financial structures.

Late capitalism's increasing dependency on financial and asset bubbles is a key symptom of something deeper. The world system is finding it much harder to translate the mega-accumulation of capital into the maximised profit margins which alone can sustain the global rule of ever fewer monopolists.

Many analysts have pointed to the increasing disconnect between rising labour productivity and falling consumer demand, leaving the world economy awash with unwanted consumer goods and excess productive capacity. That is an obvious driver of the world system's profitability crisis.

REVENGE OF NATURE

But there are other drivers as well. Hand-in-hand with the exploitation of labour, the exploitation of nature is creating an existential gulf between human sustainability and corporate profitability.

Since its birth 500 years ago, capitalism has been dependent on the free lunches provided by labour and nature. Without the state-sanctioned looting of nature, the world system could not meet its profit needs, any more than it could without the state-sanctioned wage slavery of workers.

Now we are seeing the revenge of nature, most notably in the rising tides of global warming, but also in the resource depletion and chain-reaction pollution which will intersect with climate change in dangerously unpredictable ways.

TERMINAL CANCERS

Unless checked by a global mobilisation, climate change will kill millions and perhaps billions of people on the planet, unleashing a mega-crisis which kills capitalism. Yet any such global mobilisation will fatally undermine corporate profitability and thus kill capitalism anyway, maybe even quicker.

Late capitalism is being eaten away by terminal cancers.

Yet we cannot simply stand by and wait for something better. The elites who run late capitalism will stop at nothing to transfer their power and privileges to a post-capitalist world which is almost certain to be even more barbaric. That is the road to a mass die-back of humanity and other life forms.

MANY GOOD CAUSES

So the question is: what can we do, right here and right now, to prepare the ground for a post-capitalist world which is more democratic, more equitable and more ecological than the present system.

There is no single or simple answer to that question. The struggles of many leftists in many countries around many causes all help, cumulatively, to make the grassroots stronger and the elites weaker.

Among the good causes that New Zealand leftists are currently promoting are the living wage, climate justice and pro-MMP campaigns.

ASYMMETRIC WARFARE

There exists a vital need to shape all such campaigns into a sharper challenge to the world system which creates the evils that necessitate the campaigns in the first place. Otherwise we are forever fighting the symptoms, leaving the system's elites far too much leeway to perpetuate themselves.

Yet any call to "fight capitalism" would lack mass appeal because it's too distant from most people's consciousness and capabilities.

How then can we proceed? The fundamental principle of asymmetric warfare, where the weak confront the strong, is to strike wherever the enemy is most exposed and wherever the most damage can be inflicted.

WIDESPREAD PUBLIC HOSTILITY

The big banks, whose colossal investments shape the very structures of all economies and, therefore, their governing politics and ideologies, are already the object of widespread public hostility.

If we direct our fire against the big banks, and get a good public response, then late capitalism will be weakened at an increasingly vulnerable yet important spot: the financialisation of the world system.

That is the strategic objective of Socialist Worker's Bad Banks campaign, launched in Auckland not long ago. It is an objective in harmony with the fundamental principle of asymmetric warfare.

WIDESPREAD PUBLIC SUPPORT

The Bad Banks campaign targets the key investment drivers who are responsible for rising unemployment, falling real wages, climate change and other evils flowing from capitalism's exploitation of labour and nature.

It is therefore a campaign which fingers the causes as well as the consequences of the evils of late capitalism. And going by early results at Bad Banks street stalls, there is widespread public support for the campaign.

To help out at a Bad Banks stall, email socialist-worker@pl.net.

What's a “Fractional Reserve”?

2009-09-19T16:37:00.000-07:00

by Daphne Lawless
UNITY Journal Editor

Simply put, “fractional reserve lending” is the reason why confidence is so important to banks.

Banks don't have to have assets on hand to cover all the loans they issue. In New Zealand, they only need to hang on to 4% of the loans they make for housing – and 8% of other types of loan.

Banks can't just make money up. If they want to lend out $100,000, say, they do need to have that money on their books to start with – from deposits, or from a central government monetary issue.

