Shorten and ASIC's Medcraft wins, while banks can thank Westpac
CEO Brian Hartzer: accused the regulator of failing to understand the benchmark swap rate
by Joe Aston
Australia's banks aren't just in the frying pan, they're in the fire. How precisely did they get there?
Given the financial planning scandals uncovered by Fairfax's Adele Ferguson, implicating the Commonwealth Bank, Macquarie and National Australia Bank's wealth arm MLC, and then the CBA's life insurance business, nobody loves Australian banks right now (nor should they). Scene set.
Cue David Murray's Financial System Inquiry, hugely consequential for the industry. Murray wanted to fight the draconian wish list of the Australian Prudential Regulation Authority, but the Australian Bankers' Association, under the rotational leadership of Westpac (its responsible officers being chairman Gail Kelly and her infamously flat-footed chief lobbyist Carolyn McCann), failed to coordinate its peers and defend their turf, a failure that has cost the Big Four $40 billion in new capital holding requirements (remedied by jacking up its home loan interest rates on customers). Brian Hartzer replaced Kelly (but still flanked by McCann) at the ABA, and still didn't sway the Government in the 10 months it considered its recommendations.
In today's febrile political environment, with Bill Shorten understandably capitalising politically on the public's distrust of the banks, Westpac again provided the impetus for more self (and peer) immolation. Hartzer fronted its 199th birthday function last week. Firstly, who has a party for their 199th birthday? Once you're past 21, you stick to birthdays that end in zero.This non-event begot an industry-wide dressing down from Malcolm Turnbull. Then, accused of rigging the benchmark swap rate (as ANZ was last month), Hartzer said "ASIC has got it wrong" and suggested the regulator didn't understand "the complexity of strategies involved." Really.
ASIC Chairman Greg Medcraft hit back: "Someone with 30 years in banking, I think I understand how banks hedge. I also understand how banks potentially manipulate." A headline wrapped in 199 ribbons.