As expected, former Future Fund chairman and CBA CEO, David Murray, and Ian Harper have put his hand up to join or lead the new Government’s promised financial system inquiry. From the AFR:
David Murray, a former CBA boss and Future Fund chairman, and professor Ian Harper, a panel member of the 1997 Wallis inquiry into the financial sector, told The Australian Financial Review they would consider participating in, or even leading, the inquiry if asked by the new government…
Mr Murray said a review should weigh up the appropriateness of new international regulations imposed on banks since the global financial crisis…
“We need to understand if that is appropriate for the longer term and the best structure. The other issue is the shape of the Australian economy itself. Because it relies so much on external finance, we want to make sure that the financial system is harmonious with the economy.”
As explained by Houses & Holes last week, we believe that David Murray (or any other ex-banker for that matter) would be a poor choice to join the new inquiry:
Most of David Murray’s public statements since leaving the CBA have made plenty of sense. He has for the most part attacked Australia’s current account deficit and has been harsh on banks’ dependence upon offshore borrowing. He has shown himself to be frank and fearless. In this sense he’s be a good choice.
But I’d still have concerns about David Murray heading any Wallis Inquiry. Frankly put, no banker should get the job. Part of the resona for having it to restore faith in the system and that can hardly be done by those who broke it. And as former head of CBA – at the helm throughout the great globalisation of banking that transpired across the millennium – David Murray oversaw the creation of many of the problems that this inquiry would be designed to address. While I have no doubt about the man’s integrity, this is a simple conflict of interest.
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 there presenting evidence not running it.
If incoming Treasurer, Joe Hockey, truly wants to gain a frank and honest assessment of Australia’s financial system, and develop a sustainable framework for the future, he needs to fill the panel with commissioners that are unencumbered with the past and free of conflicts. Otherwise, we are likely to get more of the same.
