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BFCSA: Hockey Inquiry into Banking slam dunked with Murray leading the evidence: van Onselen

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WE should be looking at David Murray as a witness to answer tough questions - not leading the evidence!

Hockey’s Financial Inquiry will pander to big banks

Posted by Unconventional Economist in Australian banksat 10:09am on January 13, 2014 | 

Macrobusiness

By Leith van Onselen

The AFR’s Chris Joye has delivered a detailed critique of the Coalition’s “Son of Wallis” Financial System Inquiry, which he claims will maintain the status quo and be friendly towards the big banks at the expense of taxpayers:

Anyone with exposure to Australia’s $450 billion banking sector should understand the threshold policy issues the inquiry will traverse, and start formulating probabilities on the outcomes. A careful analysis suggests it is unlikely to champion radical changes that will disrupt the status quo. This would be good news for investors in the majors, and bad news for everybody else – including their competitors and, more significantly, taxpayers…

The Reserve Bank of Australia and Treasury have historically been resistant to initiatives that disrupt the stability of the four oligopolists in the name of enhancing competition.

Both advised Kevin Rudd and Swan against assisting the liquidity of the securitised home loan market that smaller lenders relied on. Both also initially opposed the 2009 calls for a Son-of-Wallis inquiry as unnecessary. And both are fond of alleging a trade-off between competition and financial stability. (I’ve never received a response to the retort that a chair with eight legs is stronger than one with four.)

Only a conspiratorial mind would insinuate that the Treasury and RBA’s big-bank bias has anything to do with the fact that Treasury secretaries Ken Henry and Ted Evans and RBA governor Ian Macfarlane have all recently served on major bank boards.

Hockey’s appointment of the assertive former chief executive of CBA, David Murray, to run the inquiry was the first win for major bank investors. In 2012 Murray, who spent 39 years at CBA, told 7.30 Report , “I’m known to be a supporter of banks.”

Two of the remaining four panel members are also career bankers. Craig Dunn, the retiring boss of AMP, was previously head of AMP Bank. Carolyn Hewson, an investment banker with Schroders for 14 years, served for a decade as a director of Westpac (and on the board of AMP)…

Before the 2013 election the Rudd government decided to properly price the taxpayer guarantee of deposits, which was endorsed by the peak regulatory bodies. Murray appeared to criticise the move as akin to introducing a new tax.

“To impose a levy on banks . . . is the same as putting a new tax on the economy,” he said. “I am concerned that when we have a good, well-supervised banking system, we would need to have a [bank] levy that has the effect of being another tax.”

While Hockey privately says he thinks a levy should be applied, it is being shelved until Murray reviews it. It is hard to imagine he will advocate anything more punitive.

As far as I am concerned, the “Son of Wallis” Financial System Inquiry was tainted as soon as David Murray was named as chair.

As former head of the CBA, Murray is one of the people responsible for Australia’s current financial system, whereby banks have borrowed to the hilt from foreign bond holders to pump housing, requiring the Budget to remains strong in order to support (implicitly) the over-leveraged banking sector, leading to entrenched moral hazard.

It is, therefore, a bit rich to expect those responsible for the current banking system imbalances to reform them, and represents a conflict of interest.

As noted by Houses and Holes previously, Murray’s professed views on the causes of the GFC make the point. He blames the event squarely upon the governments, as if banks and the banking system didn’t do everything in its power to maximise short term gains at the expense of long term stability (without being too precise about it).

Mr Murray’s expertise and insider knowledge would be invaluable at the inquiry. But he should be there presenting evidence not running it.

With a former banking running the inquiry, supported by other bankers on the panel, the outcome looks like a forgone conclusion.

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  • doyla66
    doyla66 Monday, 13 January 2014

    In reality Australian Banking still has little or no incentive to change status quo

    I agree with Leith's comments.
    - 8 legs are better than 4, in matters of stability and risk management.
    - Banks & other lenders went hammer and tongs exploiting their markets any way they could get away with including fudging figures and putting unwary "borrowers" (and investors) at risk. This contributed to Bank created GFC (big drop in AU share portfolio values), UCCC, NCCP, ACL .... a sign that something was wrong/illegal Bankland pre-GFC. These law reforms weren't instituted to curtail the illegal/unfair practices of Govt, David Murray. More changes needed in pro-active consumer protection.
    - Just as the same mind that created the problem generally can't or won't solve the problem, the uber-conservative self-satisfied banking industry won't change the status quo unless they're hurting in some significant way.
    - Thus Murray should be giving evidence but NEVER chairing it!

