Banking royal commission: Reserve boss warned Treasurer about ‘uncontrolled’ inquiry
RESERVE Bank governor Philip Lowe warned Scott Morrison of the economic dangers of an uncontrolled banking inquiry and agreed a Royal Commission was “regrettably necessary”.
NSW
Don't miss out on the headlines from NSW. Followed categories will be added to My News.
RESERVE Bank governor Philip Lowe warned Scott Morrison of the economic dangers of an uncontrolled banking inquiry and agreed a Royal Commission was “regrettably necessary”.
A Wednesday night phone call, which coincided with a similar conversation with the regulator, convinced the Treasurer to launch a Royal Commission into the banking sector, something he strongly resisted in cabinet a week earlier.
“(The royal commission) became regrettably necessary because of the continuing damage that was being done and if there was to be a commission of inquiry with a terms of reference that was completely out of control and would only cause further damage,” Mr Morrison said.
The Daily Telegraph understands the political insights of NAB chairman Ken Henry and former NSW premier Mike Baird, NAB’s chief customer officer, were instrumental in bringing the big four bank bosses together to effectively ask the Turnbull government for an inquiry, when it became clear one was inevitable.
The letter from the banks to the ASX yesterday morning precipitated Malcolm Turnbull’s biggest political backflip as prime minister when he announced the “regrettable but necessary” commission just two days after arguing it was costly and unnecessary.
“The speculation about an inquiry cannot go on,” Mr Turnbull said. “We have got to stop the banks and our financial services sector being used as political football.”
SHARRI MARKSON: LIKE MAGIC, PM HAS CONJURED ANOTHER TRICK
The decision, endorsed by cabinet yesterday morning, came as the banks’ extraordinary intervention requested the government stop long-running threats from Nationals MPs and launch a commission.
“It is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people,” the bank chiefs’ letter reads.
TERRY McCRANN: WHY THE BANKING ROYAL COMMISSION CARRIES BIG RISK
Labor leader Bill Shorten said the backflip showed Mr Turnbull had lost control of his party and he hoped the Prime Minister “does not try to sabotage” the Royal Commission by “doing dirty deals with the banks, working out the terms of reference, getting the permission of the banks”.
The banks estimate the inquiry could cost them collectively up to $400 million in legal fees and other expenses, on top of the commission’s $75 million budget and a possible redress scheme for victims of bad behaviour.
Nationals leader Nigel Scullion said the announcement of a Royal Commission reflected the party’s commitment “for the regional communities an rural industries we represent”.
But several Liberals were seething about how their Coalition colleagues exploited the government at a time of weakness.