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.