The Bank of Israel, we learned yesterday, will be demanding that Israel's banks advise their customers of every fee they are charged.
Hats off to the Supervisor of Banks, for his courageous initiative. But while dusting off its regulations on admission of commissions, maybe the central bank should look at some more necessary disclosures:
1. Why did Bank Leumi, followed by Bank Hapoalim, decide to raise fees by 5% to 7% in recent weeks?
Was their move triggered by an economic boom? Or a surge in demand for banking assistance? Perchance it reflects a wondrous change for the better in the quality of customer service?
Or, perhaps, the banks' move to increase commissions in a time of grave recession manifests the duopolistic structure of Israel's banking establishment, which allows the banks to charge through the nose without provoking a peep from their customers. When it comes to households, the banks see practically rigid demand for many services. And when demand is rigid, raising fees automatically increases the bank's profits.
2. Why did the banks think this the right time to lift their commissions so steeply? Did their costs rise?
Were their commissions simply very low until now?
Or, did the move follow the hammering they took from nonperforming loans amounting to billions of dollars, lent for leveraged buyouts by voracious tycoons and overexcited corporations?
Could the banks possibly be raising their commissions on services to households because they are the sole source of profits for the banks, over time? Could it be that services to businesses, which the banks have madly courted in recent years, end in pitiful returns on capital?
3. Did the Bank of Israel allow the banks to lift their commissions at will, because it believes in the free market, and in nonintervention?
Does the central bank believe that the banks should be left to manage their affairs as they please?
Or, does the central bank's silence reflect its fear and paralysis after its horrendous performance in the Trade Bank affair, where grand larceny by a lowly clerk led to its collapse into rubble? Is it quaking at the thought of other banks sliding into the dust?
Could the central bank support increased commissions because it has stopped worrying about interbank competition, and is occupied solely with ensuring their soundness?
4. Why is strengthening the banks' foundations by raising commissions for households the best way to deal with their financial stability?
Shouldn't the Bank of Israel have intervened, in time, when the banks were gaily lavishing tremendous sums of credit on the business sector? The spree is most amusingly epitomized by the deal five years ago, in which the Dankners' bought control of Bank Hapoalim together with the Arison group - using money borrowed from Bank Leumi, and not a red cent of their own money.
5. Will regulation of the banks, after the collapse of Trade Bank, use the model that evolved for the communications sector?
Namely, first you let the major players get totally snarled up in tremendous loans, and shift to huge losses, because that is what "free markets" are all about.
Then, once they are half-drowned in red ink, the regulator comes along and bails everyone out, for the sake of subscribers and customers of course, because the big cheeses are in trouble, aren't they, and it's the regulator who should be "flexible" at times of trouble.
6. Is rising prices in all Israel's cartel-ridden sectors not a kind of back-door tax on households?
The government has been raising taxes in order to finance its inflated spending, which is a hangover from the boom times. When it quacks like a tax and walks like a tax, what is it? Just like the government, Israel's cartels and duopolies are imposing higher taxes on households, to finance their managerial mistakes from the seven fat years.