Last year, The Australian newspaper published some great articles questioning the commonly held view that Australia’s banking sector is conservative.
In April 2012, The Australian uncovered how Australia’s largest banks were being forced to forgive mortgage debts of borrowers granted loans based on falsified or fraudulent information supplied by mortgage brokers.
Then in June 2012, The Australian followed-up with further reports (here and here) of Australian sub-prime lending, and the battle playing-out between unscrupulous lenders and borrowers.
In August 2012, The Australian reported on instances where the banks had been enticing elderly Australians into Ponzi-like mortgages that they had no way of repaying, as well as provided detailed coverage on the Senate committee into banking, where evidence of widespread improper lending practices were revealed. The Australian also revealed that lenders had been refusing to provide low-doc borrowers with copies of their applications, while other lenders had told borrowers that such documents had been destroyed.
Finally, in September 2012, The Australian revealed how higher-risk low-doc lending was making a comeback, as well as data suggesting that sub-prime lending was more widespread than previously thought.
Now it seems the baton has passed to Fairfax, which has published some thought-provoking articles over the past few days questioning the prevalence of sub-prime lending in Australia.
Over the weekend, Michael West published a ripper article revealing that Australia’s major banks had provided large mortgages to Australians aged over 90. And today, West has published a detailed article suggesting that Australia’s banks have systematically engaged in sub-prime lending via their broker channels, as well as widespread failures by ASIC to investigate these claims:
…emails which are being released – sent from 30 banks and other lenders into the 20,000-strong mortgage broker ‘channel’ – prove the banks are calling the shots. The emails examined by BusinessDay suggest some banks orchestrated the reckless fall in lending standards as the credit boom approached its crescendo in 2007.
One after another, they show business development managers working for banks telling mortgage brokers what to do, from the “ABNs for a day” lurk for small business people, to providing reams of detailed advice on figures to enter, and figures to ignore, as inputs in the internal computer system of the banks which determined the loan approval…
Officially, the regulators are yet to accept that any of this constitutes evidence of an investigation into the banks – only the brokers have faced scrutiny…
According to another article by West, published today, consumer rights campaigner, Denise Brailey, will publically release 2500 private emails and bank documents exposing what she describes as ”Australia’s sub-prime crisis”. Hopefully public pressure will force Australia’s regulators to conduct a thorough investigation of such activities.
