The decision by the Labour Government to guarantee all bank deposits is, albeit a mild one, another example of neoliberal political parties and politicians resorting to state intervention.
But while helping out the Australian-owned banks, there have been no demands made of the banks themselves.
Westpac New Zealand for example, made a net profit after tax of $244 million for the six months ended 31 March 2008, up 12 per cent on the same period last year.
The ANZ bank made a $960 million profit for nine months to June 30, after previously seeking to make a billion dollar profit in New Zealand. This is the same bank that recently shipped off 250 jobs to call centres in India.
The banks have been making wildly excessive profits at the expense of New Zealand people - why should they be advantaged by a blanket government guarantee without returning the favour in the form the lowering their profit forecasts and cutting their fees, charges and loan margins? In the case of this new initiative from the Clark government, its a case of the banks taking and giving nothing back. The liability for any financial disaster has been dropped on to the New Zealand taxpayer.
It could actually encourage the banks to take more risks in order to drive up their already massive profit margins. The Labour Government has given them a free 'get out of jail' card.
The current financial situation raises questions about the whole system of a private banking sector run for profit, in which people’s hard-earned life savings are potentially at risk - so much so that the Clark government intervenes to guarantee those savings.
The banks, who have been exploiting ordinary New Zealanders for years, need to be told that the days of excessive profits are over.
Unfortunately, they won't be receiving such a message from this neoliberal Labour Government - nor from the incoming National Government.
Personally I'd nationalise the whole lot of them. It would be in the public interest.