Thank goodness the NZ Herald still has one great investigative reporter, Kate McNamara. In her expose yesterday she asked whether Finance Minister Willis interfered in the decision to hold a new Reserve Bank review of the Big Aussie Bank Capital Requirements. We already know the answer. Yet Willis yesterday denied any political interference whatsoever in the Bank's decision to launch (another) Review. She stated in response to McNamara's question, "The minister completely rejects any inference of political interference .. The decision to .. review the Reserve Bank’s capital requirements was made by the Reserve Bank not the minister (although she has welcomed it)” There is overwhelming evidence against.
First, Willis has no idea whether those Capital Requirements are good for financial stability. But the Big Banks want them gone. Second, Willis' own economic advisers want them gone, They are aligned with the Big Banks. Third, when Willis issued a Beehive Press Release on the morning of 31 March welcoming a new Review designed to lower the Requirements, Orr was still Governor of the Reserve Bank. His tenure ended at midnight on 31 March. Willis' Statement was not issued with his approval. Orr regarded those Requirements as one of his greatest achievements. He backed them every step of the way. For Willis to issue that Press Release proves she'd talked with the Reserve Bank Board about doing a new Review. She knew it was going to happen. Fourth, although Governor Orr stepped down at midnight on 31 March, an Acting Governor stood in for him when he was on holiday, Christian Hawkesby. He lacked the authority to order the Review and had already fully endorsed the existing Capital Requirements. He gave many speeches strongly defending them. He helped design them. He was General Manager of Financial Stability and was hired by Orr. Hawkesby is friends with Orr and they are still in regular contact, I hear.
Fifth, though you may argue that the decision to do the Review may have come from an order given to Acting Governor Hawkesby direct from the Board, over the head of Orr, who was still Governor at the time, Board Chair Neil Quigley had already endorsed the Bank's existing Capital Requirements. He put in writing that those specific Requirements were one of Governor Orr's great "achievements" when endorsing him, along with the unanimous support of the Bank's Board, for reappointment to a second term as Governor. Sixth, being a weak Board of folks who don't have much clue about monetary policy or financial stability, its members had no strong views about whether the Requirements were good or not.
Yes ,the order, delivered to the Reserve Bank's Board Chair to review the Big Bank Capital Requirements came from Finance Minister Willis. She wants them out. The RBNZ Board, its Chair, Reserve Bank Acting Governor, and Governor on 31 March, all wanted the status-quo. They'd already done a Review. It supported them. One reviewer was an old Colleague of mine, Prof David Miles, at Imperial College London, which has one of the highest ranked Finance Departments in the world. He was on the Bank of England's Monetary Policy Committee. For Willis to say she "completely rejects any inference of political interference" in the decision to do a new Review is not true. She's using her English language skills to pretend the formal "decision" came from the Board, which is legally bound to consider hew views. But she wanted the Review done. The Board didn't. The Governor didn't. The Acting Governor didn't. Willis knew, as McNamara pointed out, given the Board's Chair is asking National for a quarter billion $ new medical school at Waikato, they had no choice not just to consider her views, but implement them. She made the Board an offer it could not refuse.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
Fifth, though you may argue that the decision to do the Review may have come from an order given to Acting Governor Hawkesby direct from the Board, over the head of Orr, who was still Governor at the time, Board Chair Neil Quigley had already endorsed the Bank's existing Capital Requirements. He put in writing that those specific Requirements were one of Governor Orr's great "achievements" when endorsing him, along with the unanimous support of the Bank's Board, for reappointment to a second term as Governor. Sixth, being a weak Board of folks who don't have much clue about monetary policy or financial stability, its members had no strong views about whether the Requirements were good or not.
Yes ,the order, delivered to the Reserve Bank's Board Chair to review the Big Bank Capital Requirements came from Finance Minister Willis. She wants them out. The RBNZ Board, its Chair, Reserve Bank Acting Governor, and Governor on 31 March, all wanted the status-quo. They'd already done a Review. It supported them. One reviewer was an old Colleague of mine, Prof David Miles, at Imperial College London, which has one of the highest ranked Finance Departments in the world. He was on the Bank of England's Monetary Policy Committee. For Willis to say she "completely rejects any inference of political interference" in the decision to do a new Review is not true. She's using her English language skills to pretend the formal "decision" came from the Board, which is legally bound to consider hew views. But she wanted the Review done. The Board didn't. The Governor didn't. The Acting Governor didn't. Willis knew, as McNamara pointed out, given the Board's Chair is asking National for a quarter billion $ new medical school at Waikato, they had no choice not just to consider her views, but implement them. She made the Board an offer it could not refuse.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
5 comments:
New Zealand. The corrupt little country at the bottom of the world. With politicians who tell porkies whenever it suits them. Kudos to Kate McNamara.
The Capital Requirements were a pleasant surprise but destined for a short shelf life because the banks rule!. Shame on Nicola Willis and curses on National. MC
The list of NZ financial management decisions that are blurred against the public and NZ continue.
The ANZ and ASB issue of repaying the public for bank malpractice is going to court again.
The claimed 25% Reserve bank funding cut by Hon Willis is definitely not squeaky clean and only needs showing the truth to be certain but is rudely being argued away by the Minister of Finance .
Now the Capital requirements is language that is anything other than certain and the interested public are left bewildered and indignant.
If the public apprehension in the forthcoming Coalition 2025 budget is correct and an expectation of chaos is delivered, we should now be assured that at least our expectation will be met or exceeded.
As for any (senior) portfolio, National has a cynical riposte: " The Minister is not perfect but is doing better than the Opposition would do in the role."
This is wearing thin - and very fast.
Is any politician anywhere straight with the truth?
The Finance Minister is, at best, a very ordinary politician so of course she's lying.
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