Labour, the Greens and Progressive leader Jim Anderton announced yesterday they would hold the equivalent of a parliamentary select committee inquiry into bank profits.
The announcement was welcomed by bank workers' union, Finsec, the Council of Trade Unions and the Productive Economy Council, which urged an expansion of the inquiry into the behaviour and policies of the Australian-owned banks operating in New Zealand.
Finance Minister Bill English did not think the parties' inquiry would have much value.
"Look, it's not a banking inquiry, it's a meeting of the Opposition. This discussion is more about politics than it is about the economy."
The Reserve Bank and the finance and expenditure committee had gathered all the relevant information, so the issues were already clear.
"No amount of political grandstanding by the Opposition will provide solutions," Mr English told the Otago Daily Times.
Home loan customers concerned about higher floating rates at the margins could choose to switch to six or 12-month fixed rates, which were currently lower, Mr English said.
His comments came as United States President Barack Obama said Wall Street banks had failed to show remorse for the "wild risks" that triggered a financial meltdown and helped to push the United States into recession.
Mr Obama unveiled a sweeping regulatory overhaul in June aimed at improving government oversight of banks and markets to avert a repeat of the financial crisis.
"The problem that I've seen, at least, is you don't get a sense that folks on Wall Street feel any remorse for taking all these risks. You don't get a sense that there's been a change of culture and behaviour as a consequence of what has happened. That's why the financial regulatory reform proposals that we put forward are so important," he said in an interview with PBS television.
Labour finance spokesman David Cunliffe said New Zealanders believed they were paying higher rates than they should be paying. Banks believed interest costs were justified.
"The facts should be put on the table fairly and openly so that people can see whether they are receiving a fair deal," he said.
The inquiry would have a similar primary focus as that originally agreed by the select committee, which had then decided not to proceed, he said. It would be an inquiry into the relationship between the official cash rate and short-term interest rates.
Green co-leader Russel Norman said the recent Reserve Bank "Report on Funding Costs and Margins" highlighted growing bank spreads, especially for floating rate mortgages.
"It is time to stop playing cat-and-mouse with banks. We need answers. As law and policy makers, we don't have the information to assess what's really happening with bank profitability, lending practice or their exposure to risk. This inquiry will attempt to break that dangerous impasse."
Finsec general secretary Andrew Casidy said that for months, Finsec had been asking whether or not the banks were doing everything they could to assist working New Zealanders cope with the impact of the global financial crisis.
Uncertainty remained over whether the banks had been passing on all the reductions in interest rates to mortgage holders, business borrowers and credit card users.
The Government needed to keep an open mind and be prepared to act on the findings of the inquiry, he said.
Opting out was not good enough, as that was siding with the wealthiest corporates rather than with ordinary New Zealanders, Mr Casidy said.
