Citizens Electoral Council of Australia

Media Release Wednesday, 28 November 2018

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://www.cecaust.com.au

A decade to fix bank ‘culture’? Unacceptable—break them up!

The chairman of NAB and former Secretary of the Treasury, Dr Ken Henry, has given the banking royal commission the best argument for the banks to be broken up.

Under questioning from Senior Counsel Assisting Rowena Orr, QC, Dr Henry stated that it would take 10 years to fix NAB’s “culture”.

This is unacceptable. Dr Henry used the amorphous corporate-speak term “culture” as a smokescreen to obscure what is a very simple issue—following the law and not ripping people off. If it will take 10 years to get NAB staff to follow the law and not rip people off, then it proves that NAB is too big and complex, and must be broken up.

With that answer, and the contemptuous arrogance of his full testimony, Dr Henry displayed the true face of Australia’s major bankers. Despite all of the revelations from the royal commission, of their years of misconduct and criminality, the bankers don’t get it. They do not regret their crimes, only getting caught. The integrated structure of the major banks has made the financial system highly complex, and hard to regulate even if the regulators wanted to (which they haven’t). The banks have gamed this complexity to develop business models based not on serving customers, but exploiting them at every turn for the banks’ profits and their executives’ bonuses. They intend to keep that system going:—in their submissions to Commissioner Hayne’s Interim Report, each of the big four banks categorically rejected any suggestion that they should be broken up.

From the attitude Dr Henry displayed at the royal commission, it would seem that he and his fellow bankers assume the government and regulators will continue to protect their financial racket. For his part, Dr Henry took the revolving door from Treasury to join NAB’s board in 2011, and has been chairman since 2015. For NAB’s culture to require a decade to fix, it must have been very bad for a long time, yet at no time as a director or chairman—before the royal commission exposed its misconduct—did Dr Henry object to its culture, and in fact he happily approved full bonuses despite the bank being embroiled in massive scandals.

(The revolving door between Treasury, the regulators and banks includes Henry’s successor as Treasury Secretary, John Fraser, who came from the disgraced LIBOR-rigging bank UBS, and former Treasurer Joe Hockey’s two senior advisers, chief of staff Grant Lovett also from UBS and chief economist Tony Pearson from NAB; most of bank regulator APRA’s top management are former investment bankers.)

In the opinion of one banking expert, Dr Henry’s statement provides the best opportunity to achieve banking separation. The banks, regulator and Treasury would like the public to think that they have the problem in hand: yes, they say, the royal commission has identified serious problems, but we are already taking steps to fix it. However, the expert told the Citizens Electoral Council, Dr Henry’s view proves that NAB management isn’t up to the job—they should all resign their positions and let new management take over.

And the government should break them up. The CEC’s Banking System Reform (Separation of Banks) Bill 2018 that Bob Katter introduced into Parliament in June will impose a Glass-Steagall-style separation of commercial banks with deposits, from speculative investment banking and all other financial activities, including financial advice, wealth management, stock broking, insurance and superannuation. It will:

set clear boundaries that banks must follow and regulators can easily enforce;
stop banks from gambling in derivatives, to protect deposits and ensure financial stability;
stop banks from luring customers into other financial services to be fleeced; and
stop banks from profiting from bad loans through securitisation and derivatives.

Anything less than full separation retains the massive conflicts of interests that enable banks to exploit their customers—demand it now!

What you can do

The CEC urges all Australians to join the fight for Glass-Steagall, by getting in regular contact with your federal MP and Senators. Email or phone them with updates from the CEC’s releases, and ask them to respond. Here are two things to do today:

Send them this release, and tell them in no uncertain terms that 10 years is unacceptable, so Parliament can’t leave it up to the bankers to fix themselves, but must break them up.
Demand they amend the APRA bail-in law snuck through Parliament in February, to make it explicit in the legislation that deposits can’t be “bailed in” (seized to prop up banks) in a crisis. Click here for the details you need to know: /releases/2018_11_20_Confirmed_APRA_Law.html

Click here for a free copy of the latest issue of the CEC’s weekly Australian Alert Service magazine, which reports on the fight for Glass-Steagall in Australia and around the world.

Click here to join the CEC as a member.

Click here to refer others to receive regular email updates from the Citizens Electoral Council of Australia.