1 00:00:00,280 --> 00:00:03,440 Speaker 1: The arbian Z's giving capitals a second look. This is 2 00:00:03,440 --> 00:00:05,680 Speaker 1: for the banks, after pressure from the government looking at 3 00:00:05,720 --> 00:00:08,039 Speaker 1: easing the requirement so banks don't have to lock away 4 00:00:08,039 --> 00:00:10,959 Speaker 1: as much from emergencies. Could free up money for home loan, 5 00:00:11,039 --> 00:00:14,080 Speaker 1: small business lending, farmers. That sort of stuff could also 6 00:00:14,120 --> 00:00:16,759 Speaker 1: give smaller banks a shot at competing with the big players. 7 00:00:16,800 --> 00:00:20,239 Speaker 1: Sam Stubbs simplicity founded with me this morning, Sam, good morning. 8 00:00:20,600 --> 00:00:22,040 Speaker 2: Get a Ryan. How are you making good? 9 00:00:22,079 --> 00:00:26,560 Speaker 1: Thank you? Does this really make the system potentially make 10 00:00:26,600 --> 00:00:27,640 Speaker 1: the system riskier? 11 00:00:29,400 --> 00:00:33,919 Speaker 2: Are in a very very small way. The Reserve Bank 12 00:00:33,960 --> 00:00:36,800 Speaker 2: will still maintain extremely close control over anyone who calls 13 00:00:36,840 --> 00:00:39,920 Speaker 2: themselves a bank and takes deposits. One of the interesting 14 00:00:39,920 --> 00:00:42,360 Speaker 2: things about banking, Ryan, is anyone can make a loan. 15 00:00:42,440 --> 00:00:43,839 Speaker 2: You don't have to be a bank to make a loan, 16 00:00:43,920 --> 00:00:45,279 Speaker 2: but you do have to be a bank to take 17 00:00:45,280 --> 00:00:48,519 Speaker 2: a deposit. And they've lowered the requirements. You've got to 18 00:00:48,560 --> 00:00:50,680 Speaker 2: quit out five million dollars, not thirty million dollars, but 19 00:00:50,720 --> 00:00:53,559 Speaker 2: that will be of capital, but that'll be very very 20 00:00:53,560 --> 00:00:55,639 Speaker 2: tightly monitored, and it will actually cost a lot more 21 00:00:55,640 --> 00:00:57,560 Speaker 2: than that to run some they caught a bank, so 22 00:00:58,200 --> 00:01:00,120 Speaker 2: at the margin years, but not really. 23 00:01:00,680 --> 00:01:03,120 Speaker 1: So the current rules, well they look to be a 24 00:01:03,120 --> 00:01:06,039 Speaker 1: bit harsh when you compare them to our countries. We 25 00:01:06,120 --> 00:01:07,240 Speaker 1: like to compare ourselves to. 26 00:01:10,680 --> 00:01:14,200 Speaker 2: The sort of I mean, we've got very safe banks, 27 00:01:14,240 --> 00:01:17,360 Speaker 2: but we've also got massively profitable banks. And you know, 28 00:01:17,480 --> 00:01:20,000 Speaker 2: I read these recommendations. To be honest with you, it 29 00:01:20,000 --> 00:01:21,920 Speaker 2: feels something like the Reserve Bank we're having their arm 30 00:01:21,959 --> 00:01:23,880 Speaker 2: twisted that they don't really want to do this, but 31 00:01:23,920 --> 00:01:26,840 Speaker 2: the politicians have been lobbied very effectively by the banks 32 00:01:27,319 --> 00:01:29,960 Speaker 2: into saying, look, you know, we need to have lower 33 00:01:29,959 --> 00:01:32,840 Speaker 2: cost of capital. And the history of banking in New 34 00:01:32,920 --> 00:01:35,360 Speaker 2: Zealand is as soon as banks say costs, they actually 35 00:01:35,400 --> 00:01:37,040 Speaker 2: take it straight to their profit. They don't give it 36 00:01:37,080 --> 00:01:38,800 Speaker 2: back to the customers. You know, you've seen that with 37 00:01:38,880 --> 00:01:42,080 Speaker 2: bank branches. For example, your mortgage didn't go down because 38 00:01:42,080 --> 00:01:44,480 Speaker 2: they were saving a whole lot of money closing closing 39 00:01:44,560 --> 00:01:47,680 Speaker 2: rural branches. So this is something the banks want, so 40 00:01:47,680 --> 00:01:49,520 Speaker 2: you have to be very suspicious of it. They lobbied 41 00:01:49,640 --> 00:01:51,600 Speaker 2: very heavily for this. You've got to ask themselves what's 42 00:01:51,640 --> 00:01:54,160 Speaker 2: their motivation. I doubt their motivation is going to be 43 00:01:54,520 --> 00:01:56,880 Speaker 2: lower mortgages and higher term deposits. I think this is 44 00:01:57,280 --> 00:02:00,320 Speaker 2: a way of them seeing how they another way seeing 45 00:02:00,360 --> 00:02:03,840 Speaker 2: their profits, and in fact, the Reserve back themselves said, look, 46 00:02:04,000 --> 00:02:06,720 Speaker 2: these recommendations we're making, or you're asking us to make, 47 00:02:07,320 --> 00:02:10,880 Speaker 2: might save people maybe six one hundreds to fourteen one 48 00:02:10,960 --> 00:02:13,440 Speaker 2: hundreds of one percent in their mortgage rates. So it's 49 00:02:13,480 --> 00:02:15,760 Speaker 2: going to make a very very small difference at the margin, 50 00:02:15,919 --> 00:02:18,679 Speaker 2: if at all. I personally think the banks will take 51 00:02:18,720 --> 00:02:21,040 Speaker 2: this to profit. You know, they've already had very high 52 00:02:21,120 --> 00:02:24,799 Speaker 2: capital requirements recently, and what have they done. You've seen 53 00:02:24,840 --> 00:02:27,160 Speaker 2: their profits go up, so we'll imagine what they'll do 54 00:02:27,240 --> 00:02:29,960 Speaker 2: if their cost of doing business goes down. Do you 55 00:02:30,040 --> 00:02:31,919 Speaker 2: really trust them to give that back to the consumer? 56 00:02:33,000 --> 00:02:34,440 Speaker 2: I don't. Good. 57 00:02:34,880 --> 00:02:37,959 Speaker 1: Good point, Sam, Appreciate your time. Sam Stubbs, Simplicity Founder. 58 00:02:39,080 --> 00:02:42,040 Speaker 1: For more from Early Edition with Ryan Bridge, listen live 59 00:02:42,200 --> 00:02:45,200 Speaker 1: to news talks that'd be from five am weekdays, or 60 00:02:45,240 --> 00:02:47,160 Speaker 1: follow the podcast on iHeartRadio.