So says a humiliated Wayne Byers, via Banking Day:
A more frequent use of sanctions by APRA is on the cards, the regulator’s chair, Wayne Byres, told the banking royal commission yesterday.
An afternoon of questioning of Byres was centred on themes of remuneration and bank culture and APRA practices in challenging boards over executive pay.
This opened the way for some reflections of APRA’s prudential inquiry into Commonwealth Bank, released in May.
“Do you have a view as to whether there was a problem within the CBA supervision team [at APRA], with its willingness to act on gut feel and demonstrate tenacity in relation to CBA?” Michael Hodge, counsel assisting, asked Byres.
“I think the CBA supervision team demonstrated a great deal of tenacity,” Byres responded.
“There were a raft of issues that they were pursuing, and they were at loggerheads with CBA on a number of fronts. So I would never in any way question the tenacity of the supervision team. They were doing a good job.
“And the CBA inquiry, obviously, it went deeper and broader and so it found some extra things.
“But the starting hypotheses that the supervision team provided the panel as they went about their task were, I think, proved to be spot on.”
Byres later provided a further glimpse of internal thinking.
“We had the [John Laker led] panel meet the CBA board, and the three of them [on the panel] came in and talked about their reflections and their observations, not just about CBA.
“But as they had identified issues, they were, also alert to whether APRA had been aware of the issues, not aware of the issues. And so we talked through all of that. And generally they gave a good report card.
“But Dr Laker, the chair of the panel and my predecessor, finished the session with some parting words about just rallying the troops and the fact that we had had the inquiry shouldn’t be seen to be in any way a failing of APRA, and that it was really important that supervision teams pursued issues aggressively, even when the institution concerned was pushing back quite aggressively.”
I know we don’t do accountability Downunder but Mr Byers has already proven he is incapable of muscling-up to the banks. Given he still has his job, we can only conclude that the job description is not to do so.
This is why Labor must call a high level inquiry into the banking regulators themselves. The division of responsibilities for prudential oversight are clearly not working with ASIC and APRA at loggerheads over non-banks as one is tasked with oversight and the other with macroprudential tools. There is diffused responsibility between APRA the RBA over monetary policy. There is wildly inappropriate and dangerous secrecy embedded in every process. There is now two-speed regulation between banks and non-banks.
We literally no longer know what APRA’s goals are and credit markets are operating in the dark.
Time for major monetary reform.