Swan appoints new APRA chairman as well

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In a probable challenge to Joe Hockey, who I suspect has not been consulted, Wayne Swan has not just reappointed Glenn Stevens today but a new Chairman of APRA as well and several new positions at the RBA:

Today I announce the reappointment of Mr Glenn Stevens as Governor of the Reserve Bank for a further three year term, as well as my intention to
recommend to the Administrator acting on behalf of the Governor-General that Mr Wayne Byres be appointed as Chair of the Australian Prudential Regulation Authority, ensuring a continuation of the world-class financial supervision that helped Australia avoid recession.

I congratulate Governor Stevens on his reappointment, which acknowledges his enormous contribution to Australia’s economic resilience through his
conduct of monetary policy, as well as his enduring focus on financial stability working together with our other key regulators.

Mr Byres is currently serving in the highly distinguished position of Secretary General to the Basel Committee on Banking Supervision, the global forum responsible for the G20 banking agenda. Mr Byres is the first Australian to ever be appointed to this prestigious role, and his appointment as APRA Chair has been strongly recommended by Dr John Laker AO who has led APRA for nearly a decade, as well as Governor Stevens and Treasury Secretary Dr Martin Parkinson PSM.

…Today I also announce the appointment of Ms Kathryn Fagg as a member of the Reserve Bank Board for a five year term from 7 May 2013. Ms Fagg has uniquely broad and diverse experience across a range of Australian industries, having worked in senior executive roles at Linfox, BlueScope Steel, ANZBank, McKinsey & Co and Esso Australia. I congratulate Ms Fagg on her appointment.

I acknowledge the retirement from the Reserve Bank Board of Ms Jillian Broadbent after 15 years and thank Ms Broadbent for her distinguished contribution to Australian monetary policy.

I have further appointed Mr Paul Costello and Ms Gina Cass-Gottlieb to the Payments System Board of the Reserve Bank for five-year terms from 15 July 2013. Mr Costello was previously the General Manager of the Future Fund and has extensive experience in the financial sector, currently serving as Chair of The Blackstone Group in Australia. Ms Cass-Gottlieb, a senior partner at Gilbert + Tobin, is a highly regarded competition lawyer with expertise in the Australian payment systems’ regulation and will make an important contribution to the Board’s work on promoting competition in the payments system.

Of all of these the appointment of Wayne Byers is the most important. Here is his Bio:

Wayne Byres was the Executive General Manager, Diversified Institutions Division within APRA, a position he held since September 2004. In this role, Wayne was responsible for the overseeing the prudential supervision of all of Australia’s large and complex financial conglomerates, as well as most foreign-owned financial institutions operating in Australia. Mr Byres joined APRA at its establishment in 1998 and has held various senior supervision and policy roles within the organisation. In these roles, he has been involved in the supervision, and development of regulatory policy, for all industries that APRA regulates: superannuation, insurance and banking. Prior to APRA, Mr Byres spent 13 years with the Reserve Bank of Australia, mostly in its bank supervision area, and also worked at the Bank of England in the United Kingdom. Mr Byres has served on number of domestic and international regulatory groups, including the Joint Forum and the Trans-Tasman Council on Banking Supervision. Over a number of years, he has also been the Australian representative on a number of Basel Committee on Banking Supervision’s committees, task forces and working groups.

More recently, Mr Byers was appointed the position of Secretary General to the Basel Committee on Banking Supervision, where he distinguished himself by a special focus on bringing light and consistency to the calculation of risk weighted assets, which is the secret at the heart of Australia’s big bank ability to stretch limited capital into an huge housing bubble.

So, early signs are good. I will dig around for more.

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Houses and Holes

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.

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Comments

  1. It will be interesting to see Joe’s response. Will he come out frothing from the mouth? He’ll just appear to be a sore loser if so. The Coalition is going to have cop these on the chin.

  2. ceteris paribus

    Perhaps Swanny is showing the integrity to walk out of office with his head held high.

    If so, that may foreshadow an interesting budget indeed, not bowing to the orchestra of M rags and big business.

    He will be following the grand tradition of Howard and Costello, who left their fair share of budgetary difficulties for Rudd and co.

    • ceteris paribus

      PS. I am not talking about blowing budget restraint. Swan does believe in that. I am talking about ending the super rorts, fair tax returns on mining profits etc

  3. Deus Forex Machina

    Regardless of what our putative treasurer says both appointments should be welcomed I reckon.

      • I suspect Swanny needs to refer to his ALP-authorised talking points to work out which side of bed to get out of…which shoe to put on first…whether to turn right or left when he (or his driver) leaves his house on the way to the office, etc. The nation is in fine hands.

        I would be slightly more comfortable if Treasurers of other nations were also highly dependent on their minders to think for them. I suspect they are to varying degrees, but I reckon our Swanny leads the pack in that regard.

  4. ceteris paribus

    PS. I am not talking about blowing budget restraint. Swan does not believe in that. I am talking about ending the super rorts, fair tax returns on mining profits etc

  5. Wouldn’t it be great if Swan did one thing right before he leaves office and shut down the price fixing Reserve Bank of Australia? I reckon Labor would have a chance at getting back in.

    Central banking days are numbered – the havoc they cause with debt and asset price bubbles is becoming hard to hide with the usual tactics like. Tick, tick, tick…..

  6. Dunno mirage…RBA is Teflon coated and nobody dares tell Australians the real truth about what has been done re debt and sale of the national assets.

      • I am more skeptical, he may not be the sharpest tool in the shed, but I reckon if you were a politician and you didn’t know who your boss was – your career would be over before it even started.

        They are all feeding at the credit creation ponzi scheme trough. APRA is another credit creation ponzi scheme debt merchant. These evil organisations have sprung up all around and are designed to destroy society and turn people into compliant debt serfs.

        The lack of morale compass in society today reflects a society which is run by bankers for bankers with the support of their puppets.

        Some big ideas that would reduce these evil powers:
        1. Make government/state/council debt illegal
        2. Abolish the Reserve Bank and any other regulator which provides a backstop for debt serf lending which will never be paid back. Let the banks operate in a free market – the ones with good credit cultire would be rewarded
        3. Have clawbacks of Senior bank staff salaries and bonuses for loans which go bad over the life of the loan
        4. Cap housing lending to a reasonable ratio of rent or personal income

        The above should go a long way to prevent bankers conquering our lands without a sword.

  7. APRA is paid by the banks it regulates. The regulator is largely irrelevant, because the private fractional reserve banking system is a Ponzi scheme.

    The spread between the average lending rate of banks to borrowers and the funding rate, mostly from deposits, is the annual probability of defaults from bad loans. The capital from the spread should be held in reserve for loan loss provision (in future). But instead it is paid out as “profit” to shareholders or retained as earnings for further balance sheet expansion.

    It is the balance sheet expansion which provides the means for writing down bad loans in previous periods and for the distribution of profits. Hence “profitability” and solvency of a bank require constant expansion of its balance sheet. The moment credit expansion slows, a bank would have trouble providing profits to shareholders or providing write-downs for bad loans.

    In a nutshell, capital for providing for bad loans has been regularly paid out as profits to shareholders. Unless the balance sheet of a bank constantly expands, the bank is in danger of insolvency and collapse, showing the essential characteristic of a Ponzi scheme. A private fractional reserve banking system running for profit is guaranteed to fail eventually.

    • I should add it explains why most banks in US, Europe, Japan and elsewhere are probably insolvent. These banks rely on bailouts, hiding losses off-balance sheet in OTC derivatives, market manipulation, high frequency trading and stealing from clients and depositors etc. to keep going.