But the “fractional reserve” rule mean that they don't have to hang on to those reserves when they make loans. If a bank lends $100,000 to a business, they only need to hang on to $8,000 in their own vaults. And only $4,000 if it's for a mortgage.

One benefit of this is that money goes further, and faster. Because that $100,000 that has been lent out will end up as deposits in that same bank, or in other banks.

And then it can be loaned out again – except for the $4,000 or $8,000 reserve. So that's another $92,000 or even $96,000 back into circulation!

This is where we get what is called the “multiplier” effect. Because any initial deposit, or central bank issue, can be loaned out again and again and again, its actual effect on the economy will be much, much bigger than the initial input.

So $100,000 which is made available to business, because it gets loaned out again and again, actually means something like $1,250,000 gets added to the economy. And with housing loans, that becomes a massive $2,500,000!

The flaw in all of this, however, is that it means the system is all down to confidence.

Capitalism needs a constantly growing and expanding economy. Anyone making a loan needs to be pretty sure that they will make enough money to pay it back, and the interest, in the future.

So all this massive creation of credit - $1 million or more, or even $2 million or more – relies on the lenders' confidence in their ability to get it all back, once it's invested. It also relies on the confidence of the depositors – the people who paid in the $100,000 in the first place – that they too will get their money back, with interest.

But what happens when that confidence disappears? It's called a run on the banks.

If depositors have reason to believe that their deposits aren't safe, they run directly to the banks to ask for their deposits back. And of course the banks don't have those deposits – apart from the 4% or 8% that the law required them to keep back.

In some cases, the money in those deposits will have been loaned out, then redeposited by someone else, then loaned out again, then redeposited, over and over and over. That's fine when economic growth means everyone wins. But that can't be guaranteed to happen all the time.

So the bank goes bust – or the government bails them out. The financial house of cards collapses, and a million or two million dollars of wealth disappears overnight.

The banking system is unsustainable because it's based on the presumption of eternal economic growth – or, in other words, on the ability of bosses to screw profits out of workers indefinitely. Isn't it time we had a system where credit and growth were supplied for need, not for greed?

Latest UNITY Journal on Bad Banks

2009-09-16T01:48:00.000-07:00

Bad Banks, & how to beat them

September 2009

TABLE OF CONTENTS

5 Bank on a massive campaign
Daphne Lawless, editor of UNITY

11 Why we need to battle the banks
VAUGHAN GUNSON, national chair of Socialist Worker NZ

17 The banks and the Great Implosion
VAUGHAN GUNSON

30 New Zealand’s recession - is the worst over?
ANTHONY Main, Socialist Party (Australia)

34 Are the banks helping?
BILL ROSENBERG, NZ Council of Trade Unions economist

38 A Green response to global market failure
CATHERINE DELAHUNTY and KEVIN HAGUE, Green MPs (New Zealand)

43 International banks exploit the crisis
STEFAN STEINBERG, World Socialist Web Site

47 Are the banks to blame?
Anindya Bhattacharyya and Sadie Robinson, Socialist Worker (Britain)

52 Banks go back to bubble bonuses
ALEX CALLINICOS, Socialist Worker (Britain)

54 The recovery is here! (for Wall Street)
Adam Turl and Alan Maass, Socialist Worker (USA)

60 How the bankers bought Congress
PETRINO DILEO, Socialist Worker (USA)

65 Iceland - what happened?
JACK SMART, Socialist Appeal (Britain)

69 Iceland: devastated by global crisis
Per-Åke Westerlund, Committee for a Workers’ International

72 Can the Left-Greens rescue Iceland?
DEREK WALL, Green Left Network (Britain)

75 Australia: Banks are bastards
PETER ROBSON, Green Left Weekly (Australia)

77 Mexico: Protests target banks
RACHEL EVANS, Green Left Weekly (Australia)

78 Communal banks of Venezuela receive big boost
TAMARA PEARSON, http://www.venezuelanalysis.com/

80 Venezuela will take over private banks that fail
JAMES SUGGETT, http://www.venezuelanalysis.com/

81 Feedback: Letters from Peter de Waal, Bronwen Beechey and Pat O’Dea

To purchase a copy email socialist-worker@pl.net

For details on how to subscribe to UNITY Journal go to New subscription to UNITY Journal

Banking operations pushing us towards trans-Tasman integration

2009-09-05T16:06:00.000-07:00

by Vaughan Gunson

Bernard Hickey's blog post Single currency gaining speed (6 Sept) on the NZ Herald website links the operations of the Aussie-owned banks with moves towards increased trans-Tasman economic and political integration, specifically one dollar and common banking regulations.

