It’s a marvel of poor thinking, the federal government’s proposal to compel major banks to attend hearings of the House of Representative’s economics committee. The worst of both worlds when it come to bank accountability.

The major banks are, of course, not just ordinary companies — they play a role akin to our most important utilities in keeping the economy functioning. Their health and survival is central to economic performance. And it is on that basis banks have long been subject to a much higher level of regulation and oversight by government than most other companies.

But they are not government owned. They are primarily responsible to shareholders, not to taxpayers. Compelling them to appear before a parliamentary committee, like a government agency or bureaucracy, is a significant intrusion into their operations. It should be done when circumstances necessitate, not as a matter of course.

We will gain little, if anything, from an annual grilling for a couple of hours of bank executives — especially when the committee will be government controlled. Bank executives will simply do what experienced public servants have practiced for decades: play for time, take questions on notice, raise confidentiality concerns, lament that the relevant officer has moved on, express regret for “errors”.

Only a royal commission — with the resources to gather evidence, compel witnesses and assemble a strong legal team — will provide genuine insight into the long list of banking scandals, the decisions behind them and who made them.

That’s why the banks are so terrified of one. And why the Liberals — who benefit from millions of dollars in donations from the big banks — are so keen to prevent it.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey