So, are the banks really bastards or just misunderstood?
OPINION: Either way they now have a massive public relations problem that is worsening by the day.
On the one side we have the general public, the Reserve Bank and the Government questioning why interest rates are as relatively high as they appear to be.
And on the other we have - well, just the banks. They are on their own trying to explain that they are not able to pass on the full extent of recent cuts to official interest rates.
The issue is becoming pretty heated. The public are turning ugly.
To me it is starting to look like a classic case of each side not fully understanding the other.
The most glaring thing running against the banks is a series of reported profits that are not much worse than the bumper earnings reported at the height of the economic boom in the middle of the decade. An obvious conclusion to be drawn is that Joe and Josephine Public are having their wallets stretched to pay for another painting in the bank's boardroom.
Well, sorry if I appear an apologist for the banks but it is not quite as simple as that.
If you look at the composition of some of the first-half earnings figures recently posted by the big Aussie (and therefore big New Zealand) banks, there were sizable contributions from wholesale and treasury operations. The sharp falls in the value of the New Zealand currency and the big drop in wholesale interest rates on the back of the near-collapse of the financial system in September/October last year made - it might seem perversely - an opportunity for big profits to be had.
The picture on the "retail" side of the banks' operations - what they are making from lending to you and I, businesses and farms and from taking in money from the aforementioned - is not looking so rosy. And the outlook is for a worsening position in terms of bad debts. In addition the banks are being forced to actually increase their deposit interest rates in order to attract money from the public at a time when there is plenty of competition. Reported profits will undoubtedly be lower in the second half of the year.
I can see, therefore where the banks are coming from.
The problem is, though, that I don't really think the banks see where everybody else is coming from. In my late teens I briefly worked for a bank before flagging it away to do a tertiary course in journalism. My main difficulty with banking was that it all just seemed to involve balancing debits and credits and there was not much creativity involved. Nor was there much appreciation of the human beings behind the bank account balances.
This is not the image the banks try to portray of course. It's your friendly corner bank that you can turn to for advice.
I really don't think the banks are aware of the extent to which the public scorns this portrayal.
The banks still seem to be ploughing their own furrow. They achieved X profit last year and in the past few years, that's the profit they would like to achieve again. Sorry, guys the world changed and everybody else gets that.
Without being able to see the true nitty-gritty of what is going on behind the scenes in the banking sector at the moment, I don't think any of us are in the position of being outright able to accuse the banks of usury. We simply don't know what their financial positions are like on a day-to-day basis.
The other point is, who would be happy depositing money with a loss-making bank? It really is a blessing that our big banks have come through this turmoil in such good shape.
But the banks do need to start seeing the arguments on the other side of the fence - or else they face a very big backlash.
They need to remember also, that right now all of us taxpayers are underwriting them. And for that reason alone they need to explain themselves.
If they really have to, I think there is no doubt the banks could give their lending rates another little downward shove at the moment. For the sake of their public images they would be well advised to consider doing so, even if it chops a few million dollars off their profit.
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