Bank man warns ‘mavericks’
PA S-J Wellington The Reserve Bank Governor. Mr D. L. Wilks last evening criticised finance . houses for continuing to al- . low their lending levels to . soar V Well above, those of other institutions. He suggested that the finance industry had been punished by controls because of < maverick behaviour by some finance companies. . ••• • ' ’ ■ . ' Mr.Wilks; told Finance Houses Association members in Wellington .that the high ; lending levels made it difficult for the bank to maintain the co-operation of other financial to make the . .. . work; smoothly-dnd to slow overall ‘credit growth. Credit . growth of most in-
stitutions had slowed significantly over the past six or seven months, apart from finance houses. At the end of June, the lending of finance . houses was still growing by .almost 30 per cent a year, and the large finance companies by more than 32 per cent. - ; “You're getting to be big boys now. Society does not take kindly to 28-year-olds acting like eight-year-olds. -It tends to adopt the be-your-age br go-to-jail'syndrome. Any good headmaster knows tha't to punish a maverick br two you must sometimes punish a whole class, many of whom do not deserve it,” he said.Mr .Wilks referred to Mr ;t.Muldobn's Budget comments about inflation being well ahead of New Zealand's main -. trading, partners.-.
“The lending behaviour of many financial institutions in 1982 was short-sighted and v irresponsible.” Mr Wilks said it was a large contributor to increased inflation, particularly encouraging surging property, prices. It was also primarily responsible for the introduction of the financial services regulations last November, as well as contri- - buting to the introduction of the freeze in-June. “Credit growth must continue to slow in 1982-1983 if monetary policy is to support; the aim of the freeze add particularly, if monetary conditions are to be suitable for the freeze to be lifted next year.” ' Mr MuldOon had said in the Budget that he intended freeing, monetary controls - once inflation had been re-' duced to more tolerable
levels. Mr Wilks said finance ; companies were now a main force and had to recognise their responsibilities. Lending. totalling $l9OO million, was one third of the ReserveBanks' $5700 million, compared with 15.8 per cent in . 1975. . /He disagreed with an apparently widespread view that because inflation was viewed in monetary terms, most people could believe it had nothing to do with : “I prefer to view inflation as the consequence of New Zealanders generally demanding larger increases in incomes than productivity gains justify and larger increases in Governmerit services than they are prepared to pay' for- by way of taxation. . ; 7 '
. “This view puts the blame for our high inflation where I believe it is appropriate —
on almost everyone, becuase of their behaviour and demands, not just on the Government or the Reserve Bank.” , • . . . If the freeze was to achieve its aim of breaking or at least moderating inflationary expectations. it must change people's income-set-ting behaviour, not just frustrate old habits for a period. Despite a slowing in inflation bond sales, a significant Srtion of the $1879 ■n Budget deficit should be financed by public debt sales to the private “nonfinancial” sector. “So the stance of fiscal policy in 1982-83 can be seen as reasonably consistent with the aims of the freeze,” Mr Wilks said.
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/CHP19820810.2.48
Bibliographic details
Press, 10 August 1982, Page 6
Word Count
542Bank man warns ‘mavericks’ Press, 10 August 1982, Page 6
Using This Item
Stuff Ltd is the copyright owner for the Press. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.
Copyright in all Footrot Flats cartoons is owned by Diogenes Designs Ltd. The National Library has been granted permission to digitise these cartoons and make them available online as part of this digitised version of the Press. You can search, browse, and print Footrot Flats cartoons for research and personal study only. Permission must be obtained from Diogenes Designs Ltd for any other use.
Acknowledgements
This newspaper was digitised in partnership with Christchurch City Libraries.