The COVID-19 crisis has apparently trumped our memory of previous financial crises, what caused them, and the tortuous process of legislating to fix the long-term damage.
That could be your conclusion after reading the extraordinary speech that pumped-up Treasurer Josh Frydenberg is delivering to yet another Australian Financial Review talkfest today, the aptly named Banking & Wealth Summit.
According to the AFR take on the treasurer’s speech, he will “reprimand” — yes, reprimand — “the major financial regulators for hampering the recovery from the COVID-induced recession with overzealous intervention in policymaking”.
And if that tough talking wasn’t enough the dire warnings are ramped up with these ominous words: “He views some of their actions as an attempt to usurp the role of parliament and tie lenders in red tape.”
In other words, after years of parliament being forced to push regulators to better protect everyone he now blames them for doing what the public — then belatedly politicians — had been clamouring for them to do. Silly us for thinking the regulators were too soft.
On the surface it seems rather extraordinarily provocative — but that might be only if you actually put it into context.
Like reading another story in the Nine papers this morning under the headline “Time of reckoning” with the Australian Bankers Association’s dire warning of the problems ahead as loan deferrals and government stimulus packages end.
So on one hand the banks are warning us that next year there will almost certainly be a number of home defaults and business collapses, but also now is the time to loosen responsible lending initiatives and rev up the economy to help Frydenberg’s government’s reelection prospects.
While the treasurer quite rightly gloats about how well our financial system has coped with the pandemic — “no run on banks” he proudly noted, among other things — he must believe the worst of the crisis is over. How else to explain such an aggressive push to roll back the protections that Kenneth Hayne championed after the pain of that banking royal commission only two years ago?
Of course the government has used the cover of COVID-19 to hold up most of those reforms — despite promising to implement nearly all of them.
The explanation and context is simple: the banks have been pushing back strongly against responsible lending reforms and the treasurer is using that hoary old chestnut “cutting red tape” to justify rolling over to their demands.
In his speech Frydenberg cites the fact that in consumer credit the responsible lending framework has led “to almost 100 pages of ASIC regulatory guidance”.
“This has led lenders to become increasingly risk-averse and conservative for fear of falling foul of the guidance,” he said.
“As a consequence, the government is seeking to remove responsible lending obligations for all lenders except those issuing small account credit contracts or consumer leases, with APRA’s lending standards remaining.”
This is incredible given it was less than a week ago that ASIC reported that some consumers are having to cut back on essentials such as meals because of debt they racked up from using buy now, pay later lenders — warning one in five consumers were missing payments.
ASIC also admitted it was yet to actually do anything about this looming consumer credit crisis but it was working on it. (Don’t rush, if you are reading the treasurer’s speech.)
As well as pandering to the banking lobbyists to tone down responsible lending legislation and weaken the Hayne recommendations, the speech promises the usual ideological crackdown on the superannuation industry.
The treasurer wraps up by saying: “The reforms both preceding and during the crisis have helped Australia outperform so many other nations, but there is no room for complacency.”
A classic bit of newspeak where what he is saying appears to be exactly the opposite to what he means.
What do you make of the treasurer’s speech? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication in Crikey‘s Your Say column.
Frydenberg is an ex Global Banking Director of Deutsche Bank after stints as an advisor in Downer and Howard’s offices. Littleproud is ex NAB, Turnbull ex Goldman Sax, John Frazer (recently departed Treasury head) ex UBS, Hume ex NAB/Rothschild/Deutsche Bank, James Shipton ex Goldman Sax, Shipton’s deputy Karen Chester ex JPMorgan – is there a disturbing pattern emerging here? An unprecedented Infiltration by financial sector representatives into govt legislative bodies and bureaucracies of the US, UK and Australiaia is coinciding with the increasing financialisation of economies, decriminalisation of bank fraud and the emasculation of govt financial regulators.
If you think about their performance as members of the Government etc, it doesn’t say much about the level of know-how or competence needed to be a bank director
Yes, apparently being a rank imbecile is no barrier to high promotion in the banking world. Presumably one must have attended the right schools though.
Excellent points. This has been proceeding for the past thirty years. The problem is that both major parties accept and thrive on it and the general public simply takes the nihilistic view that “there is nothing I can do about it.” Eventually there will be a populist revolt à la Hanson and the situation will get even worse because the populist parties are in the pockets of those who their electoral supporters are purportedly voting against.
Yep, and if you look at a lot of the northern European countries, where they seem to have more politically educated electorates – the banking systems are more regulated/ownership not as concentrated and politicians less self serving.
Another glaring instance of this government’s corruption. Show me one policy in the past 7 years that is not entirely explained by the fact that this government governs exclusively for its donors, even if the harm to real citizens is obvious. There is no underlying ideology, just the pragmatism to keep pleasing donors.
Yes, and the worst part is that donations are just the small change that grease the wheels of cronyism.
Yep count the gambling and gaming industry in that cohort
True.
There is nothing wrong with their memories, ‘they’ simply think that enough time has passed for people to ‘forget’ and given the propensity for Australians to believe the crap that the LNP delivers ad nauseum they are probably correct.
The jury is still out for me. Can’t work out whether Frydenberg is just really dumb and believes this rubbish, or is a born politician who will say whatever he needs to say to please whoever is in front of him.
It leaves an option that he is thick as a brick or a man of no moral or ethical considerations at all. Although I suppose he could be both.
This man is touted as a future PM. It astounds me that such an insipid person could climb so high.
I reckon the latter DB. Which guarantees his eventual place in one of the innermost circles of Dante’s inferno – where he will have no lack of other amoral rats for company.
“future PM”? Of which tin-pot banana republic?
This one, we’re standing in it.
I too fear it is the latter, this government of full of such!
Based on his record, surely both dumb & meretricious?
Not to mention obedient & venal.
Agree.
This blathering of Fraudberg’s goes back to the influence of Murdoch’s propaganda press -> seeing/reading how well it goes down in (tabloid) print/”history” …. even if that “record” is dominated by one (along with joined-at-the-lip Nein News and “Stokes Stoats”) similarly inclined information orifice.
Red Tape Reduction (RTR) will be a familiar war cry to anyone who’s had much to do with the federal government since 2013. It’s been proposed as a solution to everything: global financial crisis? Easy, reduce red tape. Austerity needed? RTR. Slow wages growth? RTR. Low productivity? RTR. Inflation stalled? Reduce red tape!!
This all just goes to show how outdated and shortsighted the LNP’s economic policies are.
Looking forward to a ditching of this government. Mercurial, with our memory of feds since 2013, and well before, we can also see that the moves this mob is making are also what ends up with them being ousted…they can’t help themselves as they always go just too far…..