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THE NEWS WRAP: Big banks pass on the rate cut

Wednesday, 7 August 2013 | By Andrew Sadauskas

The Reserve Bank cut the official cash rate by 25 basis points to a record low of 2.5% yesterday, with Westpac cutting its advertised variable rate by 28 basis points to 5.98% in a bid to grab marketshare.


The rate cut was also passed on in full by the National Australia Bank, Commonwealth Bank and the Bank of Queensland, while ANZ will announce whether it’s cutting rates on Friday.


"The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values, and further effects can be expected over time," Reserve Bank governor Glenn Stevens says.


IBM joins NBN debate


IBM Australia managing director Andrew Stevens has waded into the debate over the national broadband network, praising both parties while favouring the ALP’s fibre-to-the-premises proposal.


"Both parties have come a long way (to develop policy) to deliver high-speed broadband. There's no doubt that the era of smart will be defined by this utility called high-speed broadband, so we just have to get there as fast as we can,” Stevens says.


“I just find there is a leader and a laggard and, in this particular case, the Coalition is the laggard. Forty per cent of people by 2025 are going to be partially or fully working from home. And $40 billion is not that much money; it's less than the value of parks and gardens in Australia.”


Department of Justice files lawsuits against Bank of America


The US Department of Justice has filed two civil lawsuits against the Bank of America, alleging $US850 million in fraud on investors of residential mortgage-backed securities at the beginning of the Global Financial Crisis.


However, Bank of America is denying any wrongdoing in its marketing of the loan pools, which date to January 2008.


"These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that,” Bank of America says in a statement.


"The loans in this pool performed better than loans with similar characteristics originated and securitised at the same time by other financial institutions. We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result."




The Dow Jones Industrial Average is down to 15518.74. The Aussie dollar is down to US 89.83 cents.