    I recommend that more Australian borrowers and investors walk away from our Banks. This action, taken in large enough numbers, will make far more impact than words alone. The combination is most effective.
    I don't know anyone who has something nice to say about Australian Banks these days. Even conservatives are worried, uncomfortable and silent as the dirty washing of their Banks is publicly unraveled and displayed in MSM and SM.

  • doyla66
    doyla66 Monday, 13 January 2014

    Quiz time

    Q. Who are they most guilty?
    A They who write and amend rules to make their own actions legal

    Q What is the definition of a white lie (multi-choice)?
    a) ashamed of what you are doing or have done OR
    b) not wanting people to be warned before you let your mates further screw them?

  • doyla66
    doyla66 Monday, 13 January 2014

    Very good IMHO :)
    It's possible that the Banker/bureaucrat/pollie emotional intelligence range is limited to guilt and shame => cover ups, white lies, etc as under stress (e.g. after election euphoria) they will revert to "the usual" responses, leaving us to wonder who we voted for/got in the bargain. :( This could lead us to conclude that there is very little difference between Team A and Team B, even with the influence of a few "also rans". Reality could be that most people with high EQs generally don't stand for Reps election, or if they do and are elected they are unlikely to stay for long. Maybe they'd prefer to do something more satisfying and rewarding with their lives. The Senate is where we will find the pick of the political crop. Australia has a long way to go yet on the road to honest and mature Democracy.

  • doyla66
    doyla66 Monday, 13 January 2014

    CBA Murray's appointment: full scale hypocrisy? Or a public consumer retribution and shaming opportunity?

    The thing I found most gob smacking is that the Govt permitted this appointment to occur, in broad daylight, so to speak, in full view of the Australian public and the World media, in light of the pending and groaning ASIC Inquiry and long after Denise broke just the ice shavings of the mortgage fraud iceberg in 2012.
    Have the Govt no shame? Well may we ask! Such a blatant about face betrayal of family and Australian voters!! Has Joe Hockey no sense of his own political future and image? Is it a joke? What are they really planning, on the secret dark side? Maybe they're setting up David Murray, formerly of CBA one of the very worst Bankster mobs ever, so they, the Govt, can sit on their hands while we, the enlightened consumers, can make a very big mess of ex-CBA Murray and the rest of the illustrious Bankster panel for their longstanding, irresponsible, illegal and inhumane conduct which has escaped from the Bankster-Pollie cabal coverup machinery? Sounds like it: looks like it: and Libs dislike a public fuss that could result in egg on blue ties or messy hair!
    We're ready for their Bankster Inquiry, no matter what THEY think it's going to be. :D

  • doyla66
    doyla66 Monday, 13 January 2014

    ABC 123

    To give the benefit of doubt there are always 2 sides to every story but trying to figure this one out is a real doozy for if one searches for the meaning of ASIC s there are a few different meanings .
    1. ASIC s – our now so very confused regulatory body
    2. ASIC s - an application-specific integrated circuit designed for a particular use, rather than intended for general-purpose use. For example, a chip designed to run in a digital voice recorder is an ASIC
    3. ASIC s is the leading manufacturer of running shoes

  • doyla66
    doyla66 Monday, 13 January 2014

    Duped

    Leith is spot on It's a shame a complete waste of tax payers money. How can Joe hockey put an ex banker CEO (Murray) in as chair and the rest of the panel current or ex bankers in charge of an inquiry into the banks and banking system. These people are most likely the very cause of the problem we are facing now and that is banking bosses concocting the fraudulent evil scam to fleece every cent and property from the people who they thought would never do them wrong. What a pack of arse#####, all they have ever done in life would be feathering their own nest and gaining pleasure from ripping people off.
    These pricks can do and say what ever they like and set their own agenda so in other words this inquiry is bull sh##, waste of time and money. What in the hell is Joe Hockey thinking and did anyone else in parliament have a say in the election of the panel ? I would imagine the media will have a crack at this one.

