Reserve Bank of Australia (RBA) Governor Glen Stevens to reporters – “I can’t remember”. Sound familiar? Think back to the grey and choppy waters at the beginning of the Global Financial Crisis (GFC) phase 1 (I think it should be Collapse, rather than Crisis – as Collapse better fits the end result, but not the positive spin of Crisis!). All of the so-called money and investment experts are lining up to either collect their ‘small’ exit bonuses (collected from the pockets of everyday Americans), or pleading with the privately controlled US Reserve Bank for more handouts (which again, come from the pockets of the American taxpayer).
During a somewhat farcical ‘trial’ in which failed companies such as AIG, Lehman Brothers, and Merrill Lynch responded to federal government questioning, the most common answer given to a clearly frustrated panel was “I don’t remember”, or “I can’t recall”. The majority of corrupt dealings ended up being brushed under the carpet, and only a few scapegoats were held accountable. The banking system in the United States remains financially unstable – and virtually unchanged. It seems that little, if anything, has been learned from the GFC.
So what is the RBA? According to their own website, the RBA is:
- The Reserve Bank of Australia is Australia’s central bank. Its role is set out in the Reserve Bank Act 1959. The Bank conducts the nation’s monetary policy and issues its currency. It seeks to foster financial system stability and promotes the safety and efficiency of the payments system. It also offers banking services to government. The Bank is a body corporate wholly owned by the Commonwealth of Australia. For more information see about the RBA.
In Australia (unlike the United States) we have a strong banking system and a stable economic outlook. This has allowed us to remain relatively safe during the GFC, but it has also allowed the big four banks consisting of the Commonwealth, ANZ, Westpac, and NAB to increase their market share of the financial sector. This has resulted in a monopoly of the financial market by the big four – in essence our ability to get a better deal on our investment capital and cheaper credit has been hampered due to price collusion and conservative lending.
As a result of the influence over the population of Australia financially, Mr Stevens has systematically refused to take a tougher line on the big four when they refuse to pass on – or only partially pass on – any interest rate cuts to their customers. He has then also failed to stop systemic corruption within his own ranks as a Commonwealth-owned bank.
The government and taxpaying members of this country are entitled to answers as part of the operational and fiscal health of our central bank. The fact that this corruption has been withheld from the government and the public for so long by Mr Stevens is particularly galling. We talk about a ‘fair go’ in Australia like the cliché is going out of fashion. We espouse the ‘Australian Dream’ of owning a house and becoming financially stable. How many of us are in a situation we feel is equal or fair when it comes to finances? Very few, I would venture.
Despite our feelings or our wants in life, to be undermined by the central pillar in our banking system is significant enough to question its relevance in the fiscal system. If the big four banks are running the vast majority of investment capital and credit (and are already in a form of collusion over credit rates) what is to say that a form of self-regulation or even governmental regulation via legislation would not be better than the current form of the RBA?
Ex-Liberal opposition leader John Hewson has called for a Royal Commission into the RBA bribery and corruption. He writes on the ABC’s The Drum website that, ”It is therefore appalling that the bribery scandal has been allowed to fester for some years now, without adequate transparency and accountability,” ”It is not good enough to have to rely on the stilted testimony of governor Glenn Stevens before various Parliamentary Committees, nor on his assurances that ‘they had done no wrong’, and had ‘acted appropriately’.”
This comment should lead us towards thinking about the future of this nation, and ourselves. Do we let corrupt officials ‘off the hook’ because the damage to our international financial reputation would be too great, ala AIG, Lehman Brothers, and Merrill Lynch? Will we ever learn from the past mistakes of the GFC or previous stock market/financial crises?
Sadly, on the evidence presented so far, I am loath to admit that this, but it seems that greed is the single most effective driver of economic growth in society. Therefore any corruption as a result of that greed, is emblematic of the struggle within our own moral and ethical mindsets. It cannot be seen then as a surprise.