Wrong? Bank on it

THE ASIC- ANZ deal is an absolute disgrace. The public interest has been sacrificed on the altar of what’s convenient for both the regulator and the bank. Any similar deals with NAB and Westpac will be the same.

In very clear terms either ANZ ( and the same will go for NAB and Westpac if they settle) is “guilty as charged” and so should be held fully and publicly to account; and held to account, importantly, across the legal spectrum.

That means not just in other jurisdictions, class actions and all; but publicly holding both executive management and the board of directors to account as well.

Or it’s not ( and again, the same would go for NAB and Westpac) and it’s been unfairly and abusively targeted by an irresponsibly out- of- control regulator, which in doing so, was demonstrating – and this would arguably be even worse – an embarrassing lack of understanding of the financial system.

Now, we don’t know precisely what has been agreed between the bank and the regulator – all the ANZ statement said was that it had reached a “confidential in- principle agreement” with ASIC, and a “more detailed” statement would follow when the agreement was sealed. And there was no statement from ASIC.

But the indications are that it will comprise a limited statement of semi-guilt and a, in the scheme of things, nominal fine of around $ 50 million. This will be enough to enable the regulator to claim a win, but ( or at least the ANZ would hope and its lawyers would have aimed at) not enough guilt to cost it potentially hundreds of millions more in other litigation.

If correct, very simply, that’s not acceptable.

The public interest demands the ANZ should be shown to be either guilty or innocent, not some sort of mushy, convenient, “agreed form of words” of semi- guilt.

The ANZ did what it did in the bank bill market. Was it acting perfectly legitimately, if robustly and with accompanying bad language and much braggadocio? As both management and the board have been assert- ing, continually and vigorously, all the way up to late last week?

Or did it step over the line – did it set out and indeed succeed in rigging the bank bill rate, and thereby, quite frankly, rip off its customers?

And, therefore, did both management and board vigorously defend conduct which was not only inappropriate but illegal?

It might well be complicated, in both the mechanics of the way these arcane areas of the financial market work and in just exactly what the law is or intended to be.

But the bottom line is two very simple questions: did the ANZ staff seek to and did they succeed in ripping off customers.

Clearly, there is a world of difference not only in terms of consequences but accountability, depending on what the answers are. They are answers that can be delivered; and that should be delivered. Clearly and emphatically.

Either both management and board have been appropriately defending both the bank’s and its actions or they have been defending the indefensible.

I might note my broad inclination is to the former.

Essentially, ASIC is accusing an individual bank of affecting the bank bill rate by aggressively buying or selling bank bills. Well, yes? Has ASIC noticed what happens on the stock exchange every day?

More basically, ASIC seems to forget that, for every bill bought or sold, there was an entirely willing ( and sophisticated) buyer or seller on the other side.

But whatever, there are just too many of these “settlements for convenience”. The legal process is not just about deals between two competing parties.

There is a more fundamental matter of the public interest; or an even quainter matter of just enforcing the law.