The Australian this morning reports on a back down by Joe Hockey on his plans for a Wallis Inquiry should the Coalition win government:
REFORMS to banking competition could be pushed back to the second term of a Coalition government under plans to give the industry a respite from change in the wake of the global financial crisis.
Opposition Treasury spokesman Joe Hockey is promising to hold off on major reforms as executives warn against a rush to overhaul the sector after what they regard as heavy intervention from Canberra.
…”What we’re asking for is for them to leave us alone for a term, because we’ve had so much dropped on us,” one executive told The Australian.
The definition of “heavy intervention” might better be described as “heavy support” given the various unpaid guarantees and help that the banks are enjoying. We could, perhaps, see regulatory interventions in Sydney as a little more onerous given Basel III and the shift to higher standards for capital and liquidity, but these are also clearly being implemented as a gentleman’s pace. Given this, Hockey’s argument doesn’t make a lot of sense, especially this bit:
“It doesn’t mean we can go to sleep with the world changing beneath our feet,” he said. “But I want to give the industry some long-term guidance — and if you don’t have that, you get piecemeal legislation and regulation.”
He noted the Wallis inquiry took two terms of government to bear fruit, including the creation of the Australian Prudential Regulation Authority, which oversees banks, super funds and many other parts of the finance sector.
…”Until recommendations are adopted there will be no substantial change to industry regulation, so industry could get some respite,” Mr Hockey said.
“I think we need to provide a reasonable level of stability and certainty.”
One wonders how stability and certainty are weakened by a transparent inquiry. Indeed, the the piecemeal approach to policy and the moral suasion to keep interest rates low (known as bank bashing) is a direct result of NO inquiry to shift policy and public expectations. The Treasury clearly agrees:
The briefing, part of the Blue Book written in the event of a Coalition government, noted the vulnerability of borrowers and investors as a result of the crisis.
…”There is merit in establishing an inquiry that draws together the existing work streams and considers broader, more systemic issues,” it said.
“This includes considering the lessons from the GFC and the balance between the dual objectives of stability and safety, and competition and efficiency.”
Nicely put and exactly right as our own Son of Wallis competition illustrated in late 2010.
