In September MB was left flabbergasted when Treasurer Josh Frydenberg, out of nowhere, announced the government would abolish responsible lending rules.
This was a watershed moment in Australia’s transformation into the property equivalent of a narco state given this decision to abolish responsible lending laws directly contravened the very first recommendation from the Hayne Banking Royal Commission:
The Hayne Royal Commission came to this recommendation after it witnessed damning evidence of criminal lending and behaviour by Australia’s banks.
To add insult to injury, it was later revealed that Australia’s financial regulators, ASIC and APRA, were not consulted on the policy change:
Financial regulators weren’t asked for their assessment on the scrapping of responsible lending laws before the government’s surprise announcement, according to testimony, leaving the head of a leading regulator to learn about the controversial decision in media reports.
Commissioners from ASIC and APRA were questioned about the scrapping of responsible lending laws before a parliamentary committee last week, where they revealed they were given little-to-no notice and were not asked for their views on the decision…
“I’m the commissioner with responsibility for credit,” [ASIC’s Sean Hughes said], “and I was first advised when I read the Treasurer’s media statement through the media on the morning of 25 September.”
Thus, the Morrison Government’s decision to abolish responsible lending laws reeks of a sleazy deal struck with its financial and property backers, supported by the corrupted Treasury and RBA.
With this background in mind, it is interesting to read in The AFR that the prudential banking regulator ASIC could be called upon to rein in lending standards if the property market runs away in 2021:
“If house prices do take off, the RBA will work with APRA to reintroduce regulations that limit bank loans for the purpose of investing in housing and tighten further bank lending standards; measures that were so effective squashing house prices back in 2018,” said QIC chief economist Matthew Peter…
“We suspect any moves by APRA in the macro-prudential space are more likely an issue for 2022. Any policies used will depend on what aspects of housing credit growth are becoming uncomfortable for the official family,” said Macquarie Group senior economist Justin Fabo.
Fancy that. The Morrison Government first neuters our financial regulators by green-lighting irresponsible lending. Then these same regulators will be called upon to rein-in lending standards once the property market inflates due, in part, to the very same irresponsible lending.
Australia is facing a case of closing the regulatory gate long after the mortgage horse has already bolted.