This is a government of former bankers, closely allied to the banking industry, and yesterday's attempt to head off a banking royal commission via a package of funding and reforms for the Australian Securities and Investments Commission looks more and more like a win for the banks.

Remember, Malcolm Turnbull is a former Goldman Sachs partner. Assistant Treasurer Kelly O'Dwyer is a former NAB executive; NAB is also a sponsor of her local fundraising body and in 2014-15 gave the Liberals a total of just under $240,000 (it gave Labor a total of $35,600). Not to mention cabinet secretary Arthur "I can't recall" Sinodinos, who is also a former NAB executive. It's now clear that the package will not restore the funding cut by the Coalition from ASIC's budget -- in fact, this is the big lie of yesterday. The banks (which, a few journalists should note, aren't mainly regulated by ASIC, but by the Australian Prudential Regulatory Authority and the Reserve Bank) will be subject to a $127 million levy, but half of that will not be ongoing funding, just capital for IT systems at ASIC. So yesterday's announcement is accurately understood as a capital injection and an ongoing funding increase of $57 million over four years -- or less than $15 million a year. That won't go close to restoring the nearly 300 ASIC staff eliminated since 2014. As Crikey noted yesterday, the government plans to increase industry secondments into ASIC -- despite the 2014 Senate Economics Committee report on ASIC raising serious concerns about the management of private sector secondees in ASIC (no one doubts that swapping both public servants and industry employees between the two sectors can be a good idea, but conflicts of interest need to be tightly managed). And in a good piece by The Guardian's Gareth Hutchens today, we got an insight into how an industry levy might not be the unalloyed positive that it appears to be. The head of Australian Bankers Association, Steven Munchenberg, is quoted as saying "if we’re paying, how can we have a guarantee that the regulator will use those funds efficiently?” That is, the big banks will want control over ASIC and its expenditure. And with more industry secondees in place in ASIC, they'll have the means to implement that. No wonder the ABA welcomed the package yesterday -- a sure sign that they think it contains no threat to them of any kind -- especially given that the only thing stopping them from passing on the industry levy is Treasurer Scott Morrison's "fury". At his current rate, Morrison won't be Treasurer for much longer, so that's nothing to interrupt the champagne skolling at the ABA. Morrison's main contribution yesterday was a folksy anecdote about his policeman father, while O'Dwyer was across the detail of the package. But Morrison also did some rewriting of history, saying about the financial crisis: "When other banks collapsed around the word -- our banks did not. That was, in large part, due to the very strong and effective regulatory system that was put in place by the Howard-Costello Government which ensured that those banks remained in place and that businesses could continue to function.” Garbage. It was the Reserve Bank that prevented Australia's banks from failing in late 2008, and the then-Rudd government’s guarantee of bank deposits and bank debt (a total of $157 billion) that saved the banks. The RBA pumped liquidity into the system, lifted note circulation (by around $10 billion in late 2008) to meet a steady "silent" run by worried depositors and kept the financial system alive during the worst of the crisis after Lehman Brothers fell over on September 15-16, 2008. And Kevin Rudd and Wayne Swan's deposit and debt guarantees (remember, the banks, large and small complained about paying a fee to piggyback off the country’s AAA rating) provided longer-term support. Malcolm Turnbull was opposition leader at the time, and his contribution to the whole crisis was to use information about the preparation of the bank guarantee within Treasury provided by his good mate Godwin Grech to try to pre-empt the government and take credit for proposing it first. One more issue of concern: in its enthusiasm to portray its package as somehow better than a royal commission because the latter can only be backward looking, the government is hyping the idea of proactivity by ASIC. “If they [ASIC] detected there was a problem with a product, instead of waiting to clean it up at the end, they will be able to intervene and ban it, stop that product being sold to people who it should not be sold to. This is a big change,” said Kelly O'Dwyer yesterday. Sounds all well and good -- except that that's not the traditional role of a regulator, which is to enforce the law and find and punish those who break it. To use the government's own, heavily labored "tough cop on the beat" metaphor, the cop is on the street -- not in everyone's house, looking for wrongdoing. ASIC only has to get one intervention wrong -- perhaps so wrong that it is sued and incurs damages -- and the idea of proactivity will be discredited. This potentially fatal error is driven purely by the government's political need to portray a serially inept regulator as not merely a "tough cop" but a preventive agency, in the hope voters will think this trumps a royal commission. But ASIC has consistently shown it can't even do the basics of straightforward regulation properly -- this is the body that not merely handed out enforceable undertakings like confetti to the big banks, but ignored it when both whistleblowers and the banks themselves revealed they'd been breached. Does anyone seriously think it will make the leap to successfully looking over the banking industry's shoulder? Particularly when, courtesy of new funding and secondment arrangements, ASIC would be in effect be funded and staffed by the banks.