Game of Mates by Cameron Murray & Paul Frijters

Author:Cameron Murray & Paul Frijters [Murray, Cameron & Frijters, Paul]
Language: eng
Format: epub
Publisher: Cameron Murray and Paul Frijters

9

The Great Banking Game

Australia’s biggest private companies are its banks. The four major banks have near complete control over the market for mortgages and loans to small businesses. Compared to foreign banks, they make spectacular profits each year, to the tune of $30 billion in 2015, which is about 2% of GDP! With a rate of return to equity of close to 15%, banking is one of the most lucrative businesses in Australia.

How have James and his Mates cooked the banking game? Like we have seen in mining and property, James plays on both sides of the fence in banking: former bankers are amongst the executive ranks at the industry regulator, the Australian Prudential Regulation Authority (APRA); bank managers were instrumental in creating key banking regulation; major investors and businesses have direct input on monetary policy via their official representatives on the board of the Reserve Bank of Australia (RBA); and of course banks are major donors who regularly contribute to both of the major political parties.

In 2017, two former state premiers, Anna Bligh and Mike Baird, joined the banking Game as the threat of a national inquiry into bank lending practices gained force. Bligh became CEO of the banks’ Australian Bankers’ Association lobby group, and Baird became the Chief Customer Officer at NAB.

Further down the corporate ladder there is evidence of a revolving door of cushy grey gift appointments that is symptomatic of a Game of Mates, as a Fairfax investigation in 2015 uncovered.

Jeff Millard, the man managing supervision of ‘specialised institutions’ – insurers, according to his LinkedIn profile – came straight from Deloitte. Scott McIsaac went from being Operational Risk Manager at Commonwealth Bank to being Operational Risk Specialist at APRA. He declined to comment for this article. Michael Saadat, a senior executive leader at ASIC overseeing deposit-takers, was previously head of compliance at the local branch of Citibank. They all declined to comment for this article. (Mannix, 2015)

More to the point, James has been playing the banking Game for centuries and knows the two main ways government can be co-opted to earn him the big bucks. First, James seeks favourable regulation that kills off the competition. Second, is from the direct control over money creation granted to him. James has achieved both in Australia, but in Australia James primarily makes money off the first, citing as ‘validation’ the dangers of the havoc he could cause because of the second issue (the money creation). Sounds like a form of blackmail, no?

In Australia, killing off competition for banking has not always been easy for James. In the 1970s and 1980s for instance, there was a state competitor bank, the Commonwealth Bank of Australia, which competed with other banks to offer cheap loans and mortgages. James had to work hard to ensure that the media was flooded with stories about how ineffective this state bank was and how much better it would be once privatised. This indeed happened (under the Keating government in 1990) and James has been doing great

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