Little reiterates bank strong arm approach

Andrew Little was interviewed on Q&A this morning. He is unlikely to make any breakthrough with winning support from his performance. One thing he seems to have become adept at is avoiding answering awkward questions.

One thing he made clear was his comments about stiff arming banks wasn’t a one -off slip. He reiterated his stance, and went further: “I stand by the stance I took, which is to get very heavy-handed with the banks.”

And: “If the banks don’t want to play ball when it comes to the way we run our monetary policy, actually, there’s only one outfit that can really take them on, and that’s the government.”

Jessica Mutch: You talk about ups and downs, has the last few weeks been an up or a down for you do you think?

Andrew Little: Oh, it’s been up and down, and I think you know you raised the issue about stiff arming the banks.

Actually I  got a huge amount of feed back from that, people saying ‘at last someone’s prepared to stand up to the overseas banks, who frankly have been, you know, flipping the bird to our Reserve Bank.

When the Reserve Bank does the orthodox thing and says ok, economy’s slowing,  we need to tick down interest rates so it’s cheaper to borrow, put a bit more money in people’s pockets, and what do our overseas trading banks do? They say ‘ah-ah, not us, we’re not going to do that’.

I’m not aware of any banks saying anything like that. In fact it looks to me that all the banks have reduced their fixed rates since I looked at them at the end of January.

Andrew Little: That’s not acceptable. It’s actually not orthodox, but it’s also not acceptable.

And what a Government doing it’s job has to do, when faced with that, is stand up to them and say no no, ah we’ve got an economy here that we’ve got to sort out, we’re all in this together, and we need you to be doing your bit.

Ah the Government refused to do that, because frankly they are scared of multinational corporates.

I think that Governments since the Muldoon led one in the seventies and eighties have refused to ‘do that’. They seem to be scared that a repeat of a Government dictated economy might lead to the country nearly going broke again.

And there may be more than a few voters a bit scared about what may happen if an Andrew Little led Government started standing up to banks and other multinational companies and stiff arming them. They may turn around and give New Zealand the finger.

And there’s more later on in the interview.

Jessica Mutch: Because another big idea that you did raise was threatening to legislate against the banks, trying to get that record low OCR of 2.5% passed on to consumers. Do you still stand by that?

Voxy has transcript from there:

ANDREW ‘I stand by the stance I took, which is to get very heavy-handed with the banks. Because the truth is when the banks fail to follow the signal that the Reserve Bank is sending, that’s keeping money out of the back pockets of ordinary Kiwis, and I will always fight for their interests and for their rights. If the banks don’t want to play ball when it comes to the way we run our monetary policy, actually, there’s only one outfit that can really take them on, and that’s the government.’

But Mr Little wouldn’t be drawn on whether his position was pre-planned policy.

JESSICA Threatening to legislate, though, is that something that you’d been planning on speaking out for a long time? Is that something that you guys had had discussions on?

ANDREW No, it was about sending a signal–

JESSICA So you hadn’t formulated this policy?

ANDREW It’s about sending a signal that when one of our most important measures we have – one of the very few measures that the government or a government agency has to assist the economy as it’s slowing down, get a bit of impetus going – and the overseas-owned trading banks just cock a snook at it, you actually do have to respond. The government should’ve responded.

JESSICA But my question is – is this a policy you had been looking at for a long time?

ANDREW The approach that I will take and in fact was signalling in that statement is that we’re not going to accept it if the trading banks want to come here, not follow the signals that the Reserve Bank is sending. Because that starts to undo one of the fundamental basis of our economic system. We want to run monetary policy. That’s what we give the Reserve Bank the job to do. If the trading banks don’t want to play ball, then you’ve got to get heavy-handed with them.

JESSICA Not answering the question makes me feel like it isn’t something you’ve been looking at for a long time. Were you caught out on this policy a little bit?

ANDREW I think what some people might be having difficulty coming to grips with is that I believe that a government is there to govern, that when the interests of ordinary New Zealanders are put at risk because, in this case, a bunch of corporates decided they just don’t care about it and they want to maximise their profit, actually, the role of government is to govern and make sure things are happening in the best interest of New Zealanders. And I don’t shrink from that at all, and somebody’s got to be the voice for that, and I’m happy to be it.

Source for the last transcript: Little ‘stands by his threats to stiff-arm the banks’

Little’s banking ballsup

Andrew Little is getting clobbered from all directions for suggesting he would ‘stiff-arm’ banks to get them to cut interest rates in line with OCR reductions, and if necessary legislate.

Radio NZ: Labour call on bank OCR cuts ‘dumb idea’ – English

Andrew Little says the government should pressure the major banks to reduce their mortgage interest rates, and if he was prime minister he could go as far as legislating to make them do so.

“I would start with pretty serious talking, you might say ‘stiff-arming’, and if they are not responsive to that, I guess you’ve got to look at your options when you are in government.

“You have the power to legislate, but I think you have got to have a pretty serious talk to the banks about expectations.”

Mr Little said if he did have to legislate he would do so reluctantly and with a heavy heart.

Responses have been scathing, with Little getting ridiculed in parliament by John Key.

And Bill English:

“I don’t think anyone in New Zealand wants the leader of the opposition setting interest rates, we tried that back in the 70s and 80s and it ends up with politicians always deciding to try and keep rates in a different place than they should be, so I think it’s a pretty dumb idea.”

Mr English said he was quite surprised by Mr Little’s comments.

“I mean the Labour Party in the past has always been fairly mainstream on economics, but now they are opposing trade, want the government to set interest rates, it’s headed in a fairly different direction, I think they’re just competing with the Greens.”

But even the Greens have declined to back political directives to banks, which is managed by the Reserve Bank with a separation from political interference.

Although there was no competition with the Greens on the matter, as the party’s finance spokesperson, Julie-Anne Genter was somewhat lukewarm on the idea of forcing banks to drop their rates.

Little didn’t say whether he would stiff-arm banks to raise interest rates if the OCR went up.

He has landed a balls up in his finance spokespersons lap, presuming Grant Robertson recognises the foolishness of Little’s remarks.

The only positive for Little is it is not election year.