Last month in Perth, at the WA Local Government Association Convention, I was lucky enough to hear a speech by former Australian Chief of Army David Morrison, in which he asked what comes to mind when you hear the words “Australian banker”? He was implying that the impression would not be positive. While he only touched on banking in his speech on organisational culture, it cemented in my mind that there is a lot of community concern about the behaviour of our banks, particularly in light of scandals such as unscrupulous practices at CBA’s CommInsure (see this ABC News report) and manipulation of the Bank Bill Swap Rate (see this Conversation article).
Also, you may recall the Storm Financial scandal, in which over-leveraged clients of Storm Financial were wiped out when stock markets crashed during the financial crisis. Banks such as CBA, Macquarie and Bank of Queensland that had lent money to investors ended up making multi-million dollar settlements in the aftermath of Storm Financial’s collapse (see this Courier-Mail report). Many investors in Storm Financial are still suffering financially and are supportive of calls for a Royal Commission into banking, as reported recently in the Townsville Bulletin:
“THE thousands of victims of Townsville’s Storm Financial collapse “to a man” want a royal commission into the misconduct of banks, chairman of the Storm Investors Consumers Action Group Mark Weir said yesterday.
It comes as Mr Weir remains part of a small group of Storm investors who are still waiting for a resolution with their bank eight years after reckless advice and lending caused $3 billion in losses, and as politicians argue over the need for a royal commission or new consumer tribunal.”
While it may yield some good and would be tremendously entertaining, as we may expect some more sordid tales to be revealed, a banking Royal Commission would be expensive, at a cost over $50 million. There would also be the risk of an excessive regulatory response following on from a Royal Commission. I will provide my views on whether the likely benefits would outweigh these costs at an upcoming lecture to the University of the Third Age (U3A) Redlands on Monday morning, 10 October at Cleveland’s Donald Simpson Community Centre (172 Bloomfield St, Cleveland). Here are the details from the U3A website:
LIFE IN AUSTRALIA will return to the Donald Simpson Community Centre 9.30am for Term 4 on Monday 10 October
Monday 10 October will be guest speaker, Gene Tunny Principal, ADEPT Economics speaking on “Should Australia Have a Royal Commission into Banking?”
Cost $4 including Morning Tea, all more than welcome.