Corrupt APRA washes hands of house prices

APRA chairman Wayne Byers today in parliament:

“It’s not our job to solve house prices and its nor our job to solve house pricing affordability. The extent to which there is dynamic emerging of increased risk taking by the community … at this stage it’s not evident.”

“I would probably start by clarifying the way you paraphrased what the Reserve Bank has said. I think the bank has been very clear and we have been very clear in saying our job is not to set or seek to target house prices.”

“The last statement from the Council of Financial Regulators said quite clearly we are watching for a deterioration in lending standings and that’s not evident at this point, that is not to say it won’t emerge but it’s not obvious at this point. We are watching with our fellow regulators.”

“Its very dangerous to be mechanic in this way. If this metric reaches X per cent or Y level we would automatically swing into action, that’s not the way we do things.

“You need to overlay judgement and what else is happening … you need to look at a whole raft of things to consider and automatic mechanics are not something we favour.”

How can the Australian people trust this drivel? APRA’s judgment was shredded by the Hayne Royal Commission which was all about collapsed lending standards on Wayne Byer’s watch.

But, instead of him being unceremoniously sacked, Byers was reappointed for five years after the Hayne Royal Commission’s disastrous interim report and before it turned its eye on regulators. The re-appointment was slammed by all and sundry.

What is most irksome was that a re-appointment made in such circumstances tied Byers irrevocably to Treasurer Josh Frydenberg whose sole goal has been to reinflate house prices from the outset of his tenure.

To put it bluntly, it was a giant favour for which there was certain to be a quid pro quo. Today we are seeing it in APRA’s lassitude as house prices go to the moon all over again.

Wayne Byers should have been sacked. When the Hayne RC findings came down he should have resigned. Yet here he is again, blowing another bubble for his political masters.

When Labor wins the next election it should clarify APRA’s mission statement to include house prices, just as NZ has done. Even better it should shut it and hand prudential responsibility back to the RBA with the altered mandate.

APRA is a captured and ruinous failure.

David Llewellyn-Smith

Comments

  1. happy valleyMEMBER

    ” … hand prudential responsibility back to the RBA with the altered mandate.”

    Yeah, right – hand back responsibility to the equally reprehensible and prima facie torcher of the current housing price boom (not bubble). The financial regulators in this country are a joke.

    So, silly question, but what does APRA actually do to fill its days?

  2. David, will you now stop banging on about MP(LOL) — well intentioned of course — and focus on credit creation? MP tools by APRA were never meant to work and were there only to allow the RBA to escape the responsibility.

  3. happy valleyMEMBER

    Was Byers appearing before Tim Wilson’s committee and therefore pushing Timbo’s “house prices to the moon at all costs” buttons?

    Just as Captain Phil is keeping a close self-interest watch on Randwick mansion prices, Byers is presumably doing likewise for Pymble mansion prices?

  4. He’s right – APRA have no responsibility (nor indeed power) when it comes to house prices other than indirectly via banks’ prudential standards.

    • Indeed, nether the RBA or APRA have control of MOST of the factors affecting house prices. Holding them responsible while doing nothing is nothing but an act of deflection by the government.
      All they control is availability of credit, and given the government wants to remove responsible lending laws it is trying to remove a good chunk of that as well.

    • Absolutely, APRA is concerned with financial stability. That means making sure the banks don’t go broke,. Translation – it is there to protect Westpac from going broke by making sure the collateral (mortgages) on its balance sheet doesn’t fall in value.

  5. About 10 years ago, Bill English asked me whether NZ should split out macro-prudential and banking system policymaking from The Central Bank as Britain and Australia have. My advice was absolutely not. And here’s why….

      • Absolutely. We have the illusion of politicians having a responsibility to the people but the reality is that they’re generally a pretty motley crew and totally captured by the ministries they run, with the senior management in those departments all looking for the main chance to jump into a high paid role in corporate Australia. The system is totally captured by special interests and business.

  6. “….we are watching for a deterioration in lending standings and that’s not evident at this point, that is not to say it won’t emerge but it’s not obvious at this point. We are watching with our fellow regulators.”

    LOLOLOL.

    He does know that 70%+ of loans are originated by brokers who have been proven multiple times to lie on behalf of applicants – Liar loans are rampant because of this. Banks love the outsourcing (less internal costs) and only have to pay for successful applicants, they also love the arms length relationship because they can claim (honestly) that they didn’t know the application was full of BS.

    Welcome to Australia, the real estate narco state where even the regulators are ignoring their mandates to pump the house price juice.

    • Leverage to the max

      Guarantors mean First Home Parent Buyers. Students with a 200k deposit somehow buying 1.5 million houses near the uni to share house rent. Tax free as its their owner occupier.

      • innocent bystanderMEMBER

        well, no – in theory
        * they should be paying tax on the rental income
        * and the capital gains at resale should be payable (pro rata) since the property was income deriving.

  7. pfh007.comMEMBER

    “..How can the Australian people trust this drivel?..”

    Easy.

    Lots of sensible and otherwise normal people seemed to trust that modern science had removed the LOL from MP-LOL.

    APRA is only worried about banks going broke.

    That is not going to happen while house prices are going up up up.

    Plus it is not going to happen while the RBA stands ready to buy whatever smelly loans they turn into RMBS.

  8. APRA actually has a very important job. It’s a professional window dresser. Let things run in the interest of the banks it actually represents. When things go too far and it looks like the public sentiment might turn, put in some measures to look like its regulating to prevent any actual regulation from taking place. Once threat subsides go back to letting it run. It’s basically a pubilc relations and political front for the banks fully endorsed by the government and RBA in its crucial function. It’s not a do nothing, its a critical part of the whole scheme, just not the role people think it has.

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