As the Aussie parent banks are only interested in making as much profit as possible, and the role of the Australian state is to facilitate the making of those profits, the dominant position of the Aussie-owned banks in the NZ economy is resulting in ever greater political dominance of Australia over NZ.

The Rudd government and the Aussie parent banks are making much of the claim that they've been propping up the NZ economy post-financial crisis, through the Australian government's credit guarantee scheme and the parent banks loaning across the Tasman to support the operations of the Big Four in NZ. The reality of mega-profits been sucked out of NZ, chiefly through mortgage lending, over the preceding decade is of course disregarded. And today, the Big Four banks operating in NZ are continuing their profit run at the expense of grassroots Kiwi homeowners.

What's clear is that the operations of the Aussie-owned banks in NZ is propelling forward increased integration of the Australian and NZ economies, to the benefit of the former.

The question of NZ's eroding political sovereignty is one that many people will be interested in. The Bad Banks campaign has the potential to tap into a number of economic and political issues of popular concern, and which go to the heart of 21st century finance capitalism.

Mega-rich bankers are squeezing the world

2009-09-04T17:20:00.000-07:00

Text from the back page of Bad Banks leaflet #1.

The cartoon (above) shows a “fat cat” sitting on people. It’s a comical image. Unfortunately it shows a sad truth. Around the world today this is what’s happening to grassroots people like us.

The fallout from the global economic crisis is leading to millions losing their jobs. In the US, the world’s biggest economy, 1 in 6 workers are out of work. 50% of homeowners risk losing their homes.

As economies slump governments are cutting spending on health, education and other services, making things worse for grassroots people.

But while this is going on, trillions of dollars have been raised to bailout banks and other financial institutions, the very ones behind the meltdown.

Big banks, like the US based Goldman Sachs, exert enormous influence over markets. They helped inflate the global “housing bubble”.

Grassroots people all over the world got caught up in the house price spike, forced to take out big loans to buy a home. The banks, media and politicians told us it was OK. House prices, they said, would continue to rise and we’d all be better off.

This was a lie, one the banks, media and politicians were happy to peddle because all this borrowing was making a few people super-rich.

But it couldn’t last, the wages of ordinary people weren’t going up in line with house prices. It all came unstuck in 2007 when house prices in the US and elsewhere fell and indebted homeowners began defaulting on their mortgages. This caught out most of the world’s banks who all had a finger in the “housing bubble” pie.

With trillions of dollars of “bad debt” on their books the banks stopped lending. Because so much of today’s economy is founded on borrowing (by governments, business and ordinary people) to have credit freeze up was a nightmare scenario for the Kings of Capital.

To keep the profits flowing governments wrote blank cheques for the banks. A recent report calculated that the bailout figure for the US alone is expected to climb to $23.7 trillion!

The global economy, however, is still nose-diving, leading to a pandemic of job losses.

Yet out of this social misery many of the big banks are returning to profitability. Goldman Sachs is posting record profits. These mega-rich bankers are set on dominating like never before the creation of credit. They’re lending to cash-strapped governments at high interest rates. They’re speculating again in financial markets. It’s “win-win” for them and “lose-lose” for us.

A system that can divert trillions of dollars to a mega-rich minority and let the majority fend for themselves is an unjust one. The fat cats are sitting on top of us. And that has to be changed. The Bad Banks campaign is where it starts.

“We need a full public inquiry into banking operations,” say Bad Banks campaigners

2009-09-02T01:41:00.000-07:00

Bad Banks media release
2 September 2009

The operations of the Big Four Aussie-owned banks are harmful to the lives of ordinary Kiwis,” says Vaughan Gunson, publicity coordinator for Bad Banks, a recently initiated grassroots campaign against banking power.