  • doyla66
    doyla66 Tuesday, 14 January 2014

    Sorry Duped I dont think our media has the ball to take up serious issues

    I cant agree with you on this one Duped, you are absolutely on the money with much of what you say and have said in previous blogs but in this case I cant agree. Our very lack lustre media have sat on their hands for much of the issues raised in this whole fiasco for the last four or so years if they were fair dinkum in their pursuit of the truth they would have jumped on the appointment of David Murray the minute it was announced. Both sides of Government for too long have managed to pull the wool over the eyes of the general public and not allow the truth of our filthy Banks and the money laundering self regulating shifty ways be exposed. The unfortunate side affect of this denial by Government and the stifling of media is that when the levee breaks our entire economy will fall with it and yet our Government with a band aid patch up wont bring what is Basically a LEGAL MAFIA into line.
    All over the globe Governments with vision and future planning and structures in place have bought these money making cartels into line and got their economies back on track after they have been destroyed by greed and dishonesty portrayed by their BANKSTER Industries. Australia is again trailing the world and taking the good old approach of SHE'LL BE RIGHT MATE well let me tell you now the good old ways and the good old AUSTRALIANISM'S are long gone destroyed by political correctness and a tow the line mentality where speaking out against wrongs is frowned upon. We as a nation need to get our SPUNK back the thing that the rest of the world admired most about AUSSIES, the ability to speak out about what is wrong and to speak out in favour of what is right. We stand on ceremony now cow towing to every other nation and not having our own identity, but more wrongful than anything else I can think of we allow crooked acts to go unpunished. We need to get out of our heads that these Bankster organisations are our good old Banks that helped to raise a nation ------ THAT THEY ARE NOT, They are globalised profit making organisations (not owned any longer by Aussies) that need to be punished for BREAKING THE LAW.
    The stand for rights is not to be left up to our MEDIA it must be up to our elected members that we entrusted at the last election to do what needs to be done to make things right. The piss poor effort being displayed by our Treasurer elect Mr Hockey is a bloody disgrace, a slap in the face to victims of the Banking and Finance scam it can only be described as down right UN-AUSTRALIAN and throws mud in the face of the AUSTRALIAN WAY. My dear old Grandad would roll over in his grave, after fighting in two World Wars to gain freedom for all only to see elected Politicians roll over for profit in preference to working and toiling for the rights of his constituents. Long live the Ausssie way we don't back down and we never will so be prepared Joe and all your mates in Canberra for a tough 3 years if this is going to be your best effort because AUSSIES don't tolerate FOOLS.

  • doyla66
    doyla66 Tuesday, 14 January 2014

    Truth is the media is also under threat of job loss or worse due to they who own and control our media yet they do what they can. If one has not read Confessions of an Economic Hitman by John Perkins then that is most revealing! I console myself on those days by telling myself in the end good always outweighs evil yet am still staggered since I woke up a few months ago that it has now come to what it has since I fled the industry in disgust in 1989!

  • doyla66
    doyla66 Tuesday, 14 January 2014

    minutiae

    During the prelude to announcing the Banking Inquiry, the talk was about not concentrating on the " minutiae" eg consumers it was going to be about giving smaller banks equal opportunity to access capital ( securitization -taking our houses) as the big four ) if you look at the terms of reference you will see that we are " collateral damage " to use a U.S. military term

  • Denise
    Denise Tuesday, 14 January 2014

    Maybe, but it will be people power that change the system and the minutiae will be exulted. If few people have been scammed by Low Docs as the Government is counting on then you are right Tom, but if the rest of the aggrieved struggling to pay outrageous monthly payments despite low interest rates ie being gouged, come out of the woodwork and ask for their LAF, then people power becomes a fortunate by product when searching for truth. Very hard to cover up100,000 people when they all realise they have been dudded by the Major Banks and smaller non bank lenders alike (same model) if large numbers say ME TOO! The entire agenda is caught in an inglorious paradigym shift. If only 1200 people (our member count) then banks should simply settle and FOS stop being dishonest and COSL be demolished. Easy! Australians are not like Americans. [email protected]

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