APRA's Outgoing Boss John Laker Tackles Critics

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John Laker hands the reins of APRA, the Australian Prudential Regulatory Authority, to Wayne Byers today. But in an excellent interview with Tony Boyd of the AFR, published this morning, he has a few things to say on the way out.

On claims that Australia is too tough on the banks with regard to Basel III, the new global regulatory regime, Laker says “the media seems to rather enjoy this reheating up of this whole issue” and he adds – in a more aggressive tone than usual – “never let the facts get in the way of a good prejudice.”

In addressing why APRA is conservative, which Laker acknowledges, he gives a none-too-subtle reminder to the majors and those who argue APRA is too tough that while Australia might have dodged the GFC, Australian banking was in crisis once and almost lost one of the majors.

Laker said:

Now, when it comes to [being] tougher, we’re certainly conservative in the way in which we measure capital. As I say, it goes back to the early ’90s. We have never deviated from those points of principle. But you can readily measure what it means in a numeric sense.

In terms of government budget cuts and efficiency dividends, Laker says that these just make it harder for APRA to do its job.

Equally, no doubt with an eye to the Basel III implementation debate, Laker says he wants the pre-HIH dispute resolution mechanism between APRA and the Treasurer to be re-instituted. This would mean the Treasurer can’t force APRA to do something. Rather, the dispute would need to go to resolution.

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