When things don’t go your way, sometimes as a commentator you put on a brave face and make the best of it for the sake of not being a damp squib. Today is not one of those days. From the AFR:
Former Commonwealth Bank of Australia chief executive David Murray will head the most significant inquiry into the financial system in almost two decades, focusing on minimising exposure to volatile international markets and further financial deregulation.
The inquiry, which will be overseen by a panel of business, finance and academic figures rather than regulators, comes five years after the global financial crisis and as Australia’s banks have become heavily reliant on borrowings from international markets rather than domestic deposits.
Prime Minister Tony Abbott announced on Wednesday night the inquiry would make recommendations to “foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness”.
“This should result in less costs, lower fees and greater efficiency in the allocation of capital,” he said.
“As part of our broader deregulation agenda, the government intends to reduce the regulatory burden on the financial services sector wherever the benefits to competition, efficiency, market stability or consumer protection are questionable.”
…Outlining draft terms of reference for the inquiry, which will be subject to a two-week consultation period, Mr Abbott said on Wednesday night the inquiry’s scope “will reflect the government’s desire for a ‘root and branch’ examination of the nation’s financial system”.
Root and branch? How is that even possible with this choice? As I wrote some months ago:
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’d 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 reason for having it is 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 be there presenting evidence not running it.
Even the AFR‘s banking sympathetic Andrew Cornell, who is leaving soon and so free to speak up, condemns the choice:
David Murray, an ex-banker and former chairman of the Future Fund with very definite ideas of his own about the financial system, is a poor choice to head Treasurer Joe Hockey’s financial system inquiry.
As several senior figures have said, including the chiefs of big banks, the credibility of any such major inquiry would be enhanced by not having someone with links to the industry.
The fix is in.
