Government contorts to protect banks from RC scrutiny

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Kelly O’Dwyer wrote at Sinofax today:

The government has also made it crystal clear that the banks have a social licence and need to be accountable to the Australian people.

This is why the Turnbull government recently announced that the major banks will be called to appear at least annually before the Parliament.

We want to ensure that they have an opportunity to transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community.

For the Labor Party to propose a royal commission into banks is reckless and ill-conceived.

Critically, a royal commission would go over old ground and would delay well-developed and important reforms, such as lifting the professional standards for advisers.

A royal commission would send the signal internationally that the government believes there are structural problems with our banking and financial system and could lead to significant repercussions for confidence, international investment, and our AAA credit rating.

With due respect, Finance Minister, how the Hell does bringing transparency hurt confidence, investment and the credit rating? It’s the opposite.

And just this last hour, from the AFR:

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The federal government has announced an inquiry into specific cases of mistreatment of small business customers by banks, in a bid to take the steam out of Labor’s call for a royal commission.

In doing so, it has killed off Labor’s push but raised the prospect of further regulation for the sector.

The government made the announcement minutes before Labor leader Bill Shorten used the start of the new Parliament to move a motion calling for a royal commission.

The motion was set to fail when Liberal-National MP George Christensen, who had been calling for a commission, spoke on behalf of the government and said he was satisfied with the measures taken.

So, right now we have:

  • an industry inquiry into bank remuneration structures pretending to be independent;
  • a global litigation over big bank BBSW manipulation playing out in New York courts;
  • a sort of slow motion prosecution of same at home via an inept ASIC;
  • and now a new government inquiry into mistreatment of small business.

Plus there are unresolved questions about the bank’s treatment of staff, treatment of whistleblowers, conduct at financial planning and insurance arms, the serial failure of the regulator and what on earth is going on at the secret cult we call APRA.

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There is no co-ordination in the investigation. No accountability in it. It can’t by definition map out the full landscape of the financial system and regulators to identify the weak spots driving misconduct and therefore can’t offer any constructive reform.

It’s another complete Turnbull Government balls-up which, frankly, seems unable to run a piss up in a brewery.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.