There’s a pattern emerging in the coalition campaign: discover greenhouse, pledge aborigines a place in the constitution, bloat social security spending and now threaten to nationalise the banks. Can compulsory unionism be far behind?

A week ago I used the banks line as a joke, but Peter Costello seems to have bought it. In an extraordinary and surprisingly under-reported part of his 7.30 Report performance last night, the federal treasurer was making the sort of noises more expected of Rex Connor or Ben Chifley as he bluntly told Australia’s banks to toe his interest rate line – or else:

KERRY O’BRIEN: OK, on interest rates, Mr Costello. We know the CPI figures come out tomorrow which may or may not put further upward pressure on interest rates, we’ll know that tomorrow. But in the meantime we read in the ‘Financial Review’ today the National Australia bank chief John Stewart is also chairman of the Australian Bankers Association, flagging that loan rates likely to be going up soon regardless of what the Reserve Bank does. He said “banks don’t want to be stick their heads above the parapet at the moment” but quote “once there is no election is looming prices will rise”.

I guess for some mortgage holders, there goes their tax cut, long before it arrives if that happens.

PETER COSTELLO: This is a different point. What… the point that’s being made there by John Stewart is this, that because of the subprime fallout in the United States, the cost of borrowing, particularly in the United States, has gone up.

What he’s saying is that those institutions that were borrowing in the United States and lending back in Australia are paying more for their money and therefore will want to put their interest rates up.

I’ve made it entirely clear there are no grounds, no grounds whatsoever, for any of the banks to use the US subprime fallout as a reason to put up home mortgages. There are no grounds and this government has made it entirely clear to the banks that they should not be doing it.

KERRY O’BRIEN: What’s your reaction to what Mr Stewart said today?

PETER COSTELLO: Well, my reaction is it hasn’t happened and it won’t happen whilst I’m the Treasurer.

KERRY O’BRIEN: Why not? How do you stop him?

PETER COSTELLO: Because there’s no grounds for doing it.

KERRY O’BRIEN: How do you stop the banks?

PETER COSTELLO: Think as Mr Stewart has said, the message that I’ve already given him has stopped him to date and the message will continue whilst we are in office. Now there’s no reason at all, Kerry, for them to move it.

Any statement vaguely like that from Rudd or Swan would have the Murdoch headline writers reaching for Armageddon type in Red-baiting fervour.

Here’s the Treasurer firstly denying the reality of banks’ higher cost of funds from the credit confidence crisis and then claiming he controls banks’ mortgage lending rates, only allowing them to rise in line with RBA official rates.

We are left to imagine what explicit or implied threats have been delivered to John Stewart and his peers to keep them in line – regulation of penalty fees would be obvious, perhaps a parliamentary inquiry into profit margins, a ban on off-shoring, mandating minimum account features and maximum account fees, any number of possibilities really.

Come to think of it, the Treasurer’s comfort with the banks’ legally dubious penalty fee gouge has been rather odd in an election year. Maybe he’s been keeping his side of the bargain.

If Kruddy is Mr Me Too, what are the Howard/Costello Siamese twins – the Ghosts of Labor Past?