Stephen Mayne's campaign on bank rip-offs

November 27, 2007

Stephen Mayne has a long history of taking on the bank cartel. Here are examples of some of his stories in that wonderful ezine Crikey over the past three years, along with some audio of an inteview with ABC Sydney's Virginia Trioli on November 28, 2007.

Trioli interview

Wayne Swan is on notice about the bank cartel. Have a listen to this exchange with Virginia Trioli on 702 ABC Sydney at 9.50am on Tuesday, November 28, 2007.

Costello twiddles his thumb as the bank cartel gouges away

August 30, 2007

We've all seen plenty of hypocrites in our time but Future Fund chairman David Murray whingeing about excessive fund manager fees to The Weekend Australian is one of the more brazen examples of chutzpah you'd ever come across.

Murray is the former chief executive of the Commonwealth Bank who led the charge on punitive banking fees during his 13 year reign. Armed with a banking licence from the Federal Government and a Treasurer who sat back and watched whilst a ferocious cartel gouged away, Murray built himself a personal fortune of more than $40 million.

This didn't come from taking CBA to the world or generating export earnings, but rather from gouging millions of Australians going about their daily lives.

For the five years that I owned Crikey, the Commonwealth Bank clipped the ticket for an average 4.2% on every credit card transaction we processed. All up, they helped themselves to about $50,000.

When Crikey was sold, we tried to close the merchant facility but discovered there was a $500 fee. Given there is also a $500 establishment fee for setting up a new merchant facility, we decided to hang in there and just cop the $12 monthly fee on the basis that we might need it again one day.

Over the past 30 months, this has amounted to $360 in fees even though the bank hasn't processed a single transaction. Lo and behold, when the July 2007 statement arrived we discovered the monthly fee had been tripled to $38.40 without so much as a letter of explanation.

When you add all the brokerage that has been paid to Commsec assembling a 410-strong stock share portfolio, plus the mountain of fees and charges on other credit cards, overdrafts, margin loans and the like, I reckon my activities have contributed more than $100,000 in clear profit to the bank over the past seven years.

The same thing has happened to hundreds of thousands of other Australians – the $20 billion net profit posted by the Big Five in 2006-07 had to come from somewhere.

Whilst big business has the clout, skills and time to negotiate better deals with their bank, it is the punters and small operators who get mercilessly screwed. Inertia explains much of it because we're so entangled with our bank through direct debit and the like that it's just not worth changing. Besides, in a cartel, everyone's as bad as each other.

Having seen what Geoffrey Cousins is achieving by taking on Malcolm Turnbull in Wentworth, maybe it's time someone ran an anti-bank campaign against Peter Costello in his seat of Higgins – because nothing else has woken him from his slumber on this issue over the years.

How much did Labor make out of the banks?

February 22, 2005

Mark Ludlow had a very interesting feature on the Queensland Labor Party in the Fin Review on Tuesday last week in which he revealed the party had accumulated a $100 million investment fund by wisely investing the $16.5 million in proceeds from the sale of radio station 4KQ in 1986.

This raises all sorts of interesting points including disclosure. How on earth are Australia's political parties allowed to operate without revealing their balance sheets.

It is bad enough that political parties are given until February the following year to reveal their sources of income for the financial year ended June 30. If political parties were ASX-listed they would have to release profit and loss statements within two months of year end and complete balance sheets within three months.

Does anyone else think it is disgraceful that the Labor Party in Queensland can secretly build up a $100 million reservoir of investments and not tell anyone about it?

For instance, it appears that the single biggest factor in turning $16.5 million into $100 million was investing in the banking cartel.

Ian Brusasco, the man credited by the Fin Review with overseeing the investment fund for years, makes no secret of the fact that investment in banks has been a bonanza for Labor in Queensland. To quote from the Fin Review:

"The largest dividends came from the Commonwealth Bank, which has returned at least $24 million to Labor Holdings - more than one third of the dividends received over the past decade."

