From The AFR today:
"Caught in a pincer by his nimble shadow Joe Hockey and the Greens, Treasurer Wayne Swan has rushed out a half-cooked bank competition package. Cobbled together without the benefit of a broad inquiry into the post-global financial crisis banking system, it is a mixture of the useful, the useless but harmless, and the positively counterproductive. It fails to address the elephant in the room, the fact that “too big to fail” banks are implicitly guaranteed against failure, which in turn lowers their funding costs relative to smaller lenders such as the credit unions and other “mutuals” that Mr Swan is striving to help…
Mr Swan has lunged for the illusion of having put to bed the issue of inadequate banking competition. The policy seems torn between the competing goals of increasing competition and preserving stability. In the long run it will be judged on its results in increasing banking competition, which are likely to be unimpressive. A fuller inquiry into the banking system would have better equipped the government to devise a package that dealt more effectively with the “too big to fail” banks’ dominance of our lending markets."
