National Radio Caught Bashing Banks

Okay, I know this post is about a radio station in Middle Earth, but still, I hear this a lot: bank-bashing as a pastime for radio presenters.

Last Tuesday, Radio New Zealand (RNZ) presented a section on our banks under the headline ‘What’s behind our banks’ huge half-year profits?’ The subject is music in the ears of the Labour electorate. The headline is also bound to vibrate the eardrums of many listeners: RNZ benefits from the attention generated by the Ozzie Royal Commission, which examines badly behaving Australian banks.

With New Zealand banks making handsome profits indeed, it is time for Morning Report presenter Susie Ferguson to query a bank specialist.

Here is were the things take a strange turn. Susie calls upon Claire Matthews, who is Massey Business School’s director of Academic Programmes. Unfortunately, Claire turns the interview into custard. Two minutes into the radio interview, Claire informs the public that profitability has reached the point that “questions need to be asked about the amount of money the banks are making.” Wow! Despite a lack of evidence, now is the time for a Royal Commission at this side of the Tasman.

A minute later, Claire realizes what she has said. She makes an important U-turn – but now in favor of the banks. She explains that our banks are well-behaved. And actually, there is sufficient competition in the New Zealand banking sector. It’s just that the banks need these profits to enable them to ride out a next crisis. Now is not the time for a Royal Commission at this side of the Tasman.

No matter how hard Claire woos the banks, it is all too late of course. Her bold reference to the Royal Commission features in news bulletins during the rest of the day.

Why am I writing this? I mean, a slightly biased radio interview, a headline that does not cover what was said, and a news program that makes the best of a confused bank expert, director of academic programmes. These things happen. Even the fact that Claire Matthews works at a research center that is affiliated with Westpac should not be a worry, or … .

Well perhaps it should worry us.

The choice of Claire was unfortunate for sure. She should have mentioned that the New Zealand banks are sufficiently capitalized to weather a next crisis. Just read the RBNZ financial stability reports. There is no need for these these ‘huge’ profits to withstand a next economic downturn. All NZ banks pass stress tests hands-down.

But this is why I worry: A week before, Guyon Espiner, co-presenter of Morning Report queried Banking Ombudsman Nicola Sladden on bank customers’ complaints. Nicola confirms what others have said. She has not (yet) seen anything in New Zealand banks like the systemic abuse that has come from the Australian royal inquiry.

So far so good.

However, six minutes into the radio interview, Guyon turns it into a toe-cringing experience. He loses it when he realizes he forgot to do his homework. Guyon discovers that the banks, yes the banks! pay Nicola’s salary. For two long minutes, Guyon challenges Nicola’s independence.

Nicola, however stands firm. She calmly explains that the governance of the Banking Ombudsman mitigates conflicts of interest. Nicola has a valid point, these funding models are common. Unfortunately, Guyon’s obsession with the Banking Ombudsman funding model does not help. Listeners have learned that the financial sector is even more corrupt than previously thought – even tough there is no evidence (yet) to support this.

What worries me in particular is this. Morning Report seems hardly neutral when it comes to banks. The words of one interviewee, with so-so banking credentials and unchallenged ties with one of the four large Australian banks, are taken for granted and broadcasted to support a bank un-friedly message: ‘What’s behind our banks’ huge half-year profits?’ The words of an other interviewee, with over 20 years’ experience in dispute resolution, get’s grilled for no clear reason. But they support a bank un-friedly message: the bank ombudsman cannot be believed.

Perhaps it is time for Morning Report to clean up their act before they ask the banks to do so.