JOHN MENADUE. The bank’s PR gloss and descent from heaven.

The banks project their image  by employing a large number of   business  economists  that we see and hear regularly in our media. A few do but seldom do  these economists venture into any comment that would politically embarrass their employers let alone tell us what is really going on in the organisations that employ them. It is mostly all PR.

And  some of the ‘regulators’  or supervisors on retirement from Treasury and the Reserve Bank of Australia, take very senior governance and  executive positions with the very same banks that they formerly ‘regulated.’ That regulation was with a very light hand!

 Our media, including the ABC provide great opportunities for banks and other financial institutions to put their corporate image across.  A quick and random check of some recent media stories reveal  how  many bank economists we hear about and see in the media are really in the PR game for the banks.  These  business economists, often recruited from Treasury and the RBA  are employed by  the Commonwealth Bank, ANZ, JP Morgan, NAB, Macquarie Bank, TD Securities, Bank of America, HSBC and Goldman Sachs to mention just  a few.

I have yet to hear even a hint by  economists from these institutions about the malfeasance and cheating by their employers.  There must be very effective ‘Chinese walls’ to shield them from what is really happening in other parts of their employers’ organisations.!  They prefer not to see what economic and social  damage their employer is causing.Again there are a few  notable exceptions but not many.

Most of these economists are clearly constrained from saying anything that their boss wouldn’t want them to say and which might get them into a political debate.  Most keep their heads down, particularly during election campaigns. They rarely speak publicly about any policy issue apart from monetary policy (interest rates and whether they should be increased or decreased) and a few guarded comments on fiscal policy.  Seldom  do we hear them comment about important economic policy issues that have political implications.  Mostly they stick to discussing the latest figures on the state of the economy, forecasting what is to come on labour force figures or the GDP, or what the RBA board will decide to do about interest rates at the next month’s meeting. They seldom go near any subject which has a party-political implication and never about the behaviour  of the bank that employs them. Have any resigned in protest? Surely some of them must have known  what has been going on but they sat tight.

Similarly, most business economists who work for the major chartered accountants are also careful not to say too much that would displease their employers.

Hopefully, the gap in robust reporting and discussion due to  the abdication of  many of our business and bank economists would be filled by academic economists.  But that is just not happening.  There are a few academic economists who speak up, but not many.  There are few public intellectuals  commenting on most important public issues in Australia today.  Thank goodness for think-tanks like the Grattan Institute and others.

But there is much more than the PR  linkage between our business economists, the banks and the media.There is also a revolving door between the bank regulators, Treasury and the Reserve Bank, and the ‘regulated’ banks. Just consider a few recent examples.

  • The Chair of Westpac, Ted Evans,  until 2011, was formerly Secretary of the Commonwealth Treasury.
  • The former CEO of Westpac, David Morgan, was until 2008, Deputy Secretary  of Treasury.
  • The current Chair of NAB, Ken Henry, was formerly Secretary of Treasury.
  • Glenn Stevens, former RBA governor has joined the Macquarie Bank Board.

The Japanese call these sorts of arrangements ‘descent from heaven’ whereby on retirement, regulators move to well-paid positions in a sector they previously regulated or managed.

It is all quite legal and within public sector guidelines, but it does detract from public confidence.

Apparently Commonwealth  Super/Pension is inadequate!

Three cheers for Bernie Fraser.


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2 Responses to JOHN MENADUE. The bank’s PR gloss and descent from heaven.

  1. Michael D. Breen says:

    Spin is no more than fake news which we find unacceptable in the statements from the White House. It galls me to think that these pr firms, the whores of capitalism, anything for a bob jobbers are paid enormous amounts which are then claimed as business expenses so that the tax payer is the ultimate donor.
    So much of the language has changed so that you seldom hear words like stealing, honesty, integrity, telling the truth.
    And as you point out taxpayers fund the career development of folks in Treasury, Finance, political party, or state premier so that these worthies on pensions but dirt poor can come back and charge enormous amounts for what mostly is their again tax funded network of contacts.
    And as we are seeing the so called regulators are quite complicit.
    Unfortunately the fall from heaven does no longer pass through purgatory.

  2. Michael Hart says:

    Well pointed out reminder of the lack of sense of public interest or good either by the regulators and treasury and economists of a particular ideological persuasion. In the case of the regulators and treasury the same revolving door exists but at a lower level as well. There is a well researched recent study from Queensland University non mainstream economists (not know for its departure from current economic orthodoxy) which clearly demonstrated how the exercise of public policy and government is done on and for ‘mates’.

    As you clearly point out the outcome of many decades of neoliberal economic which is no better illustrated than feather light hand of regulation upon unrestrained rent seeking and profit taking has and is causing significant and possibly irreparable damage to our wider society, small business, innovation and the social contract. You will see very few if any economists even raise this as economic issue and everybody trots out the same talking donkeys to give media and the public the spin. As long as they believe this nonsense (like business tax cuts increasing jobs and wages etc – See Stiglitz et al for a proper analysis) and it is uncritically accepted, despite the evidence to the contrary, we will get the nonsense and downright lies about what Banking is and does. We will also not get a response from the mainstream political parties either that properly generates debate, ideas and solutions for the greater good of all Australians not just a greedy few.

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