But, rather than terminating the gaurantee as an unwise and unnecessary move, they get American-style political and attack the banks for making good profits. Funny how that happens: government intervention begets anti-market rhetoric. Previously governments have avoided criticising bank profits and credit policies. Now it has become acceptible.
From http://www.stuff.co.nz/national/politics/2409368/English-tells-banks-to-curb-profits
English tells banks to curb profits
Finance Minister Bill English has told banks to lower their profits, after the four big Australian-owned lenders reported total profits in excess of $4.5 billion.Labour is also calling on the banks to "share the load" after they reported profits down just 7 per cent after tax.
The comments follow another serve from the Reserve Bank.
It said in its financial stability report yesterday that banks should be more forthcoming with credit.
"The banking system has continued to lend to households and businesses over the past year, but credit growth has slowed in recent months, lending criteria have tightened and some businesses are reporting difficulties in obtaining credit," deputy governor Grant Spencer said.
"While current conditions warrant caution, it is important that the banks continue to lend to creditworthy borrowers."
Spencer told a parliamentary select committee yesterday that it was "disappointing" banks had not dropped mortgage rates further as more homeowners faced loan defaults.
English told reporters it was time banks explained their profit margins.
"I think it would help the banks if they explained fully to their borrowers just why interest rates are at the level they are at," he said. "It [$4.5b] is a big profit and we would expect that in the next financial year they will be less profitable.
"We've made it clear right through with the banks that with taxpayers supporting them and their depositors and their overseas borrowings, we expect that they will give borrowers a fair go."
Labour finance spokesman David Cunliffe said major banks' profit margins had hardly moved since the recession hit.
"Some banks, according to the Reserve Bank, have not been passing on the cut to the official cash rate at all, leaving hardworking Kiwi families to bear the whole load, while billions of dollars of profits are being made.
"When the New Zealand taxpayer is underwriting banks through extensive guarantees, stimulatory fiscal policy and expansionary monetary policies, it is high time that New Zealand's major banks demonstrated a clearer sense of responsibility to this market and their clients," he said.
English said that while Australian banks were still making plenty of money, it was clear the Australian economy was entering the "rapid reversal" New Zealand had experienced.
"We're in roughly similar places now both facing similar challenges about growing our economies," he said.
"It's an opportunity for us to do better than Australia."
However, he did not believe unemployment would reach 8.5 per cent in New Zealand the level predicted in the Australian Government's Budget.
Neither would New Zealand consider raising the superannuation eligibility age, as Australia had.
"We're not increasing the pension significantly and we're not contemplating raising the age either. We're happy with the arrangements as they are," English said.
A New Zealand Institute of Economic Research (NZIER) report yesterday said the $10b of fiscal stimulus added to the economy by Labour and National over the past year could prevent the loss of up to 10,000 jobs over the next two years.
However, it said the job creation came at a cost, with the additional debt created by the spending likely to lower the country's gross domestic product and employment rate in the longer term.
The NZIER said English should cut payroll taxes, reduce annual leave from four weeks to three and spend more on infrastrucuture to get the country moving.
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