The Integrity of Banks in Australia

The decision by the major banks in Australia not to pass on to consumers and mortgage holders the 25 basis point reduction in interest rates by the Reserve Bank of Australia is typical of a general lack of integrity and social responsibility of many business leaders. There is no reason the banks and other businesses cannot participate in minimizing the effects of the current financial crisis, and turning around the economy as quickly as possible. If banks cannot do this voluntarily, there may be merit in government regulating the banks to do so, penalizing anti-competitive behavior, or using some other form of moral suasion to encourage a more responsible attitude. A government owned and operated bank that is prepared to compete with private banks may be the solution.