Putting cricket to one side, it would be accurate to say that bank bashing is the nearest thing we have to a national sport in this country. So when the Commonwealth Bank came in for a kicking after it raised its variable home loan rate by 10 basis points or 0.1 percentage points earlier this week it wasn’t a big surprise.

But the commentariat have completely missed, or deliverately chosen to ignore, two key points. In the first instance, the Commonwealth Bank had been offering the lowest interest rate among the major lending institutions. The rate rise simply placed Commonwealth Bank alongside other major financial institutions as the equal lowest.

In the second instance, while it’s true that the RBA has lowered the overnight cash rate further relative to the variable mortgage rates offered by the banks, the costs of funds that the banks use to on lend to customers has also risen, resulting in a net loss for most part when compared with 18 months ago.

The outrage that was leveled at the banks could have been better harnessed by critiquing their refusal to reduce lending rates to small business, who are paying on average around 2.5% percentage points more than Australian home owners.

When seeking working capital or cash to invest, small business owners usually have little choice than to put on their best suit and tie and front up to their nearest branch and beg. Larger companies, such as those listed on the stockmarket, have other options to consider.

Listed companies have a set amount of shares on the market. When you add the number of shares on issue and multiply it by the value that has been placed on the share you reach a figure called market capitalization, a measure of a company’s value. When they need more money, they can choose to issue more shares, usually at a discount to their current value.

The problem with this strategy is that the upside in each share shrinks, it quite literally reduces the amount of profit that shareholders can participate in.

It’s much like when you pass the hat around the office for a colleagues going away gift. You might have come up with the idea of giving them tickets to Andre Rieu, but because everyone else’s name is on the card you have to share the credit (or perhaps the blame) with everyone else.

In Australia, the amount of shares issued this year is steadily approaching $55 billion. In the US, a record was reached in May where companies issued $US64 billion worth of shares in a single month. These figures are approaching the size of issues we saw in the first half of 2008 and also the six months preceding the tech bubble of 2000.

History has also shown us that following these periods of record issuance the market tends to underperform. So why is this happening? Why are companies passing the hat around in huge numbers to get funds that are so expensive?

Well, certainly some of them were so battered the financial crisis that they desperately need the cash to restore their balance sheets and the prevailling optimism has allowed them to do that. A quick look at the AREIT sector (Australian real estate investment trusts) shows that they alone have accounted for $14 billion of that capital raised this year as they sought to pay down debt. The second, and more frightening reason, is that the banks may not be able to lend these corporates the money when they need it the most.