Australian banks

MacroBusiness covers Australian banks from the perspective of their macro-economic role, as political economy actors, as investment propositions and in terms of financial stability and capital adequacy. Australian banks have played a crucial role in inflating the Australian property bubble, exist within an utterly privileged position as “too big to fail” institutions and operate within a deeply distorted financial architecture that has Australian tax payers well and truly on the hook in the event of trouble. MacroBusiness seeks to define this role for investors as well as change it in the name of the Australian national interest.

9

Mortgage broker locusts swarm politicians

By Leith van Onselen The mortgage broker locusts continue to swarm politicians over the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system. The head of the country’s biggest retail mortgage broker, Aussie Home Loans chief James Symond, is mobilising brokers across Australia to lobby politicians to retain the

2

Voters trust Bowen over Frydenberg on Hayne

Via AFR: Many more voters trust Labor than the Coalition to implement the recommendations of the banking royal commission, according to a poll that also shows Josh Frydenberg and his rival Chris Bowen level-pegging as the nation’s preferred treasurer. The latest The Australian Financial Review-Ipsos poll, the first for this political year, shows almost half

14

Labor’s banker smash fires up ASIC

Do not expect any loosening of credit in this cycle, via AFR: The corporate regulator’s chief prosecutor, Daniel Crennan, QC, has warned the government has empowered him to pursue “extremely harsh civil penalties and criminal sanctions against banks, their executives and others” after the Senate passed tough new rules for white-collar offences. Corporate executives could

16

Consumer groups slam mortgage broker forum

By Leith van Onselen Consumer groups have lashed the mortgage broking industry for pretending to care about reform while vigorously lobbying politicians to protect their commissions. From SBS News: The consumer groups that were part of a forum with the mortgage-broking industry have quit en masse, citing a lack of progress and willingness to change.

14

ASIC prepares for HEM 2.0

Via AFR: The Australian Securities and Investments Commission (ASIC) has released updated guidance on how banks should verify customers living expenses before lending, to meet its expectations regarding the responsible lending laws. Lenders using the Household Expenditure Measurement (HEM) as a benchmark will need to apply a “reasonable buffer” reflecting the benchmark is too low.

57

Labor pushes for massive banker penalties

From SBS News: Bankers found guilty of serious corporate crimes could be jailed for up to 15 years and shonky corporations may face fines of up to $525 million, under legislation proposed by Labor. In the wake of the damning banking royal commission, the federal party wants to significantly increase penalties against financial institutions who

10

Mad Macquarie backs mortgage brokers

Well…of course it does. It doesn’t have any branches to distribute its mortgages, via The Australian: Macquarie chief Shemara Wikramanayake has backed the role mortgage brokers play for borrowers, acknowledging that the Hayne royal commission would prompt smaller banks to rethink distribution and more closely ­assess what customers would pay for loans. Commissioner Kenneth Hayne’s

19

I hope ANZ doesn’t believe its own economist

It shouldn’t because he’s talking nonsense. Via Bluenotes: The fall in Australian house prices in 2018 was the largest since the financial crisis. But the implications for the broader economy are more important. It’s even possible that weaker house prices and a weaker economy combine into a negative feedback loop (although in my view this is unlikely). “All previous periods of declining

24

Corrupt mortgage brokers launch absurd banking devils ads

This is a new low in political economy stupid: Mortgage brokers are a con. Their brand of competition is simply to destroy lending standards and fuel absurd property prices out of which they take massive and conflicted trailing commissions. UBS research found that brokers “a statistically significantly higher level of factual inaccuracy via the broker

32

Property Council PM backs mortgage broker locusts

By Leith van Onselen Prime Minister Scott Morrison gave a National Press Club address yesterday, where he defended the mortgage broking industry against the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system: “The mortgage brokers understand, with the cautious way we’ve responded to the report, that we understand

42

Alan Kohler: Let mortgage brokers die

By Leith van Onselen The mortgage broker locusts continue to swarm the Hayne Royal Commission’s recommendation to overhaul mortgage broking from a commission-based to a user-pays system. Mark Bouris – executive chairman of Yellow Brick Road – claims that the reforms will kill the mortgage broking industry, erode competition, and drive mortgage rates up: Buying

17

ASIC moves to outlaw the HEM

The most important economic finding of the Hayne Royal Commission is under the pump today, via Domain: The corporate regulator will ask the government to change mortgage rules that could make it harder and more expensive for borrowers to get a new home loan if it loses a landmark case against Westpac over responsible lending

10

NAB should avoid Mike Baird like the plague

Mike Baird appears to be firming as the favourite to replace Andrew Thorburn as NAB CEO, via UBS: Following the negative comments by Commissioner Hayne in the Royal Commission Final Report NAB announced the resignation of both the CEO Andrew Thorburn and Chairman Ken Henry. NAB announced that well regarded and highly experienced Phil Chronican

1

Hayne reverses bus over Professor Harper speed hump

Professor Ian Harper has had better weeks. First, as the Reserve Bank’s micro-economic patsy, he was thrown under the interest rate bus to set up Phil Lowe’s elegant back flip with pike: The clearest indicators of ongoing momentum of Australia’s economy are strong employment growth and a rapid shift in the federal budget toward surpluses,

52

NAB halted as executive changes arrive

At least we hope they’re resigning, via Bloomie: National Australia Bank Ltd. shares were halted from trading pending an announcement on leadership changes. The announcement, expected later Thursday, comes amid speculation Chief Executive Officer Andrew Thorburn and Chairman Ken Henry may be ousted after being sharply criticized by the financial industry misconduct inquiry, which questioned

22

Heat intensifies on disgraced NAB duo

Shareholders started it last year when they rejected Ken Henry’s remuneration plan by an astounding 88% majority. Hayne made it worse when he picked them out of a line-up: NAB also stands apart from the other three major banks. Having heard from both the CEO, Mr Thorburn, and the Chair, Dr Henry, I am not

10

Can rate cuts save house prices this time?

Another bank is blaming poor mortgage demand today for falling house prices. This time it is CBA, at the AFR: “The facts are: our approval rates are unchanged over the last 12 months; our time to get a decision is the same, or slightly better, once the application goes in; [and] we have seen average

3

Pre-nationalisation Genworth soars as it hoses away capital

Sometimes markets are bizarre. Take the case of mortgage insurer GMA today: There’s nothing overly interesting about its year end accounts though delinquencies are still rising. But check out its economic assumptions: This is a fading fiction. Unemployment is going to rise and wages fall. GMA’s delinquencies are going to rise too. But what matters

14

As Hayne fades, mortgage rate hikes appear

CBA’s half year result is out today and it reeks of coming mortgage rate hikes: Unexciting at best: falling revenue; falling ROE; falling NEM; rising bad debts 15bps or $577m (vs consensus 13bp) and NPLs 89bp (vs 85bp) NPAT boosted by cost cutting; dividend stalled and broker write downs ahead. Mortgage rate hikes are inevitable

124

ACTU: Henry, banks, Scummo colluded to shape Hayne

Is this why Justice Kenneth Hayne was so disgusted at the handover of his report? Via Sally McManus on Twitter: EXPOSED: ACTU uncovers secret letters between the big banks and Scott Morrison https://t.co/RSn0Uu6nLx — Sally McManus (@sallymcmanus) February 5, 2019 What on earth happened to the once lovable Ken Henry?