Bank bashing has no foundation

Rather than spouting interest rates nonsense, politicians should concentrate on helping our economy grow.

This letter from Don Argus was published in Business Spectator's Conversation.

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Hi Stephen,

A good analysis of the current nonsense being spruiked by politicians and some so-called experts (Swan's blind bank bashing, January 31).

With respect to all commentators, there are only a few people who have any knowledge of how a bank balance sheet is structured: the chief executive and his/her chief financial officer, and probably the person in charge of the asset/liability model so essential in understanding the risk profile of a commercial bank balance sheet, the margin prevailing in the balance sheet and the cost of funding the balance sheet.

All balance sheets are different, the structure and the leverage is decided by the chief executive of the day and his/her board. And all chief executives, whether in banking or any other industry, know that their competitive edge is derived from being smart with their cost of capital (debt and equity) – because if they get that right then they are able to increase the value of the dollar that their shareholders have invested with them. A low cost producer in any industry will always be competitive.

We need to maintain a strong banking system in this country to create the opportunities to grow. Politicians should concentrate on how effectively they distribute the taxes we provide and how that is assisting this great country to grow.

I will leave it to others to opine on how the current group of politicians are performing but the disenchanted noise from those who provide the bulk of the tax income seems to be growing by the day.