ANZ National Bank, BNZ, Westpac and ASB have been making mega-profits from interest gouging grassroots Kiwis. In 2008, their combined income from loan interest went up $4.6 billion. Last year the profits of the Big Four totaled over $3 billion.

“And now, in a recession, these Bad Banks are king-hitting people who have lost their jobs or had their incomes cut,” says Gunson. “They’re inflicting penalties on people who can’t meet their mortgage payments and forcing mortgagee sales in increasing numbers.”

“They’re looking after their own equity position and chucking people out of their homes. It’s disgusting. These Bad Banks are part of a corporate culture of greed that’s sucking the life out of this country,” says Gunson.

While it's good that the Green, Labour and Progressive parties have gone ahead with their banking inquiry, the time frame for submissions was very short. That means there are only 11 oral submissions.

“11 oral submissions does not do justice to the devastating impact banking power is having on the lives of grassroots Kiwis,” says Gunson. “We need a full public inquiry, properly resourced and promoted, so that grassroots people can have their say and the Aussie-owned banks be held to account.”

“Any full public inquiry should allow for public meetings up and down the country, so that grassroots people can tell their stories.”

“We hope that MPs in the Green, Labour and Progressive parties are going to be part of an ongoing campaign against the banks,” says Gunson. “We need to confront corporate power full-on.”

The first goal of the Bad Banks campaign is to educate people about the operations of the banks. Bad Banks activists will be out on the streets in Auckland and other cities handing out leaflets and talking to people over the coming weeks and months.

“People can find out more about Bad Banks by going to our webpage www.badbanks.co.nz. We welcome any stories or comments on the banks,” says Gunson. “We’re looking to reach out to other groups, organisations and individuals to help build this campaign.”

Bad Banks on Queen St

2009-08-30T12:07:00.000-07:00

The Bad Banks team in Auckland had a good start to the campaign on Queen Street. Hundreds of leaflets were given out and lots of conversations with people concerned about the operations of the Big Four Aussie-owned banks.

There will be Bad Banks stalls across Auckland in the coming weeks. To get involved ring Peter in Auckland 021 230 4128 or email socialist-worker(at)pl.net

Bad Banks leaflet #1

2009-08-29T03:00:00.000-07:00

To kickstart the Bad Banks campaign we've produced a double-sided A4 leaflet. Spread the word about the campaign by downloading a PDF file of Bad Banks leaflet #1 and emailing it to your own contacts. Or print off hardcopies to give to friends, family and workmates. Let us know how you get on, email Vaughan socialist-worker(at)pl.net

We want to produce many more Bad Banks leaflets. If you have a bank story, a comment, or wish to write a short article to be included in a future leaflet, we'd like to hear from you. Send to the email above. If you don't want your real name used, we won't use it.

We've produced a Bad Banks contact sheet to be used on street stalls or other outreach work. Download an A4 sized image of the Bad Banks logo to advertise the campaign in your area.

Let's take it to the Bad Banks!

Why we need to battle the banks

2009-08-25T22:53:00.000-07:00

by Vaughan Gunson

The recession is taking grip in New Zealand. People are losing their jobs. In some grassroots communities unemployment is already turning into a social crisis.

138,000 people are officially unemployed. Thousands more will be desperately looking for work. And the situation is going to get grimmer as the economy slumps further.

Job losses and income cuts are putting many homeowners in a terrible situation. They can’t meet their mortgage payments. The banks are knocking at the door.

And with property values falling some people are left owing more money to the banks than their home is worth. They face financial ruin.

For grassroots people, this is all very frightening and unfair.

Grassroots mood against the banks

Jobs and homes are gut issues for people. Rising concern about these gut issues is intersecting with a mass mood against the banks.

Last year, RAM activists took a survey out on to the streets, which questioned people about the operations of the banks in this country. Over 90% of people thought the banks were doing no good.

That sentiment has probably hardened. It can be picked up in everyday conversations. It’s reflected in the stories being carried in the media.