"While not revealing most of the key investments that have reaped benefits for Labor Holdings, Brusasco says the company's significant shares in Metway Bank - before it merged with the insurance company, Suncorp - was one of the highlights of his six years at the helm of Labor Holdings."

So, the Labor Party has profited to the tune of tens of millions of dollars by investing in a banking cartel which is regulated by the government. Was Labor Holdings given an abnormally large allocations of shares in the Commonwealth Bank when it was floated at just $5.40 a share in 1991.

How much more money did Labor make out of Metway Bank from the merger/privatisation process driven partly by the Queensland Government?

Congratulation to Mark Ludlow and the Fin Review for a terrific piece of journalism but the features raises plenty more issues which the rest of the media should be chasing hard.

When will Kevin Rudd take a swipe at the banks?

July 12, 2007

Kevin Rudd's rhetorical swipe at Coles and Woolworths has caused quite a stir and should give great pause to Wesfarmers as it contemplates going over the top to buy into the world's most concentrated grocery market.

Whilst the big two are actively in denial, the bald facts of the matter are that they are both still generating super returns because of the unprecedented market power they command.

One of the worst legacies of the Howard years will be the tragic duopolisation of Australian industry. Consumers have been ignored for the past 11 years and our industries have become more concentrated than ever before.

Peter Costello was on a hiding to nothing on last night's 7.30 Report as he attempted to belittle the Rudd plan to sick the ACCC onto Coles and Woolies. The whole point of the exercise is to put pressure on the duopoly to do the right thing. They've never suffered the same political scrutiny as the past two days, all because of Rudd's pronouncements.

Given that Rudd has gone hard on big oil and now the grocery duopoly, it must surely only be a matter of time before he waves a big stick at the banking cartel, particularly over penalty fees.

The evidence of gouging is there for all the world to see. In 1996, Woolworths made a net profit of $234 million on sales of $14 billion. After this week's profit upgrade, Woolies is headed for net profit of $1.25 billion in 2006-07 on sales of $42.7 billion.

Similarly, the Commonwealth Bank was trading at about $10 back in 1996 when the Howard government offloaded its remaining 50% stake based on annual net profits at the time of $1.12 billion.

Today, CBA shares are at $55.30 and if Rudd has any sense, he'll follow his Woolies strategy and announce a banking customer charter the day after CBA reports an estimated $4.3 billion net profit for 2006-07 next month.

Peter Costello will ridicule this at his peril because the punters are sick and tired of being ripped off by big banks, big oil and the supermarket duopoly.

And let's hope the Rudd family have the good sense to offload their $300,000-plus investment in the Big Four banks before unveiling a pro-consumer crack down.

Finally, has anyone else noticed that it was the ABC that went hardest on the grocery crackdown. The commercial media is potentially compromised by the huge supermarket advertising budgets and Fairfax even boasts former Woolworths CEO Roger Corbett as a director.

Peter Costello only steps up for Liberal bank victims

September 13, 2007

The News Ltd press have been whipping the butt of Fairfax on the scoops and influence stakes over the past few days in Federal politics. Whilst Andrew Bolt joined Glenn Milne in the Costello camp three months ago, it was the switch of The Australian's Janet Albrechtsen last Friday which will go down in history as one of the most impactful columns of all time.

Most political leaders leave office bitter with the media and you can expect John Howard will be no different after Albrechtsen literally spoiled his APEC. Dennis Shanahan's page one read yesterday provided the following excellent insight:

Albrechtsen is an unashamed and long-term Howard supporter who decided to write a special column for Friday's newspaper urging Howard to go.

On Wednesday and Thursday the columnist - a strong supporter of Turnbull, and whose husband, John O'Sullivan, campaigns for the Environment Minister in his Sydney electorate of Wentworth - told Turnbull, as well as Tony Abbott, Nick Minchin and Downer, of her plans. She also told the Prime Minister's office. She said yesterday she talked to the ministers "as a courtesy".

