Not Macfarlane

The more things change the more they stay the same. From the SMH:

The shadow treasurer, Joe Hockey, will call for an inquiry into the banking system today with the National Australia Bank, Westpac and the ANZ all expected to reveal record profits.

In an address to the Australian Industry Group entitled ''It's time to talk banking'', Mr Hockey will argue that 13 years after the landmark Wallis inquiry into the financial system Australia's banks are beyond effective control and are engaging in behaviour that will put the nation at risk.

While the big four are telling investors they want to be ''growth stocks'' expanding overseas, Mr Hockey will argue Australia's interests would be better served by them ''sticking to their knitting'' as they did before the financial crisis.

... Mr Hockey will take up a call made by six prominent economists last year for a public inquiry into the financial system to be led by a respected figure such as the former governor of the Reserve Bank, Ian Macfarlane.

Bring it on. But not with Ian Macfarlane at its head. First, although Macfarlane has the reputation of a bubble buster arising from his actions in 2003, he spent the prior six plus years stoking raging house price growth, as this blogger has traced in a previous post. The shaded area in the above graph is his tenure at the head of the RBA.

Second, he also oversaw the growth of Australia's gigantic offshore borrowing in the banks and securitisers. At a Lowy Institute event last year, Macfarlane defended the banks to the hilt on these borrowings. You can listen to it here (money quotes at 35 minutes).

MacFarlane can identify the flaws in Australia's financial architecture only if he attacks his own legacy.

h/t Delusional Economics for original chart.