Bravo Chris Joye who appears to be the only other writer with any balls or brains in the financial press today:
RBA governor Phil Lowe needs to pull his head in. It’s fine for him to tell the banks to loosen their lending standards, but he isn’t the one being sued by ASIC on the basis of an entirely fallacious interpretation of Labor’s 2009 responsible lending laws.
…The banks are justifiably assuming a worst-case scenario whereby ASIC and the royal commission’s “activist”, or non-literal, reading of the laws are somehow validated by the courts, even if this is a very low-probability contingency.
…It should not be forgotten here that it was Lowe’s RBA who bequeathed us the mother of all housing bubbles with its irresponsibly low cash rate, which Lowe is frustrated he cannot now raise because it would exacerbate the housing correction.
…Thank heavens for APRA, the world’s leading banking regulator, which, notwithstanding the RBA’s historic poo-pooing of the efficacy of “macro-prudential” constraints on credit creation, aggressively reined in lending back in December 2014. Initially it was the application of the 10 per cent speed limit on investment loan growth coupled with a minimum interest rate of 7 per cent when assessing a borrower’s servicing capacity. (If banks did modestly underestimate borrowers’ spending habits, they massively overestimated their repayment costs.)
…One of the least recognised policy triumphs in recent times has been APRA’s orderly deflation of the worst housing bubble ever recorded (based on the house-price-to-income and household-debt-to-income ratios).
Not exactly my own argument but close enough. Pull your head indeed, Phil Lowe.
