The Morrison Government wants to abolish the current obligation on banks to ensure people don’t borrow more money than they can afford.
The banks are all for this and, what d’you know …
- Westpac gave the Coalition $107,000 and Labor $70,000, up from the $146,000 it donated the year before.
- The Commonwealth Bank upped its donations by 65 percent on its 2017 levels and gave $85,340 to the Coalition and $72,000 to Labor.
This is corruption, pure and simple. The major parties pocket the money, the government delivers the goods and, in this case, more loans to people (who are most likely to default) and less time spent by the banks filling in the loan application forms.
Here’s what Choice is saying about why this is a bad move.
People will be worse off. When people are given loans or credit cards they can’t afford, the human cost is high. The banking royal commission heard shocking stories of banks giving aged pensioners 30-year mortgages, relying on fraudulent loan documents provided by car dealers, and paying thousands in kickbacks to loan ‘introducers’. We’ll see even more of this if banks and other lenders are not legally required to take care when lending.
This will lead to a debt disaster. We are experiencing our first recession in nearly 30 years and high levels of household debt will slow down the national economic recovery. Australia already has the second-highest level of household debt in the world. Banks and other lenders should not be given a green light by the government to burden people with even more debt and trap households in a cycle of persistent debt.
Anyone else in favour? Well no. The man who knows most about corruption in the banking sector – Commissioner Kenneth Hayne – thinks RLO’s should be tightened rather than removed.
200+ community organisations, academics, financial counsellors say this is irresponsible.
See here for The Guardian story by Professor Kevin Davis.
We could solve this with caps on donations and complete bans on donations where there is any whiff of vested interest on the part of the donor. NSW did this with property developers. It’s not that hard.