Shocked. Shocked! Banks support criminal mortgage lending

Unsurprisingly, the Australian Banking Association (ABA) supports changes to responsible lending laws in its submission to an inquiry into the federal government’s proposed reforms.

The ABA claims the reforms “strike the right balance” between protecting consumers and ensuring that credit is available:

A submission by the industry’s peak lobby group, the Australian Banking Association, says the removal of barriers to accessing credit “strike the right balance between maintaining strong consumer protection while providing credit to the economy at a critical time”.

“Banks remain committed to the ongoing and efficient flow of credit to consumers and small businesses,” the ABA submission says.

“The reforms provide lenders with greater flexibility to make faster credit decisions.”

No doubt the liquor industry would support deregulation of liquor licensing rules too, as would the Tobacco industry with respect to cigarettes. This doesn’t mean that deregulation is in the public interest.

Remember that the very first recommendation of the Hayne Banking Royal Commission was to maintain responsible lending laws:

This came after the Royal Commission documented extensive cases of criminal lending and behaviour.

Consumer groups rightfully destroyed the proposal in a separate submission to the inquiry into the federal government’s proposed reforms:

The group, which includes the Consumer Action Law Centre, Choice, Financial Counselling Australia and Redfern Legal Centre, says it normally provides constructive feedback in policy consultations.

“Unfortunately, we are unable to say anything positive about the government’s plans,” it says.

“The repeal of responsible lending obligations for almost all forms of consumer credit is the most shortsighted, poorly thought-out policy proposed by a government in credit or financial services in recent memory.

“The draft materials are fundamentally defective, and no number of amendments can solve this.”

The Morrison Government’s decision to abolish responsible lending rules reeks of a grubby deal with 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 justifiably outraged.

Labor, The Greens and the Senate cross-bench must block the legislation.

The lessons from the Global Financial Crisis and Hayne Banking Royal Commission must not be forgotten so quickly.

Unconventional Economist
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  1. happy valleyMEMBER

    I basically consider every cent I have on deposit with any Strayan bank as high risk and defacto equity, as the gubmint deposit guarantee is worthless, come next Monday deposit bail-in will be likely legitimised when Malcolm Roberts’ deposit bail-in exclusion bill is likely voted down by the Senate and the bank lending lunatic asylum will soon reopen for business and Josh Rainbowberg will be ordering banks to lend with their ears pinned back. Rainbowberg must surely rate as one of the most questionable treasurers Straya has ever had?

  2. Holiday In ScomodiaMEMBER

    I signed on the Debt Disaster letter that is doing the rounds and wrote my (Labor) local member a while back. After talking to others who did the same, looks like we all received the same wussy form letter response from the Labor members referring to importance of access to credit, the economy etc etc… not sure if they have sniffed the wind since and now more opposed to this but I expect this latest dumb idea to get waived through… any quiet Friday nights/big sports fixtures coming up? Need a time to announce these changes that the plebs wont notice…

  3. Anecdata from a data set of one…

    Getting finance (recently bought a house) was fairly difficult. Lots of supporting documents to prove expenditure, conditions on credit card limit – needed to drop down significantly and pay off car loan. 75% LVR, borrowing 4X annual. Took 5.5 weeks to get finance across the line. Sort of worked out as rates were dropped so 1.99% fixed for 3 years.

    So haven’t really experienced relaxed lending, maybe it hadn’t trickled through yet?

    • Your problem is that you didn’t lie and just write up your own supporting evidence. Have a bit more of a go next time will ya.

    • Jumping jack flash

      Can confirm that there are a lot of hoops to jump through regarding pre-approval (which is by no means indicative of success) but the volume of credit is what I expected. I can borrow a little under twice as much debt on approximately 12% less income than what I was earning in 2012.

      The problem is the 5% ponzi buy-in fee.
      5% of a million is 50K which is a serious amount of money to try and save up on a median income in a reasonable amount of time. It is probably around 10 years’ worth of sensible savings out of a median income.
      This archaic requirement is seriously hindering the growth of the economy of debt!

      By 2050 when median house prices are hovering around 10 million each, the ponzi buy-in will be 500K. If the debt economy doesn’t take off between then and now and produce some serious inflation, then just try saving up 500K using a median income in under 50 years!

    • happy valleyMEMBER

      The LNPers such as PB Wilson are raving about how good it is and that all that counts in a benevolent dictatorship?

  4. Jumping jack flash

    I agree, something must be done, and done quickly. The people need debt, lots of it! Unfathomably huge piles of debt that nobody in their right mind should ever need to take on.

    Debt is absolutely essential to purchase a house. There is definitely no alternative. Its not like anyone can save up the total price of a house any more from scratch using a reasonable percentage of a median income over a reasonable amount of time, while still maintaining a reasonable standard of living.

    All barriers to debt must be broken down otherwise it is simply unfair. Why should any Quiet Australian wanting to have a go miss out because they aren’t eligible for the correct amounts of debt that are required for them to realise their dream?

  5. working class hamMEMBER

    Bought a PPOR this month. Weighed up the options of waiting for a downturn, or dealing with all my savings being swallowed by what ever hair brain schemes the Govt comes up with next.
    Anecdata 5x income, pre approval in 4 days.