Latest / Best of Business / Dr Claire Matthews: Head of Massey University's Finance school on the Reserve Bank's proposed changes to capital lending

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Dr Claire Matthews: Head of Massey University's Finance school on the Reserve Bank's proposed changes to capital lending · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio Afternoon.
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  Speaker 2: The Reserve Bank is proposing to change the rules around
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  Speaker 2: how much money our banks are supposed to hold for
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  Speaker 2: a rainy day. So they're reviewing the so called capital
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  Speaker 2: requirement rules, which are supposed to help retail banks whether
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  Speaker 2: a one in two hundred year crisis, but they're widely
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  Speaker 2: considered to be onerous and very conservative. Doctor Clare Matthews
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  Speaker 2: is Massy University's banking expert High Clear, Hi, Heather, how
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  Speaker 2: do you feel about them going softer?
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  Speaker 3: I'm reason to be comfortable. The reality is there's been
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  Speaker 3: a lot of comment about the fact that the current
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  Speaker 3: regulations we're seen as a little bit higher than they
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  Speaker 3: need to be. So all we're looking at is bringing
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  Speaker 3: them back to what is really seen as a more
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  Speaker 3: reasonable level.
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  Speaker 2: And which of the two options do.
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  Speaker 3: You prefer at the stage? I don't have a strong preference.
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  Speaker 3: I think we need to have a little bit more
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  Speaker 3: time to have a look at them and just see
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  Speaker 3: exactly what are the implications of them both.
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  Speaker 2: How would you feel at us about us unwinding it
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  Speaker 2: all together? Going back to the way it was pre
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  Speaker 2: twenty nineteen.
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  Speaker 3: Well, that's an option, but I think the reality is
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  Speaker 3: that it's reason able to suggest that before twenty nineteen
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  Speaker 3: we were perhaps a little bit light, so beefing it
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  Speaker 3: up a little bit, but perhaps not just not as
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  Speaker 3: far as the current rules have taken us.
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  Speaker 2: I mean, there are some estimations that if we had
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  Speaker 2: gone all the way through with this, we would be
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  Speaker 2: paying twenty five basis points, maybe thirty eight bases points
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  Speaker 2: too much in contrast to the Australians. Would you say
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  Speaker 2: that's about right.
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  Speaker 3: I haven't done the calculations, but I'm prepared to accept
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  Speaker 3: that those calculations are probably accurate.
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  Speaker 2: And so therefore if we stop it in its tracks,
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  Speaker 2: won't be as much as that, but we could potentially
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  Speaker 2: save a fair chunk in money that we're not going
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  Speaker 2: to have to pay.
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  Speaker 3: Oh absolutely, it will have an impact on the rates
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  Speaker 3: that are charged on home loans and other lending and
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  Speaker 3: therefore all juice three payments, and that's got to be
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  Speaker 3: good for everybody.
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  Speaker 2: Yeah, listen on that. Do you have any concern about
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  Speaker 2: the fact that this is this review has quite clearly
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  Speaker 2: come about because the Finance minister has been asking for it.
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  Speaker 3: I mean that is a concern, the political intervention. But
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  Speaker 3: given that it's reasonable that you know, there have been
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  Speaker 3: a lot of people that have said that actually the
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  Speaker 3: bank Reserve Bank went too far. It's just taken the
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  Speaker 3: government intervention to actually force them to have another look
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  Speaker 3: at it. So, yes, some disquiet, but not a huge amount.
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  Speaker 2: And then what about Christopher Luxen this morning saying that
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  Speaker 2: he thought the Reserve Bank should have cut the ocr
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  Speaker 2: lower earlier. Is that also a little bit of overstepping
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  Speaker 2: the mark rey the independence?
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  Speaker 3: What do you think, Oh, it's fine to offer an opinion,
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  Speaker 3: but the problem is when you're the prime minister, it's
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  Speaker 3: more than an opinion. It's seeking to sway what's happening.
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  Speaker 3: And yes, that really is going beyond what should be
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  Speaker 3: being said, given that we do have an independent Reserve
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  Speaker 3: Bank and they're making their judgment call.
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  Speaker 2: Okay, But the thing is we all know the Reserve
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  Speaker 2: Bank is wrong, right, we're looking at it. We can
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  Speaker 2: all see they shout a cut earlier. We all knew
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  Speaker 2: the capital requirements were too onerous. So if you have
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  Speaker 2: to choose between them actually getting on the right track
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  Speaker 2: with a little bit of political help versus independence, which
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  Speaker 2: is more important to you.
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  Speaker 3: To be honest, Actually, the independence is more important because
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  Speaker 3: the political interference at the moment might not be too bad,
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  Speaker 3: but there's a strong risk that you know, it's a
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  Speaker 3: slippery slope, and you know a little bit now and
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  Speaker 3: it gets a lot more significant later on. So independence
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  Speaker 3: would win out over the benefits of the little bit
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  Speaker 3: of political push that we've had so far.
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  Speaker 2: Claire, thanks for your time and your expertise. That's Claire Matthews,
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  Speaker 2: Doctor Claire Matthews, Matthew University Banking expert.
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