Senate must reject criminal mortgage push

21 months is a long time in Australian politics.

In February 2019, the Kenneth Hayne released his final report from the banking royal commission which, as its first recommendation, directed the government to keep responsible lending rules:

This recommendation came after the Hayne royal commission documented extensive cases of criminal lending and behaviour, leaving Australia’s financial regulators humiliated and victims vindicated.

So why then is Treasurer Josh Frydenberg so hell bent on abolishing responsible lending rules and neutering corporate regulator ASIC?

Josh Frydenberg has declared war on the corporate regulator, saying the Australian Securities and Investments Commission needs to be overhauled so it conforms to the will of parliament…

“They must pursue their mandates in a manner that is consistent with the will of the parliament,” he said. “There need to be mechanisms to hold them to account”…

There has been a long-running dispute between Asic and Frydenberg over responsible lending rules and a backlash by the financial sector against tougher regulation proposed by the banking royal commission.

Asic’s decision to appeal a legal loss over responsible lending in what is known as the “wagyu and shiraz” case sparked outrage among government backbenchers and in September, after heavy lobbying from the banks, Frydenberg decided to abolish the rules.

The decision to axe responsible lending rules has all the hallmarks of a grubby deal made between the Morrison Government and its financial and property backers.

Neither of Australia’s financial regulators, ASIC and APRA, were consulted on the move. And mortgage victims and consumer groups are outraged.

The only shining light is that Labor and the Greens oppose axing responsible lending rules as do several Senate crossbenchers. They must unite to block the legislation.

The lessons of the Global Financial Crisis and the Hayne banking royal commission must not be so easily discarded.

Unconventional Economist
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Comments

    • happy valleyMEMBER

      He couldn’t give a rat’s as he’s now overseen the hugest-ever deficit after flirting with that silly balanced budget rubbish and realises nobody gives a stuff except about their hip pocket, taxpayers will pick up the tab and if and when that ever happens, he’ll have succeeded ScoMo as PM after the ScoMo decade of dynastic rule and he’ll be in to everything that opens and shuts as far as being PM goes? How good is Straya.

  1. Jumping jack flash

    Won’t. Can’t.
    Debt growth at the correct rate is vital. If this can-kick is going to work to restart the economy, then it is important that ALL barriers to debt growth are removed. The problem remains one of debt eligibility:

    How much debt are you eligible to own at whatever income?
    And what is the ponzi buy-in fee?

    The amount of debt problem has been effectively solved through 10 years of interest rate manipulation including this latest can-kick. I can borrow almost twice the amount of debt on 3/5ths of the income I was getting 10 years ago.

    But they will need to start looking at the antiquated and draconian need to obtain the minimum 5% ponzi buy-in fee.
    It is ridiculous and it is hampering the growth of the economy.

    When median house prices reach 10 million by 2050, a poor struggling first homebuyer (hopefully not still on 75K by then) is going to need to try and save up 500K for the buy-in.
    At 75K income, that will probably take around 50 years, by which time median houses will have doubled 7 times to over a billion dollars each, and he’ll need to save 64 million. At minimum!

    (we all hope that the can-kick starts inflating prices and then wages very soon!)

    Nevertheless, a change to these ancient rules needs to be made, and quickly! They are the banks’ rules, so they can easily change them. There is no risk while the debt grows at the correct rate to ensure there is no risk, only riches for all, just faster.

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