The Green Party is accusing the Reserve Bank of misleading parliament over the massive profits Australian-owned banks are making in New Zealand.
New Reserve Bank governor Graeme Wheeler told Parliament's finance and expenditure select committee last month that bank profits were "about average or below" most other OECD economies.
However, Reserve Bank data obtained by the Greens shows New Zealand banks' pre-tax returns on assets from 2009 to 2011 make them the fifth most profitable banks in the OECD, with only Iceland, the Czech Republic, Singapore, and Australian banks more profitable.
Greens co-leader Russel Norman says Mr Wheeler misled Parliament, and his "complacency" about bank profitability is concerning.
"The governor was wrong to tell parliament that our foreign-owned banks are only making average, or below average, profits," he said.
"His job is to regulate our banks, not be their champion."
Earlier this year, the independent Bank for International Settlements found that Australasia's big four banks - Commonwealth Bank (owner of ASB), Westpac, ANZ and National Australia Bank (owner of BNZ) - were the most profitable in the developed world for 2010 and 2011.
In 2011, Australian banks made a pre-tax return of 1.19 percent on assets, compared with a global average of 0.36 percent.
The four banks are reported to have made a combined profit of nearly $3.5 billion in 2011/12 and Dr Norman says nearly all of it ended up in Australia.
Dr Norman says Mr Wheeler's mistake demonstrates why a board, rather than one person, should be responsible for the Reserve Bank's decisions.
"Boards make better decisions than individuals and are less prone to capture by the industry they regulate. This is why no other OECD country vests this much power in one person."
The Greens want a board, made up of wider economic sectors, to be in charge of the Reserve Bank's decisions, such as setting the official cash rate.