(03) 9020 2905Debt Man column – The West Australian (Business)
For: November 12, 2010.
Stay calm for ‘National Smack a Bank Day!’
Bruce Brammall
Debt Man
My parents had a rule about handing out smacks. They would never dole out the punishment when they were still angry.
The reason was that they didn’t want my brother Dirk and I to make a link between anger and violence. Fair enough.
So, we would first be sent to our rooms. After five minutes, we’d be called out and, with calm parents, our butt cheeks would feel the thud of an open hand, or the crack of the thin plastic handle of the feather duster. I hope that feather duster is burning in Hades …
While the “no angry smacks” decision seemed logical, there was an unintended consequence. I developed a fear of the five minutes of purgatory spent in the bedroom in between “Official Notice of Smack To Be Given” and “Punishment Delivered”.
I knew the punishment was coming. I knew it would hurt. (If it didn’t, it was REALLY wise to pretend it did.) But the waiting …
Sometimes it was 10 or 15 minutes. Naughtiness comes in degrees. Sometimes the Old Bag and the Old Fart needed extra time to calm down.
Even then, there was definitely a direct correlation between scale of naughtiness, time spent in purgatory and velocity of feather duster handle on backside.
You can imagine my fear the day we were left there for an hour and a half. Turns out Dad had simply forgotten to meter punishment.
Even five minutes was a billion times worse than the three seconds of intense pain caused by the feather duster.
I still hate the period between action and consequence. If I’ve done something wrong and punishment is coming, bring it on. Get it over with.
Action: The economy has been partying too hard, or looking like it might. So the Reserve Bank hikes interest rates.
Consequence: Depends on who your bank (parent) is.
If your parents were the Commonwealth, you got the immediate angry smack. It was a stick with a nail in it. CBA made you pull down your strides, bend over and, bang, you’ve got a tack up your bum.
Then nothing. Everybody else got sent to their rooms.
For a week.
Finally, this Wednesday, ANZ bought out the feather duster. Clearly, the end of the duster handle had splintered a little during its 30 years in hiding. A rise of 39 basis points was not as bad as CBA’s 45 bips, but it had a fair sting.
ANZ’s next “Barbara from Bank World” ad will have the ANZ voiceover guy finishing with: “Bugger it. You know what? We just hired Barbara. And all her sisters.”
There’s never seen such a delay between a rate rise and the Big Four banks reacting.
It shows two things. One, that there is an absolute intensity of competition and, two, at the same time, absolutely no competition.
“Huh?”
First, the extended delays in announcements showed three banks desperate not to go second. They were all jockeying for position. ANZ blinked first.
Second, it shows that, outside of the four major banks, there is absolutely no competition at all. With no-one to keep them honest, they’re behaving like Jim Carrey in “Liar, Liar”.
The banks deserve a caning. To cry poor, after they’ve topped $20 billion in profits for the first time, is simply blowing raspberries to customers. Thpppppt!
The question is … what are you going to do about it?
Take a leaf out of the Old Bag’s and the Old Fart’s smacking book. Put your bank on notice. “NAUGHTY bank!” Send them to their room.
But wait for the dust to settle, which might take weeks or months. Then go and see a mortgage broker.
With politicians promising to act and banks lifting exit fees voluntarily, good mortgage brokers won’t have been telling you to shift your loans elsewhere this week. They don’t know what the rest of the banks are doing just yet.
Banks are doing this because they think they can get away with it, just like a child. If you’re going to smack, make them wait a bit. Deliver on the promise when you’ve had a chance to calm down.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au .