Turnbull says he urged her not to write it, as did Abbott and Howard's office. But she went ahead and gave media lift-off to the speculation. Cabinet ministers and Liberal figures immediately blamed Turnbull for Albrechtsen's emotional intervention, which dogged Howard at his meetings with Bush, Russia's Vladimir Putin and Chinese President Hu Jintao.

Janet Albrechtsen is not short of a quid. The latest Commonwealth Bank annual report (pages 39-45) reveals John O'Sullivan collected $2.4 million in 2006-07 for his work as chief legal officer. Whilst Janet's husband does owe the bank $1.5 million, his 114,000 shares are worth a tidy $6.27 million.

O'Sullivan was the senior Freehills partner who married the blonde summer clerk within four years of her arrival from Adelaide. His Commonwealth Bank profile boasts of his work on all the big Federal privatisations in the following terms:

Prior to joining the Bank, John had been a partner of Freehills since 1983. He acted for the Bank in its acquisition of State Bank of Victoria and the Colonial Group, as well as on the three stages of the Bank's privatisation. He also led the legal team for the Commonwealth of Australia on Telstra 1, Telstra 2 and the sale of Sydney Airport.

Peter Costello recently took the long handle to the Commonwealth Bank on behalf of aggrieved customer and former Liberal candidate Lana McLean. John O'Sullivan was forced to publicly rebut the Treasurer, but now his wife has suddenly attempted to put him into The Lodge. Interesting! Was the Treasurer enjoying causing trouble for a key Turnbull backer. After all, he's never before publicly stood up for a banking consumer.

Tanya Costello joins the bank cartel

August 2006

Tanya Costello, the wife of Treasurer Peter Costello, has been recruited by the federally-licenced ANZ Bank on a six-figure salary in its trustee business.

An anonymous tipper to Crikey claimed that the connection was Tim L'Estrange, the brother of DFAT boss Michael L'Estrange, a lawyer who does work for ANZ, and that ANZ CEO John McFarlane was involved in the process.

However, ANZ spindoctor Paul Edwards explained the circumstances as follows:

We have been recruiting for a business development role in our charitable trusts business for several months. As part of that process, Tanya Costello has been introduced to us by a recruitment adviser who we have used over the last 10 years for select appointments. It's natural given Tanya's legal background and her professional experience in the charitable sector that we have progressed those discussions and we are looking forward to her joining ANZ during August.

Peter Costello's political adviser David Gazard, himself a former government lobbyist for Westpac, defended the move on similar grounds this morning: "Tanya Costello is lawyer of 20 years' experience and was uniquely qualified for the job. She was approached by an independent head hunter and satisfied the selection criteria of the organisation."

This is good and well, except for one thing – Peter Costello has sat back and done nothing whilst Australia's banking cartel has gouged consumers mercilessly to the point where listed banks are now worth more than $230 billion and comprise almost 40% of the Australian index.

ANZ's shares and profits have quadrupled whilst Peter Costello has repeatedly declined to use the vast powers under the Banking Act to protect consumers from higher fees. The system has created several hundred millionaires in the rank of Australia's big retail banks and now the Treasurer's wife has been hired by a cartel member.

The Treasurer's light-handed regime contrasts starkly with the approach taken by the previous Labor government, and with the pro-consumer perspective in New Zealand which saw NAB fined last week for increasing consumer fees without proper warnings.

You can't deny political spouses a chance to pursue a career. But it's not a good look for Tanya Costello to go from being a suburban solicitior to a better-paying job at the ANZ, especially given her husband's role in deciding that Australia shouldn't introduce a New Zealand-style Charities Commission to better regulate the sector.

Then again, the higher salary at ANZ Trustees, which suffered a management exodus over the failed merger with Equity Trustees, might help to pay some of those expensive school fees if the Treasurer takes the back bench option as part of his mission to topple the PM.

