Day 334: 'Keep the books open'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 334.
Today in summary: bankers and the government talk across eachother on the role of regulation and its impact on small business lending; union heavyweights disagree on the need for financial adviser qualifications; and the odds shorten on which big bank chairman will appear before Commissioner Hayne in coming weeks.
-- Charis
Current banker panic level: 😨😨😨
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Over the weekend, Treasurer Josh Frydenberg called on Australian banks to “keep open the books” amid a slowdown in housing credit growth. There are fears the Hayne royal commission will lead to a credit crunch as banks tighten up their lending requirements to satisfy nervous regulators. Frydenberg told the AFR:
“I would encourage the banks when it comes to lending, in particular for small business, make sure you get the balance right, keep the books open and don't lose sight of the broader public good.
"We all know the royal commission has brought into focus the issues of responsible lending and examples of misconduct. While both issues are important, I do see them to some extent as separate, with different responses required."
Bankers from NAB and Westpac responded by saying they were open for business. The industry continues to argue against more stringent lending requirements for small business customers, ahead of any recommendations from Commissioner Hayne.
AFRAustralia’s Finance Sector Union is reportedly calling on members of parliament to block new laws including a code of ethics and education standards for financial advisors. The Union’s submission responding to the Hayne royal commission interim report argues against breaking up the banks, a view at odds with the ACTU, which is campaigning for retail banks to be banned from owning superannuation funds.
The AustralianNAB’s Ken Henry and Commonwealth Bank’s Catherine Livingstone are expected to be called as witnesses in the Hayne royal commissions final weeks of hearings, according to The Australian. Already confirmed are the big four bank CEOs, along with Macquarie Group’s Nicholas Moore and AMP’s Mike Wilkins.
The Australian
Today’s burn prize: the Reserve Bank of Australia
🔥🔥🔥
“Recall that behind the scenes the RBA is working with Treasury to prevent any change to the corrupt banking regime exposed by the Hayne Royal Commission upon which its favourite property bubble depends.”
Macrobusiness commentator Houses and Holes isn’t impressed by the regulation pushback from people worried about a credit crunch.
The Commentariat
The mortgage broking sector is the real dark heart of Australian banking writes the AFR’s James Frost.
“For a long time, the financial advice arms of the banks had been viewed as the sector's problem child. But as the royal commission revealed, the grubby antics of a few hundred dodgy financial planners was nothing compared to what was going on in the bank's true profit centres.”
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