You know there’s a mass mood on an issue in New Zealand when two things happen. The first is when it becomes a storyline on Shortland Street. Scotty and Shanti are in trouble with the bank, owing more than their house is worth.

The second indicator of a mass mood is when you start hearing calls for a public enquiry.

This is what the Green, Labour and Progressive parties have been voicing. They want an independent public enquiry into the banks. They’ve sensed the mood and the political opportunities that it presents.

Not right

In the eyes of grassroots people it’s not right that in these times of increasing hardship the banks are continuing their profit run.

The Big Four Australian-owned banks, ANZ National Bank, BNZ, Westpac and ASB, control 90% of the banking industry in New Zealand, putting them in a near-monopoly position.

With so much market control, there’s no pressure to lower interest rates. In 2008, the income the Big Four banks received from loan interest went up a whopping $4.6 million.

As a result the profits of these Aussie-owned banks totalled over $3 billion in 2008, up 3.7% on the year before.

To add fuel to the fire, the Big Four are trying to avoid paying a tax bill of $2.25 billion. BNZ has been convicted by the High Court and told to pay up. Undaunted, the banks are using their extreme wealth to hire teams of lawyers to fight the ruling.

The feelings people have towards the banks has been heading South for sometime. This was before the banks started turfing people out of their homes.

To maintain their own equity position the banks are getting tough and forcing mortgage sales in rapidly increasing numbers. In April this year, there were 250 foreclosures. The numbers are only going to escalate as mortgage pressures worsen with further waves of job losses.

The banks are the bad guys. They could become public enemy number one.

A Bad Banks campaign

In isolation grassroots people have no power against the banks and the laws written to protect the money men. But mass feelings are strong.

It is the job of mass Marxists to tap into those mass feelings. That’s why Socialist Worker is launching a “Bad Banks” campaign.

We believe the Aussie banks are vulnerable to a broad and inclusive campaign that connects with the anger ordinary people feel towards these mega-rich interest gauges.

A campaign to expose and shame the banks must be out on the streets. We’ll produce mass leaflets and posters. There will be street stalls. We can build towards publicity pickets outside targeted banks.

We will organise public meetings. Send out media releases, write submissions. We will liaise with others on the left about organising jointly hosted campaign conventions.

The campaign will have a web presence (www.badbanks.co.nz). A Bad Banks Facebook group is up and running (log into Facebook and search for “Bad Banks”).

We will pursue multiple publicity strands that aim to connect with masses of grassroots people.

The first stage of the campaign will be educative. We’ll tell people what the banks are up to. We’ll even explain in popular language “fractional reserve lending”, the credit creation mechanism which literally allows the banks to make money out of thin air.

Our leaflets and other publicity will connect the operations of the banks to the Great Implosion. Explaining what’s happening globally and pointing the finger at who’s responsible. Knowledge, as they say, is the first step to empowerment.

As the Bad Banks campaign evolves we begin to put forward concrete demands and campaign goals. These will emerge through dialogue with other leftists and through listening to grassroots people themselves.

Broad left cooperation

A multi-headed campaign against the banks has the potential to bring networks of indebted homeowners, political parties, unions, community groups and grassroots activists together.

The campaign on the streets should work in tandem with the good initiative of the Green, Labour and Progressive parties to set up their own independent public enquiry into the banks. Parliamentary and street campaigning can both work to build a movement. Linking these two essential political arenas will get the best out of each.

The Bad Banks campaign (or some other campaign name that emerges through discussions with others) could become an invigorating example of broad left political cooperation in practice. This would be extremely positive.

Joint work, sharing of ideas and on-the-ground collective organisation around this “flashpoint” political issue will hopefully encourage a further coming together of broad left forces. Such political cooperation is needed if the left is to rise to the challenge of the biggest economic meltdown since the Great Depression of the 1930s.

Banks and the “bubble economy”

The role the banks and international money men have played in the Great Implosion needs to be widely exposed. The banks are at the centre of the “bubble economy” built on trillions of dollars of debt and speculation.

