31 October 2008

Nats finally wake up to banks' responsibilities

The Green Party is welcoming National's belated recognition that the banks have responsibilities in return for taxpayers underwriting the deposit guarantee scheme and in return for the Reserve Bank extending them lines of credit.

John Key said today that he expects "banks will be very careful about the manner in which they deal with customers who may, as a consequence of the global financial crisis, find it hard to meet their obligations.

"The Green Party has been calling for the last couple of weeks for banks to behave responsibly in return for taxpayer underwriting," Green Party Co-Leader Russel Norman says.

"We believe that the banks should behave responsibly by acting sensitively to anyone struggling to meet their mortgage payments. We don't want to see big penalty payments forced on borrowers who struggle to meet their repayment schedule if they lose their job.

"But the Green Party believes banks owe more than just acting sensitively to those who are in financial straits.

"The banks also have a responsibility not to drain liquidity from the New Zealand financial system. ANZ National and Westpac recently announced large profits. If these are sent to their Australian owners it will negate attempts by the Reserve Bank to provide lines of liquidity to the banks.

"Tthe banks also owe it to us to adopt responsible lending activities. In the past they have pushed loans on people who could barely afford to repay them," Dr Norman says.

"The banks in New Zealand are now underwritten by the taxpayer. Some of them are actually now owned by taxpayers (such as ABN AMRO, owned by UK and Dutch taxpayers). If taxpayers have to carry the can, then taxpayers have the right to tell the banks to behave responsibly.

"It's good that National have finally cottoned on to this. But I do find it strange that John Key says that he has 'confidence that the banks will act responsibly' when in the past they have acted irresponsibly by loading debt on people. We need to monitor them to make sure they do actually do behave responsibly," Dr Norman says.

ENDS

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