BANKS Back in your box, Mr Swan

IF SUPPORTERS of Wayne Swan think his incessant bank-bashing serves this country's interests, just wait till the banking industry has been brought to its knees like its European counterparts because of interference by politicians and the general public into something they know nothing about. It should be recognised that only a third of the population have mortgages. If bank-bashing continues, we will end up with lower interest rates on deposits, lower dividends, higher charges and a credit squeeze that will make it near impossible to get a loan. Where is the shadow treasurer, Joe Hockey, in all this? Does he believe that the Treasurer is correct? So much for any hope of competent financial management of this country now or into the future.

Seeing that the banking industry makes not even 3 per cent return on invested funds, it is absurd for it to rush into making decisions on interest rates because media outlets, unionists, politicians and others demand it. It's time the banks stood up and told politicians and others to stick to issues they know something about.

Gil Solomon, Dover Heights, NSW

Taking the safe route

I WONDER what the many, including Wayne Swan, who partake in the national blood sport of bank bashing, would think if our banks followed the reckless lead of our international counterparts by rendering their superannuation depleted and bank savings threatened or wiped out, and lent what precious money they have to crooked and inept governments (such as Greece) and corporations (such as WorldCom).

David Ewens, Blackburn

Bottom line is investors

MAJOR banks are a business and as such must make a profit. It does not matter what the politicians on both sides of the house say about what the banks should or should not do when it comes to interest rates, they will do and say whatever it takes to maintain their profit margins. Try getting the tens of thousands of mum-and-dad shareholders to happily accept a reduction in their dividend cheque. I am sure all of us have a friend or neighbour who has shares in one of the major four banks ask them the question and see what their reaction is. Ultimately, it is these investors that the banks have to answer to.

Ian Brown, Ashburton

Consider the cash flow

IT IS disappointing that in Reserve Bank governor Stevens' statement on the unchanged cash rate there is no indication of the possible effects of Australia's relatively high interest rates on inflows of foreign capital. Financial market reports suggest that foreigners have been encouraged to invest in Australia where there is little exchange rate risk. This may help account for the exchange rate being higher than the RBA assumed. If that is the case, the situation may now have been reached where the cash rate could be lowered further and where, subject to rates on their extensive overseas borrowings, our banks could also cut domestic rates without reducing profit margins. It is hoped that the RBA will review this situation when it next considers the cash rate.

Des Moore, South Yarra