Another big rip-off by the bank cartel

April 10, 2006

When the Australian stockmarket closed at yet another record high last Friday, our big five banks were valued as follows:

NAB: $60.15bn
CBA: $58.98bn
ANZ: $48.95bn
WBC: $44.35bn
SGB: $15.95bn
Total: $228.36bn

And where does about $200 billion of that value come from? The long-suffering and highly indebted Australian banking consumer, of course.

With every member of this exclusive club enjoying returns of more than 1300% since the Commonwealth Bank first floated in 1991, you'd think the $18 billion or so in pre-tax profits generated each year would be enough.

Sadly, you're badly mistaken if the front page splash in The AFR yesterday is to be believed. The story opened as follows:

The nation's biggest banks are set to reap more than $10 billion in charges this year as they look to offset cut-throat competition in the mortgage and deposit market with sharp fee increases for households and businesses. Stockbroking analysts believe the banks will increase their fee income by between 7 and 9% in 2006 as they raise charges on a range of products, including ATM transactions, telephone banking, Eftpos withdrawals and bank cheques.

Have you noticed how cartel members are all going in exactly the same direction. No bank is proposing to cut fees to attract customers.

I've long given up on Treasurer Peter Costello, RBA governor Ian McFarlane and ACCC chairman Graeme Samuel when it comes to protecting consumers from this cartel. Banking might be nominally heavily regulated but all members of the Australian cartel operate with a government licence which may as well say "feel free to abuse your position and charge as must as you can get away with".

Is there a fee increase that would awake this trio of soundly sleeping bank watchers from their inertia? It's at moments like these that you really wish Paul Keating was running the country again. The Latham Diaries revealed that Keating would be tempted to return to Parliament if he could "f*ck the banks".

It seems that perhaps the only option left is an anti-bank campaign against Peter Costello in his seat of Higgins at the next election. Nothing else seems to work.

Why Costello falls short of Keating on the banks

October 3, 2005

There is no doubt that Paul Keating and Peter Costello have both been very successful Treasurers, but a few extra points should be made about their respective records after Christian Kerr's interesting commentary last week.

Keating's reforms of the financial services sector were profound and this is where Costello has really let himself down. The Latham Diaries reveal that Keating would be tempted to return to Parliament if he could "f*ck the banks."

Indeed, Keating did keep the banking cartel in check, firstly by introducing foreign competitors and then by keeping the pressure on them to deliver good and cost-effective services for consumers.

Banking is an essential service, yet in this area, Costello has tolerated a series of major mergers, then sat back and done nothing while a rampaging cartel has gouged consumers mercilessly. Costello is now responsible for the sector which generates more consumer complaints and hatred than any other. But he does absolutely nothing to pull the big banks into line, instead allowing them to dominate funds management and become a ridiculous 30% of the entire stockmarket.

While Keating has to be held responsible for "the recession we had to have" and 17% official interest rates, it is very easy to forget that Australian interest rates have been comparatively higher than its major competitors during the Costello years. World interest rates were high in the 1980s and early 1990s and they've been much lower across the board globally since Keating's defeat in 1996.

Just as Hawke and Keating benefited from the drought breaking in the early 1980s, Howard and Costello have also been phenomenally lucky that the emergence of China as an economic powerhouse has given us the best terms of trade in 30 years. That Costello is still running a $57 billion annual current account deficit – equivalent to the 6% of GDP when Keating made his famous banana republic comment – with such favourable prices for our goods does him no credit whatsoever.

Costello is also partly responsible for Australia's booming imports and consumer debt after triggering a ridiculous housing bubble with the halving of capital gains tax and all those first home owner grants.

That said, Costello should be congratulated for finally tackling unfunded superannuation, something Keating never did. And the GST reforms were welcome, although these were largely the work of John Howard.

Similarly, the budget surpluses have been bigger and more sustainable than Keating's efforts as Treasurer, although former Treasurer Howard did hand Paul Keating an appalling deficit blowout in 1983 which was even worse than the one handed over by Prime Minister Keating in 1996.