The Fed is no longer reinvesting maturing assets; this is ‘quantitative tightening’. At the same time, it’s raising the federal funds rate.
Australia’s banking system emerged from the GFC relatively intact, thanks to Australia’s comparative strength at that time. Today, the banking sector represents a huge part of the Australian market.
Despite this, Australians have generally been kept in the dark about their practices and sky-high profit margins.
An important feature of Australian banking is the high amount of debt from the residential sector. Housing loans have been the Aussie bank’s bread and butter for decades, and the housing boom has put a rocket under their profits.
Now, however, there is growing concern that the wealth created by this over-
Australians are rightly asking themselves about the balance between competition and regulation in the banking system.
After years of public pressure, the Royal Commission’s inquiry into Australia’s financial services has revealed a culture of malpractice and misconduct throughout the banking system.
And the ‘big four’ — National Australia Bank (NAB) Commonwealth Bank (CBA) Australia and New Zealand Banking Group (ANZ) and Westpac (WBC) — are seen as the worst offenders.
The inquiry has found evidence of improper lending practices, bribery, and outright fraud. The actions of unregulated financial advisors and planners has also been called into question.
These revelations are profoundly affecting the amount of regulation and competition allowed within the banking sector.
Other forces such as the Asian market, technology, and consumer behaviour are also changing the face of Australian banking.
With luck, the commission’s findings could herald positives changes, both for consumers and the financial industries.
The future of banking in Australia
The inquisition into banking practices could also signal wider systematic change, with loan and credit conditions tightening as the banks are forced to become more ‘responsible’. A system that balances opportunity and risk could be the best way forward to even out profits and consumer welfare.
Here at Markets & Money we continue to run a sceptical eye over the banks, the credit market and Aussie housing regularly, to make sure you’re never vulnerable to the disasters banks get themselves into all too often.
Below you’ll find all the latest news and analysis on the subject.
The Fed is at least trying to build a buffer for the coming deflationary crisis…but Japan and Europe have hardly moved from zero. Neither of them have anything to cut next time.
The global market sell-off continued over night with Wall Street, as well as other global markets slipping rapidly during an unstable period of trading. Major US share indices were trading a little higher in the…
As usual in a booming market, investors lose peripheral vision. The focus is solely on one thing and one thing only…the offer of higher returns.
Class-action lawyers have lobbed a lawsuit against CBA’s wealth management arm, Colonial First State. And what is the suit about? It is all about performance — or a lack of it.
At time of writing, shares of Netflix, Inc. [NASDAQ:NFLX] are down 8.4% as it got caught up in a major sell-off in the US. It will open tomorrow’s trading (US time) at $325.89, with another…
Commonwealth Bank of Australia’s [ASX:CBA] share price sunk lower this morning, after revealing its plans to pay back any ‘unauthorised advice fees’ that it charged to deceased customers over the past seven years.
ANZ Banking Corporation’s [ASX:ANZ] share price has fallen 1.98% upon opening this morning, after revealing that its full-year cash profit will be impacted by a further $374 million of costs.
The September Institute for Supply Management (ISM) manufacturing index came in at 59.8, lower than August’s 61.3 and below the 59.9 forecast – suggesting President Trump’s trade war is not yet impacting the US economy.
The Aussie dollar steadied today around 72.5 US cents after a period of volatility yesterday. Perhaps markets had already priced in the Federal Reserve’s move to raise interest rates by the time it was officially…
Our banks spend millions on PR to convince us that they’re good corporate citizens. The veil on that deception has been well and truly lifted in recent months. The art of illusion and deception.
The central bank did raise its overnight interest rate, as promised. The target range for the federal funds rate is now 2% to 2.25%, up a quarter-point.
How do banks control the money of a nation? Well, as Christopher Kent tells us, they create it. But he doesn’t explain exactly how it works. That would give the game away.
Borrowers who were given interest-only loans — to make repayments easier to manage — are facing the prospect of having the loans converted to P&I (principal and interest) over the next 12 months.
The problem is that the Fed is raising rates as emerging markets around the world are tanking. In August, the MSCI Emerging Markets Index marked a 20% fall this year. However, the stock market is…