ScoMo’s banking reform paradox

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The banks must shaking in their boots as ScoMo turns punitive:

Treasurer Scott Morrison said he expects more high level resignations from the Commonwealth Bank following a damning report from the regulator into the culture of the bank in the wake of year’s money laundering scandal.

Mr Morrison said the report by the Australian Prudential Regulation Authority should serve as a wake-up call for executives and board members of other backs and financial service providers as well.

“We are taking action to ensure that this can’t happen again,” he said, citing the Banking Executive Accountability Regime legislation passed late last year.

This is what he said on the bank royal commission:

  • “populist whinge”
  • “I think there is the great risk that if the opposition continues to engage in this recklessness that the only product of that approach could be to undermine confidence in the banking and finance system”
  • “blank sheet of paper”
  • “There is nothing more than crass populism seeking to undermine confidence in the banking and financial system, which is key to jobs and growth in this country”
  • “Politics is doing damage to our banking and financial system, and we are taking control as a government to protect the strength of our banking system through a properly constituted inquiry on these terms of reference, rather than the alternatives present in other commission of inquiry proposals”

Let’s also recall that the Treasurer did not call the RC until the banks told him to. Remember as well the episode in which he was so mightily pissed that his media advisor was not appointed to the bank lobby that he punished the banks with a levy. There is also his professional history with the Property Council.

Then there’s his boss, the banker, via Mungo MacCallum at The Monthly (which I might add that I despise):

Since he became prime minster – long before, in fact – Turnbull has been a zealous defender and protector of the four pillars and everything they stand for. He opposed Labor’s early reforms to demand that financial institutions – principally the banks and their subsidiaries – behave honestly and decently. Turnbull claimed it would involve excessive regulation and red tape.

When it became obvious that honesty and decency were not always priorities, Turnbull effectively said that it didn’t really matter – there may have been a few rotten apples, but the orchard was still producing for Australia, a few tweaks would fix things. When the malfeasance continued and increased, Turnbull said that a friendly chat between the moguls and some politicians was all that was required to repair the culture.

But a serious inquiry, a royal commission? Out of the question: royal commissions were for the enemy – the unions, the traditional opponents of the banks since the 19th century. The banks were our mates and always have been – that’s why we’re giving them more than $13 billion in tax cuts. Government by the bankers, for the bankers, and, in Turnbull’s case, of the bankers.

Given the events of the last few weeks and those of many months to come, bankers’ buddy may not be the image our prime minister wants to take into a tight election. But it is the one he has made for himself, and any attempts to change it have proven futile.

Indeed, given the rest of his CV, it could be hard to make serious improvements. In other facets of his previous life Malcolm Turnbull was (and basically still is) a lawyer, not the most loved of professions. But this is arguably better than another of his early forays: he was a journalist.

Now that really is the pits. Perhaps he is wise to stick to banking after all, with all its fraud, theft, perjury and general bastardry.

We need to see more than a few resignations, ScoMo. We have a banking system running riot on a public guarantee that has corrupted everything that it does. We need structural reform to address a structural problem. That’s what a serious treasurer would do. Either the permanent revocation of the guarantee or something along the lines of a Tobin Tax that charges too-big-to-fail banks heavily enough that it slows their growth allowing smaller competitors to rebalance the financial system.

ScoMo is a walking banking paradox. Only by resigning could we trust him to restore banking.

About the author
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.