The Rudd Government’s philosophical instincts have been paraded to the world over the past 48 hours with a $10 billion handout to the poor and now an attack on executive fat cats in the banking sector.

Whilst it is absolutely true that thousands of millionaires have been created by an army of ticket clippers and paper shufflers in the Australian financial services sector, we need to be careful about who is targeted.

For instance, we need high quality bank leadership at the moment and it is the immediate past CEOs of the major banks who pocketed far greater fortunes than the current breed.

It all comes down to who got the cash payments and who cashed in their equity at the top of the market.

The biggest winners were those who got set before the credit bubble, especially back in the early 1990s during the last recession when Macquarie, Babcock and Allco were all unlisted outfits and the big four banks bottomed with a combined market capitalisation of about $30 billion. Who can forget Westpac shares hitting a low of $2.39 on November 6, 1992?

Westpac’s shares might have tumbled from $31 to $22 since last November, but it has still delivered spectacular returns over the longer term.

Westpac’s new CEO Gail Kelly has made more than $20 million from her time running St George but her predecessor David Morgan is worth at least $50 million. Let’s see Kevin Rudd launch an attack on Ros Kelly’s husband.

Similarly, former Commonwealth Bank CEO David Murray is far richer than incumbent boss Ralph Norris, although the latter has picked up $15 million over the past two years.

Let’s see Kevin Rudd launch an attack on the man who has actually done a great job preserving capital at the Future Fund.

The same goes for BHP Billiton chairman Don Argus, who made more than $30 million running NAB and was being quoted approvingly by Anthony Albanese in Parliament last week.

Macquarie Group CEO Nicholas Moore will be another favourite whipping boy but at least he’s changed to taking a majority of his bonus in stock that must be held for three years.

Moore’s predecessor Allan Moss took out more than $100 million in cold hard cash over the past 5 years, although Federal Treasury obviously helped themselves to a big chunk of that.

Whilst Macquarie should curtail its executive pay practices now that it is reliant on a government guarantee, we should also celebrate its risk management successes over the years.

The same can’t be said for Babcock & Brown. The top executives helped themselves to more than $300 million in cash payments since the 2004 float and have managed to destroy more than $10 billion of equity across its dysfunctional family of revolting funds.

That said, current Babcock CEO Mike Larkin hails from Lend Lease and despite being the immediate past Babcock finance director, he shouldn’t be the pin-up boy for everything that went wrong in the empire, like has happened with filthy rich Lehman CEO Dick Fuld.

The real Babcock villains are the founders and long-term executive directors, led by former CEO Phil Green and former executive chairman Jim Babcock.

*Check out what will soon be a much-diminished Mayne Report Rich List of every Australian worth more than $10 million.

Peter Fray

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