The Murray Inquiry is due to hand its final recommendations to Treasurer Joe Hockey next month.
In the lead-up, rumours are flowing thick and fast on what these recommendations might be and in particular, the impact on the major banks, including what – if any – of the big-ticket items called for will make Murray’s final list.
These items are a smorgasbord and include:
- A tax on the majors through the imposition of a fee for the government guarantee of deposits because of their ‘too-big-too-fail’ status;
- Break up their vertically integrated financial planning model;
- Ring-fence the home loan and commercial banking operations from riskier ventures;
- Increase the capital they need to hold against their mortgage book; and
- Impose a minimum level of capital to be held against mortgages under the majors, and Macquarie’s, internal ratings-based apporach
But the AFR reports this morning that it is only the last two items that are likely to make Murray’s short list of recommendations to the Treasurer.
It still means that the majors will need to hold more capital then they do presently, and there will be cries of increased costs to the economy. But it is likely there will be sighs of relief in the C suites of the Big 4 if this is all that Murray recommends.
That is not a bad result for the economy either, because it means the majors won’t be artificially hobbled with taxes and fees due to a situation of concentration which is both a result of history and also replicated in almost every major industry in the Australian economy.
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