Nice to see someone else asking about the responsibilities of the regulatory authorities in banking and financial service (cf. my earlier post on the regulators). Though disappointing not see cited John Braithwaite and Peter Grabosky, ‘Of Manners Gentle: Enforcement Strategies of Australian Business Regulatory Agencies’ (Oxford University Press, 1986). In this Australian empirical study the authors found there was neither enforcement nor strategy, but a great deal of ‘she’ll be right,’ while six-figure salaries were paid to the regulators, evidently on the assumption that nothing so untoward as enforcement would occur.
It seems little has changed. In the 1980s I was surprised to witness the hostile reaction to this book. I heard it denounced more than once as evidence that the authors did not understand the Australian way. That was about the same time the media was ridiculing Dutch bankers who had come to Australia to confront and complain about Alan Bond. The flag was raised and the Dutchmen sent packing. Hypocrisy is always amusing. The more so when it is wrapped in nationalism, since many Australians brag that they are not nationalistic in between bouts of hysterical nationalism frequently kindled by sports.
A propos of the regulators, I infer from what is not said in O’Brien’s piece that the Royal Commission is carefully steering clear of bringing their role(s) into question. Is that discretion itself another instance of manners gentle?
By chance the other night I spoke to a graduate who works for an unnamed regulator and asked about all of this. In reply I got the corporate line about the technicalities of the legislation. My informant pretended to believe it, and politely I pretended to take its seriously. Ah uh. Regulators who find that their legislation is inadequate have, often, a legal responsibility to point that out to parliament, and, always, a moral responsibly to offer some sort of warning. Sailing on is not an option.
O’Brien also omits the role of the media and those financial wizards in newspapers, on radio, and the television telling one and all about money in all its sizes and shapes. It seems that all those financial reporters were too busy pontificating to do any investigating and reporting. The independent ABC and the independent Sydney Morning Herald were as silent on this subject as all the other, numerous media outlets, despite their loud and frequent claims to superiority.
Not only are they passed over, but even let off the hook on reporting about the Royal Commission because the Commission publishes on Fridays. Evidently no reporter can be expected to examine material appears on Friday. Must remember that.
Cut and paste this link into a browser to see the article:
http://www.afr.com/business/banking-and-finance/justice-deferred-hubris-incompetence-and-lost-opportunity-in-the-australian-finance-system-and-its-regulation-20180522-h10efl