Wesfarmers managing director Richard Goyder has warned Canberra against taking populist action to re-regulate the banks, saying it would be major mistake with negative long term consequences.
Wesfarmers managing director Richard Goyder has warned Canberra against taking populist action to re-regulate the banks, saying it would be major mistake with negative long term consequences.
Wesfarmers managing director Richard Goyder has warned Canberra against taking populist action to re-regulate the banks, saying it would be major mistake with negative long term consequences.
Commonwealth Bank's decision to raise its lending rates by 45 basis points yesterday, 90 minutes after the Reserve Bank increased the official cash rate by 25 basis points, has led to howls of protests from a wide spectrum of the community, including consumer groups and retailers.
Both sides of federal politics have now announced populist initiatives to try and re-impose limits on the banks ability to lift rates beyond the extent of changes to the official cash rate.
But speaking to journalists in Perth, Mr Goyder - who also heads the giant Coles supermarket business - said he had a problem with politicians touting such "short term" populist ideas.
"I just think we should have learned the lessons about regulation and the fallacy of regulating business in a world where you've got deregulated banks," he said.
"I think in any business, unless there is some really compelling market reason - and I can't see that here to do it - it shouldn't happen.
"It's all about short term political stuff at the moment, it's not about the long term. The politicians, I'm sure, do understand the banks funding model and that there is a cost of funding issue."
Mr Goyder denied that meant that people should just "cop it" when banks decided to raise interest rates more than Reserve Bank changes to official rates.
"Not at all, let the market work," he said. "Then people can move to whichever business, bank or retailer which provides them with the best service."
"But don't re-regulate, do it through a deregulated market mechanism."
Federal treasurer Wayne Swan today declared the Gillard Labor government would be announcing a series of reforms next month to boost competition between banks, and described the Commonwealth Bank's interest rate hike as "arrogant in the extreme".
Mr Swan's plans, which will include strengthening competition regulators powers to investigate price signalling and collusion between the banks, come a week after Labor derided the Coalition plans to rein in the banks as a series of "thought bubbles".