What a crock from this Moron. Murray one of the key bankers who invented Low Doc
Lending Scam. Hockey promised a “roots and branch Inquiry into Banks.” Why do that if
“nothing wrong.” Libs were trying to gain power and knew of the myriad of bank
scandals. After Hockey gained power on the Bank Scandal issues he appointed Banker
Mate and ex Cartel member Murray to run the FSI Inquiry. Hockey then resigned in
favour of top NY Job. Libs, Hockey, Murray won…..Consumers lose.
Corrupt Murray specifically ignored submissions and potential witness to Sub Prime
Lending Scandal. If Murray had an ounce integrity he would have said “I have massive
conflict of interest and cannot accept appointment.”
So why are Liberals raising “bank bashing” stories everyday to attack Labor? Because Bill
Shorten is a big threat to their political existence.
David Murray: telling tales on the big bank bashers
The Australian 12:00am August 24, 2016
Janet Albrechtsen
Hallelujah. A bloke from business who talks straight about business and politics. Speaking to The Australian this week, David Murray has quite a lot to say about bank bashers and the less than pure motives that might explain Labor’s push for a royal commission.
The man who started out as a bank teller and ran the Commonwealth Bank for more than a decade doesn’t go easy on the banks either. The former head of the government’s Future Fund and chair of the recent Financial System Inquiry also has a few choice words for business in general and the Business Council of Australia in particular.
Murray has seen up close the growing populist drive in this country to bash banks. From Bill Shorten and the unions to Nick “where’s-the-camera” Xenophon, from sections of the media that have never understood the virtues of a profitable bank to the Greens’ open loathing of banks and business, bashing Australian banks is a national sport.
Such is the competition that even Malcolm Turnbull announced last month that the big banks would have to front an annual show trial at the house economics committee. It was reactive populist politics from a man who should understand more than most the real dangers of undermining the banking system.
Murray doesn’t deny the banks have a problem and points to non-monetary default clauses in farm loan contracts as completely one-sided. “They purport to make a loan what it isn’t,” he told The Australian.
“You can have a principal and interest loan so if you don’t repay the principal and interest when due, you’re in default. Or you can have a margin loan, like you can with securities, where if your lending margin falls below the contract percentage, you have to make good. Now what happens with these loans is that they are principal and interest loans but the non-monetary default clauses turn them into a margin loan as well.
“So if the value of your farmland falls below x per cent of your loan, or the loan falls below x per cent of the value of your farm, then that can put you in default even if you have been paying principal and interest when due.”
As head of the Financial System Inquiry Murray pleaded with the banks to deal with this, but says the credit departments of the banks “are like the worst of the cops” driving aggressive outcomes that hurt farmers who have paid every interest and principal payment.
Equally, Murray says there are cases where farmers with no legitimate claim have sought to blame banks when things go bad. When the bank takes action under a defaulting loan “the farmer goes straight to the media and starts a brawl. They cut off a sheep’s head or a pig’s head, put it on the stake in front of their house and say the bank did this (caused the farm failure)”.
Murray is dubious of Labor’s call for a royal commission because Labor pivots from one issue to the next, be it vertical integration and banks giving advice or lack of bank competition and “no one in the opposition is stating what the terms of reference would be, and exactly what the issues are that require a royal commission”.
Vertical integration is a clumsy phrase which means nothing more than the banks are keen to sell superannuation products and other investment-based advice to home loan customers. Murray says that if there are concerns, then remember that there are many non-bank players in the superannuation system. Moreover, both the Senate inquiry into the financial system and Murray’s own inquiry recommended significant changes to the provision of advice.
Murray says Labor’s push for a royal commission might be explained by an unspoken agenda by Labor and the unions to get the banks out of the super space, creating a bigger monopoly for union-backed industry funds.
Murray’s concern raises Labor’s own vertical integration issue which is far more sinister than anything happening in the banks. Over the past two years, industry super funds have paid more than $5.4 million to unions and the ACTU, with a handy portion flowing upstream to Labor. Construction industry fund CBUS directed $927,940 to the CFMEU, the AMWU, the CEPU and the ACTU in 2014-2015 as payment for union representatives who sit on the industry fund’s board. Smaller industry fund Maritime Super paid more than $347,000 to the MUA between 2013 and 2015. The flow of funds from industry super funds to Labor is a nice earner at a time of dwindling union membership fees.
Remember this vertical integration between Labor and industry funds next time unions and Labor question the need for better governance control of industry super funds. And when Labor, the unions and industry funds tout the low fees and high returns of industry funds, remember too the monopoly these funds enjoy as the stipulated super fund in enterprise agreements.
As Judith Sloan exposed in this newspaper in June, the recent Coles enterprise agreement nominated only one super fund, the union-affiliated industry super fund REST, whose union trustees are dominated by officials from the Shop, Distributive and Allied Employees Association.
Oddly, the Turnbull government has failed to question Labor’s impure motives. On the back foot again, the Prime Minister is talking about a banking tribunal in answer to Labor’s royal commission. Murray has some advice for the government on this too. The starting point is we need farmers and banks to have confidence in the system, “otherwise the banks will gradually withdraw from it, or they will limit what they do in that sector which wouldn’t be healthy because they are the cheapest costs of funds in that system”.
To achieve confidence in the system, Murray says a tribunal should have a fixed term, agree on admissible cases, hold hearings in camera “because if it’s a star chamber the parties, one or other, will run away from it” and be led by a judge. He warns that if the tribunal is an ongoing publicity hungry star chamber, banks will simply stiffen up their loan contracts.
Murray believes a tribunal may be useful if it settles the current cases and clears the air on what needs to change. But he also warns banks need to take a radically different approach to communicating publicly. “If they don’t start to educate the community about how the system works, then people will keep filling that vacuum,” he says.
Murray is equally scathing of the intransigence of business in explaining its role in the economy. The plethora of feel-good diversity programs and the faddish addiction to ESG (environmental and social governance) is a caper where corporates “pretend to be in society but they’re not actually doing their job” of advocating important economic reforms.
And the lobby group for business, the Business Council of Australia? “It has been ineffective for a long time,” says Murray who, as CBA boss, considered withdrawing the bank’s membership from the BCA more than once. “Neither sides of politics take [the BCA] very seriously,” he laments.
Comments last week by BCA’s outgoing chair Catherine Livingstone that the BCA doesn’t have to campaign because the integrity of its policy positions should speak for itself attracts particular derision from Murray. “It is completely naive,” he says, describing her legacy as chair of the BCA as “about as bad as her legacy as chair of Telstra”.
BCA chief executive Jennifer Westacott doesn’t attract the same ire. She has a good policy mind, he says, adding “she’s well-placed at the BCA given the brief the BCA seems to think it is operating under. But the problem is the brief. If you want a really good policy mind, get Jennifer. But the question is whether they are a policy body or a business lobby.”
“They should be a business lobby and that’s where Catherine’s remarks are staggering,” he says. “Can you imagine a union leader saying this?” Murray says in disbelief “As a lobbyist you get out there and fight.” Bank-bashing is on the rise because banks won’t defend themselves. A weak government sits with the slimmest of margins facing a savage Senate. Our corporate bosses would rather extol the virtues of same-sex marriage than growth policies. Limp BCA leaders hide under the covers and the BCA membership increasingly represents law and accounting firms who profit from over-regulation.
And we wonder why economic reform is relegated to the pages of a dusty old history book about the Hawke and Howard eras.