The System is Rigged

The System is Rigged in Favour of the Big Banks, Again!

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The System is Rigged in Favour of the Big Banks, Again!

Once again, I find another example of the system being rigged in favour of the Big 4 Banks in Australia.

Not sure if you saw this but last week Standard and Poor’s (S&P) downgraded the credit rating of 23 banks in Australia.

They had their credit downgraded due to S&P’s concerns over high levels of exposure to the property market among banks, which leaves them vulnerable to a housing correction or market crash.

Now whether you agree or not as to whether property prices are going to crash, the timing and nature of this announcement shows me once again the system is rigged in Australia.

Let me explain why I believe this.

The credit downgrade does not apply to the big 4 banks

Firstly, the credit downgrade does not apply to the big 4 banks (ANZ, CBA, NAB, and Westpac).  They maintained their credit rating due to S&P’s belief that they are “too big to fail” and would be bailed out by the government if such a correction was to occur.

So should the big banks fail, you and I as taxpayers need to step in and pay for this, as where else would the government get the money to do this?  The big 4 banks can do what they like because if they crash, guess what, the poor old little taxpayer is there to bail them out.

System definitely rigged in favour of the big 4 banks here!

What does this mean for the 23 Smaller Banks

Secondly, let me explain what this means for the 23 smaller banks like Bendigo Bank, Bank of Queensland, Adelaide Bank, Credit Union Australia.

It means that the cost of their funding will increase.  That’s right the money they borrow to on lend to their customers for things like home loans will cost them more.

So if the money they borrow costs them more, what will they have to do?  They will have to pass on this cost to their customers.  That’s right, if you have a home loan with one of these banks, chances are strong that your home loan rate will increase very soon.

Now this happens at the same time the Government has placed a levy on the big 4 banks.  Their argument was that the big 4 banks would not pass this on because of competition from other banks who would have lower rates.

But what happens if that competition has now have to charge higher rates because of the credit downgrade?  Simple, the levy supposedly charged to the big 4 banks is passed straight onto you and I as interest rate increases.

So the system is rigged again in favour of the big banks, again!

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Do you and your family a favour and start taking steps so you can beat the rigged system and improve the health of Your Wealth.

Wayne Wanders

The Wealth Navigator

wayne@thewealthnavigator.com.au

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