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Banks, behaving badly
blacksheep
post Posted: Feb 6 2019, 10:07 AM
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In Reply To: blacksheep's post @ Feb 5 2019, 01:11 PM

Banking royal commission: That’s another financial sector inquiry done, see you all again in 2029!
Andrew Linden and Warren StaplesThe West Australian
Tuesday, 5 February 2019 2:20PM

QUOTE
Every 10 to 15 years it’s the same.

Ever since financial deregulation in the 1980s we’ve had a finance industry scandal followed by an inquiry, a quick fix, and a declaration that it shouldn’t happen again.

In the early 1990s there were royal commissions into the $1.7 billion Tri-continental/State Bank Victoria collapse, the $3.1 billion State Bank of South Australia collapse and the WA Inc collapse which explored the interrelated activities at Rothwells bank, the $1.8 billion collapse of Bond Corporation and the $1.2 billion siphoned from Bell Resources.

A decade later in 2003 Justice Owen reported on the $5.3 billion collapse of Australia’s largest insurer HIH.

And now, bang on schedule, we have Kenneth Hayne delivering the final report of a royal commission into systemic misconduct in banking, superannuation and financial services industry to a Government that voted 26 times against holding it.

There are two particularly striking things about the 10 to 15-year cycle.

One is the rhythm of public inquiries followed by reports, then (sometimes) trials, then books, then almost everyone forgetting (except for those personally scarred) only for problems to resurface later.

The other is that the times between have been punctuated by government-commissioned banking and financial system reviews: the 1991 Campbell Inquiry, the 1996 Wallis Inquiry, the 2010 Cooper superannuation review and the 2012 Murray Review. Each either missed or downplayed the links between poor governance, industry structure, systemic misconduct and prudential risk.

Has Kenneth got the frequency right this time?
Commissioner Kenneth Hayne’s 1000-page final report hasn’t gone far enough to end this cycle.

While his referral of 24 misdeeds for possible criminal and civil prosecution will help in righting past wrongs and perhaps focus the minds of directors and executives, the impact will be generational rather than permanent.

The flurry of prosecutions and actions will again reveal problems with the law — gaps in coverage, inadequate penalties and cases the law won’t allow to stand up.

Taken together the recommendations are a patchwork of measures that if implemented will over time be eaten away — and at some point will be dismantled — because the rationale for their adoption will be forgotten.

Even before they are implemented they will have to run the gauntlet of a massive subterranean lobbying effort from industry to water them down, something Hayne indicated he expected.

The deepest flaw lies unaddressed …
Even though Hayne emphasises the link between systemic misconduct, governance, structure and prudential (system-wide) risk, something that Treasury, the RBA and Australia’s three business regulator amigos — APRA, ASIC and the ACCC — have long rejected, he makes no concrete suggestions to tackle it.

As we have written previously, research tells us big systemically important shareholder-focused universal for-profit banks that cross-sell products are more profitable than smaller banks in the good times but are more prone to misconduct and to failure in the worse times.

Australia’s big four fit the bill — they’re big, they have been vertically integrated one-stop shops, they are very, very profitable and they are very focused on shareholder returns.

While the banks, apart from Westpac, have divested themselves of wealth management and insurance arms for now there is nothing stopping them reacquiring them in the future.

This means we are once again 10 or 15 years away from systemic misconduct resurfacing as big banks seek to become more profitable.

… and putting the onus on directors won’t much help
While heads might roll in yet another round of internal investigations to fix bank culture, it is wise to remember that as Adele Ferguson observed ANZ’s internal investigation of the Opes Prime collapse left the bigger governance lessons “unlearned”.

Directors and senior executives of failed companies continue to live charmed lives.

The directors of Babcock and Brown were cheered as they left the building, while friends and family of the disgraced One.Tel director Jodee Rich have resurfaced at Hayne and other public inquiries.

Some of the One.Tel directors have had long corporate careers. The former chair of the collapsed Allco Finance Group Bob Mansfield went on to review the ABC.

As Adam Schwab bluntly put it, “corporate Australia is nothing if not forgiving”.

It’ll chase horses rather than close doors
Hayne is persisting with a chasing bolting horses approach to misconduct that relies on detection and enforcement.

We have argued this approach is just not as a effective as other alternatives such as two-tier boards and employee directors which have a better track record of keeping stable doors closed and horses tethered.

Without them we could very easily have another crisis and another royal commission in 15 to 15 years time.

Ireland has been prepared to change corporate structures. After the meltdown of its financial system triggered by the end of a “classic vanilla property boom” its parliament legislated to appoint public interest directors to the boards of its failed banks.

These changes were designed to ensure banks directors put the public interest first, ahead of shareholders interests and even customers interests.

It’s beyond time we did it here.


Andrew Linden is a sessional lecturer, PhD (Management) candidate at the School of Management, RMIT University. Warren Staples is a senior lecturer in Management, RMIT University


https://thewest.com.au/business/banking/ban...-ng-b881095361z



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
mullokintyre
post Posted: Feb 5 2019, 06:22 PM
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In Reply To: blacksheep's post @ Feb 5 2019, 11:05 AM

In the past, I might have accused you guys of looking for conspiracy theories where there are none.
However, given the astounding fact that no criminal charges have been recommended, I can only concur that Hayne was in on the deal.
This is further enforced by his obvious unhappiness at being part of the press conference media bull shit setup.
Even if he didn't think charges would stick, he could have at least sent something to the DPP and let them argue why there should be no prosecutions.
A pox on all their houses.

