Speech calls for extension to Banking Royal Commission

Thank you, Mr Speaker.The Banking Royal Commission has exposed a lot of bad behaviour but, given the chance to dig deeper, it would find that ulterior motives drove deliberately dodgy behaviour.In 2009, McKinsey and Company published a ‘bad bank’ strategy template, which detailed the rationale, benefits and processes for banks to dump unwanted business loans.The Commonwealth Bank clearly adopted this strategy, with a very senior CBA executive, stating:“The Bankwest story is very much an intentional one. We have quite deliberately got out of low credit quality lending in this space and on an annualised basis in fact our reduction in the target, low credit quality space is well over 20%”.Bankwest loans were dumped – even though borrowers never missed a payment – simply because the CBA wanted to change its risk profile.Further investigations will reveal evidence the bank followed the “bad bank” strategy:

• Overriding grade systems to push down risk ratings;
• Reducing property values to trigger non-monetary defaults

I support the Small Business ombudsman, Kate Carnell, in her call to extend the Royal Commission’s time to investigate small business loans.It would be a tragic lost opportunity if the full extent of deliberately dodgy banking practices were not exposed.I call on the government to grant the Royal Commission more time to investigate issues around small business lending.