The floundering of the real economy since the 1970s has seen workers, business and the state increasingly reliant on the extension of credit.

Over the last four decades debt has ballooned. This has allowed the banks and other money lenders, facilitated by governments, to assume a dynamic role within late capitalism.

So entwined are industry giants, big banks and governments, that when the credit crunch hit last year, following the bursting of the worldwide housing bubble, the leaders of the world’s big economies raced to save the banks.

In January this year, Oxfam calculated that $8.424 trillion had so far been raised by governments to bailout the banks and other financial institutions. That’s a vast sum, one which could easily put an end to world poverty.

And the bailouts haven’t stopped. In the US alone, the Obama administration’s bailout commitments could reach as high as $23.7 trillion, according to an official independent report.

However, the bailouts have not prevented the economy from nose-diving, far from it. There’s a global pandemic of job losses and other social miseries. Smaller banks and other financial institutions continue to go under.

Yet some of the big banks, like Goldman Sachs, one of the main players behind the housing bubble, are now posting record profits. With trillions and trillions of government money floating around, these experts at financial manipulation are creaming it.

Helped by government insiders the really big banks are now set on dominating like never before the creation of credit, the fragile base upon which the world economy rests.

The banks left standing are profiting out of lending to cash-strapped governments at high interest rates. They’re speculating again in financial markets. It’s “win-win” for them and “lose-lose” for the rest of us.

Given all the social and environmental problems besetting the world the bailout of bankers is a crime against humanity of obscene proportions.

Debating the nature of capitalism

A system that can divert trillions of dollars to a mega-rich minority and let the majority fend for themselves in an increasingly scary world is an unjust one.

Without a doubt the global economic crisis, and the response by governments, is eroding the legitimacy of the market. And it’s happening in the so called “first world” economies of Northern America and Europe. That’s significant.

A broad campaign against the banks in this country will, if successful, begin to expose the structures of power within monopoly finance capitalism that locks in place gross inequalities globally.

A mass-based campaign against Bad Banks has the potential to stimulate a nationwide debate about the nature of capitalism and the need for a human centred economy. Socialists and leftists from a number of political traditions will want to see this happen.

Lots to learn, lots to get excited about

The Bad Banks campaign that Socialist Worker is initiating will be a long term one. We will be trying things out as we search, hopefully alongside other activists, for a connection with a mass audience.

There’s lots to learn about the operations of the banks in this country and internationally, and how to connect their operations to a system in crisis. It’s going to be a big learning curve for everyone involved.

While the Bad Banks campaign is only just hitting the streets, it’s yet to be fully tested in practice, we do know there’s great resentment towards the banks amongst ordinary Kiwis. We should have confidence that this path will bear fruit for the left in this country. That prospect should be an exciting one.

Vaughan Gunson is the publicity coordinator for the Bad Banks campaign. To contact him with feedback or offers to help, email socialist-worker@pl.net or ph/txt 021-0415 082.

Launching the Bad Banks campaign

2009-08-24T02:37:00.000-07:00

The operations of the Big Four Australian-owned banks, ANZ National Bank, BNZ, Westpac and ASB, are harmful to the lives of grassroots people in New Zealand.

Socialist Worker-New Zealand is launching a campaign to shame and expose these Bad Banks.

We welcome other groups, organisations and individuals producing their own publicity that targets the Bad Banks.

The initial thrust of the on-the-street campaigning will be educational, building towards campaign demands that reflect a dialogue between broad left activists and grassroots people.

Why these Banks are Bad:

• They've made mega-profits by interest gouging grassroots Kiwis. The profits of the Big Four banks totaled over $3 billion in 2008, up 3.7% on the year before.

• They've used market dominance to keep interest rates high. In 2008, the banks income from loan interest went up $4.6 billion.

• They're forcing mortgagee sales in increasing numbers. There will be many more, unless we stop the banks.

• They're trying to avoid paying a $2.25 billion tax bill. BNZ has already been convicted by the High Court and told to pay up.

• They helped inflate the “housing bubble” in NZ. Average mortgages have ballooned to ten times the average wage, putting a huge financial strain on modest income homeowners.