Micik



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nipper
post Posted: Feb 5 2019, 04:45 PM
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Nicole Cannon claims she will be forced to quit the mortgage broking industry because of "devastating" recommendations by the banking royal commission that she said amounted to a $1.6 billion free kick to the major banks.

No. You were just a volume based intermediary. And besides, the fact you call it an industry reveals the sordid truth. No professionalism to be seen.



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"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Feb 5 2019, 01:11 PM
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In Reply To: blacksheep's post @ Feb 5 2019, 10:47 AM

Australia’s Banking Overhaul Looks Like a Dud
By David Fickling | Bloomberg February 4 at 4:05 AM
QUOTE
The fearsome beast that’s menaced Australia’s financial services industry for the past year turns out to have been a paper tiger.


QUOTE
Ultimately, though, preventing the weeds of misconduct from growing depends not on design, but on the vigilance of the gardeners. Given the way the current government cut real-term funding for ASIC to a 15-year low even in the midst of this Royal Commission and the opposition Labor party’s more laissez-faire attitude when it was last in government, it’s hard to feel confident that the current desire for tougher regulation will persist.

https://www.washingtonpost.com/business/aus...1eb4_story.html?



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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blacksheep
post Posted: Feb 5 2019, 11:05 AM
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In Reply To: triage's post @ Feb 5 2019, 10:57 AM

Agree, triage. No wonder Josh Frydenberg had such a smile on his chops when the report was presented - that little "pat" he gave to the documents and the big cheesy grin - body language - wondered what that was all about - now we know.



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

Said 'Thanks' for this post: triage  
 
triage
post Posted: Feb 5 2019, 10:57 AM
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In Reply To: blacksheep's post @ Feb 5 2019, 10:47 AM

blacksheep - it now seems clear as day that it was all a stitch-up between the bankers and the current government. The only question unanswered is weather Kenneth Hayne was in on it or if he was just a patsy. Wonder who the commissioner ran the draft of his final report past for any suggested corrections?


https://www.abc.net.au/news/2019-02-05/big-...letter/10778928




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Said 'Thanks' for this post: blacksheep  early birds  
 


blacksheep
post Posted: Feb 5 2019, 10:47 AM
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In Reply To: blacksheep's post @ Feb 3 2019, 12:37 PM

The RC talk was tough but did the outcomes/recommendations fit the crimes - the Banks seemed to have come off lightly IMHO.

Appears the shorters, who expected more, are having to cover their positions this morning - thus all Banks up considerably

Below are daily charts yesterday for all 4 Banks - odd how the trading patterns for all look identical - big spike in the morning
Attached File(s)
Attached File  asx.png ( 77.02K ) Number of downloads: 2
Attached File  cba.png ( 76.96K ) Number of downloads: 3
Attached File  nab.png ( 76.19K ) Number of downloads: 0
Attached File  wbc.png ( 76.81K ) Number of downloads: 1

 




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
early birds
post Posted: Feb 5 2019, 09:19 AM
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https://www.afr.com/business/banking-and-fi...20190203-h1at2t

Big banks: The report makes no changes to vertical integration, or any expansion to how banks asses the suitability of borrowers; it also does not prohibit the use of the "household expenditure measure" as the basis for making loans;
.....

Losers
The (at least) three companies facing prosecution over fee for no service: The final report is scathing about the industry-wide scandal fee for not service scandal where between them AMP, ANZ, CBA, NAB and Westpac will refund customers at least $850 million.

Mortgage brokers:

Retail super funds

Insurers



 
blacksheep
post Posted: Feb 3 2019, 12:37 PM
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In Reply To: blacksheep's post @ Feb 1 2019, 09:23 PM

An Upheaval Is Coming for Australian Banks
By Jackie Edwards
February 3, 2019, 8:00 AM GMT+11 Corrected February 3, 2019, 10:10 AM GMT+11
Inquiry may recommend financial firms be broken up, pay curbed
Bribery, forgery, charging the dead among scandals uncovered

QUOTE
Potential Charges
There will be some nervous people waiting to see if Hayne recommends criminal or civil charges against individuals or companies. The prospect of charges was raised during the hearings and all the big-four banks, AMP and IOOF acknowledged misconduct that in some instances may have breached the law. Hayne can’t lay charges, but he can recommend the public prosecutor consider bringing them.

https://www.bloomberg.com/news/articles/201...nd=premium-asia



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Feb 1 2019, 09:23 PM
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In Reply To: triage's post @ Feb 1 2019, 08:36 PM

Did Frydenberg organise this photo shoot without Haynes knowledge - I didn't think Commissioners do this kind of publicity stunt. Shocking lack of judgement on Frydenbergs part. Once Josh reads the report I'm guessing the smile will be wiped off his face.

QUOTE
It’s known, in the game, as a picture opportunity.

Politician on the make meets constituent/kiddie/moviestar/public figure, hands are grasped, big smiles, cameras whir, flashes pop and the happy little circus moves on.

Sometimes, it doesn’t work so well. The kiddie bursts into tears. Sometimes, it’s a bust. The movie star’s smile is so radiant the politician may as well have stayed in bed.

And then there’s the day the Treasurer, Josh Frydenberg, met the royal commissioner, Kenneth Hayne

https://www.theage.com.au/politics/federal/...201-p50v75.html
Attached File  iCckxPzh.jpg ( 32.05K ) Number of downloads: 0


The whistleblower, politician and journo who hauled the banks before a royal commission
https://www.abc.net.au/news/2019-02-01/how-...ection=business



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
 


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