Shadow treasurer Joe Hockey stuck his neck out last month when he challenged treasurer Wayne Swan to stand up to the banks. He put a strong set of reform proposals on the table and spruiked them in the media.
Hockey pointed out that Reserve Bank minutes showed the banks had overstated increases in funding costs. He said the government should be protecting home buyers and small businesses from the banks’ predatory practices. At the time, Hockey was portrayed as a fool by the government and the banks, and even his own party leader Tony Abbott appeared to distance himself.
Since then, we’ve had the surprise interest rate rise on Melbourne Cup Day, and the Commonwealth Bank’s decision to take from its customers nearly double the amount of the Reserve Bank increase. Now Hockey is being rightfully lauded, and the tabloid press has launched a campaign against the banks’ corporate greed.
On Friday, the Daily Telegraph was pointing the finger at banks when it reported survey findings that ‘almost 300,000 Australians say they are too poor to celebrate Christmas this year, while another 1.8 million will postpone it’. The paper urged its readers to get online with its blogger Tony Abbott to work out how to ‘get the banks under control’.
One way of getting the banks under control could be to study Islamic banking, which repudiates the principle of charging interest. Instead, under Sharia banking, the bank might enter into a partnership with the home buyer or small business owner, in which they share the profits.
Last year the Vatican’s semi-official newspaper L’Osservatore Romano urged Catholics to take a sympathetic look at Islamic banking: ‘The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service.’
Such thinking about banking shares common ground with the Grameen Bank, the microfinance entity that was founded in Bangladesh to make small loans to the poor that require self-discipline rather than collateral.
Liberal Senator Cory Bernardi dismissed Islamic banking in comments he made last week, because ‘Sharia or Islamic law is incompatible with Australia's Western values’.
It could well be that he is right, and Islamic banking is indeed incompatible with Western values. But Western values that uphold a banking system that treats its customers with disdain – as the Commonwealth Bank did last week – need to be questioned.
If Australians are not convinced that their banks