Ken Henry is too big to fail

From the AFR:

Former Federal Treasury secretary Ken Henry says he’s thriving on the cut and thrust of the corporate world and will be “decisive” as the new chairman of National Australia Bank.

“You don’t get rewarded for sitting on the fence,” Dr Henry said on Thursday.

NAB chairman Michael Chaney, who will step down after 10 years as chairman, said Dr Henry had very good “commercial nous” for someone who spent 27 years in the public service, and he surpassed many who had worked in the corporate sector for their entire career.

Does anyone else get the sense that Chaney is up-selling an apprentice? How do we know he has the “nous” to run a bank after a grand three years in business? I know if you’d put me in charge of NAB after that long I’d run have run it into the ground in six weeks.

Let’s face it, Ken Henry is not a commercial appointment. He’s a political economy appointment. With respect to Dr Henry, he is a fantastic chairman choice only because of his connections to government and regulators.

NAB shareholders should be thrilled. Their bank just got even more “too big to fail”. The next time Dr Henry speaks in public is he going to be representing the bank, the Henry Tax Review or the next round of Australian stimulus that he pioneered at Treasury?

When the rubber hits the road and NAB requires a bailout, who will Ken Henry call? And why is he allowed to make that call instead of ANZ or BHP or Cochlear or, for that matter, Macro Associates?

Ken Henry has become too big to fail and the Australian political economy is poorer for it.

Comments

    • More likely the latter although I do think risks of the former may even have a few of the more wily bulls looking over their shoulders now. Not sure if you can say any collapse is imminent until it really is obvious that sentiment is about to evaporate. Not quite there yet as ZIRP/QE is powerful dope for those over extended. Henry is a sensible political choice now that regulatory mechanisms like MP are being looked at to address the growing imbalances/risks.

  1. melbourneguy

    Agree! Smart move .

    Who else would you appoint as Chair of a loosely regulated oligopoly business but a prominent public servant?

  2. Ken was the perfect choice. He gets some time to learn the ropes before the banks get taken over by the government when they go splat.

    Ken thought nationalising the miners was an elegant solution. Think of his excitement now?

    Banana Republic boxes just keep getting ticked

    • Well they might have to go Swedish on them, 7 years late tho.

      Skippy…. orderly liquidation is a feature of capitalism imo.

      • I think they will skippy – there is no way with the current capital structures the banks survive a 30% drawdown in property values. The Swedes from memory kept the bondholders whole. I think that is wrong but I don’t know who owned the bonds – probably local insurers and pension plans?

        The APRA ‘bail in’ clauses in the subordinated ‘hybrid’ debt they all issued like crazy all of a sudden appear sage on behalf of the regulator. They know the equity is shot and they will be on the hook for the depositors – bailing out the highly ‘tax structured’ hybrids was perhaps a bridge too far.

        I’ve struggled to believe Australia took zero lessons from 2008 – perhaps someone deep in the belly of APRA too some insight. Shame they don’t work with Wayne and Luci.

      • @8~

        Even still… the more worrisome… is the size and hyper connectivity of the shadow sector due to regulatory problems. It is with this in mind that inaction or fiddling around the edges, due to nascent fears. and a forlorn hope that it would self wash in the end, may have reached its conclusion.

        Skippy…. Depends under garments and Buckets for Monsieur [!!!!!!]…

  3. “You don’t get rewarded for sitting on the fence,” Dr Henry said on Thursday.

    Wow… did he really mean to say that?

    • Tassie TomMEMBER

      I wonder if this is a dig at people sitting on the fence despite his advice to them?

  4. Crocodile Chuck

    “Let’s face it, Ken Henry is not a commercial appointment. He’s a political economy appointment. With respect to Dr Henry, he is a fantastic chairman choice only because of his connections to government and regulators.”

    Bullseye.

  5. Henry won’t last. His ego is bigger than the 4 pillars combined.

    Plus I’d say he’d be more a double agent working for the government as well as NAB.

  6. ” I know if you’d put me in charge of NAB after that long I’d run have run it into the ground in six weeks.”

    Yes! But you’d do it on purpose just to be rid of the damned thing!

  7. proofreadersMEMBER

    Ted Evans, a former Treasury Secretary many years ago, was Westpac Chairman for quite a few years until about two years ago.

    How did he go?

    Now, Westpac has as Chairman Lindsay Maxsted, apparently a chartered accountant, former liquidator and horse racing devotee – an interesting back story?

  8. Don’t underestimate the internal politics within the Board. The best candidate doesn’t always get the big chair. It comes down to who is friends with who, and who hasn’t got the decision makers offside.

  9. Capitalism at its best! Seriously, come to think of it, if I was working in a firm I would want their leadership to think ahead and make changes/recommendations to safegaurd the firm and its assets. I think thats what the outgoing chairman+board have done.
    Brilliant move, may not be brilliant for the tax-payer. But hang on, even the GubMint does not give a rat-arse to the tax-payer so why should a profit-making bank?

    • invest-magicMEMBER

      Corporatism is a form of fascism… certainly not capitalism!

      Being able to go to the govt for a bailout and a short-selling ban is not capitalism.

    • “…limit the size of the loans given out.”

      Oh, that’s far too sensible for us.

    • Mining BoganMEMBER

      Eh? You mean people will actually have to EARN the money they pay for a house?

      Never catch on.

  10. Sorry to hijack the thread.

    Does anyone know what time today the Senate Enquiry into Affordable Housing releases its report today?

    I have been anxiously waiting for this and hope its not delayed again.