It’s unanimous: Economists’ poll says we can fix the banks. But that doesn’t mean we will



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Most of the economists polled think better regulation can make banks put customers first. The rest think it will need more.
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Gigi Foster, UNSW and Paul Frijters, London School of Economics and Political Science

After three years and 35 polls, the Economic Society of Australia has received its first-ever unanimous response to a survey question.

It asked just over 50 of Australia’s leading economists to respond to this statement:

There is no way to significantly increase the degree to which Australian retail banks act in the interests of consumers.

Twenty did. All rejected the proposition that nothing could be done. But there was widespread disagreement about what should be done.

Most thought that regulations should be tightened and better enforced.

Mathew Butlin’s comments typify this “more regulation” approach:

The incentive structures for bank staff, from the top down, play a key role in shaping behaviour. A more complete set of performance measures linked to remuneration that strongly penalises behaviour not in the consumer interest would provide stronger incentives for better behaviour, especially when linked with reliable information on non-compliance going to management and ultimately the bank board and a requirement for both to take action.

A smaller group openly doubted that better regulations would
help, because they were not confident that the current crop of regulators or politicians would be able to devise and properly enforce them.

Allan Fels gave the most damning response (with the highest word count) saying what was needed – among other things – was a
“radical improvement in the performance” of the two main regulators, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.

In particular they need a change of culture. This will prove to be harder to do than it sounds. People have been talking for over twenty years about the ASIC and APRA culture needing improvement.

Geoffrey Kingston called for mandatory minimum sentences
for financial crimes, arguing that the courts were complicit in the maintenance of financial crimes by being reluctant to jail white-collar criminals.

Kingston and Joaquin Vespignani pointed to the monopoly power of the big four banks before then raising the hope that the “big data” revolution would democratise banking and re-empower consumers, an idea at the heart of the government’s Consumer Data Right initiative.

Also targeting market concentration, Allan Fels, James Morley, and
John Quiggin called for the separation of bank functions (with marketing separate from advice) or the breakup of banks themselves as happened in the United States under the Glass-Steagall Act of 1933 which separated investment banks from deposit-taking banks.

Gigi Foster called for foreign countries to send competent regulators to sort out Australian’s banking system, suggesting that Australian regulators were compromised.

John Quiggin called for a stand-alone “no frills” public bank modelled on New Zealand’s Kiwibank, something he hoped would rein in the expansion of the financial sector that began in the 1970s. But he added:

These proposals may be beyond the realm of political feasibility, which is why I have expressed only modest confidence in my view.

Quiggin and a substantial minority of those polled acknowledged that – uncomfortably for economists – many of the barriers to getting banks to behave better lay outside the realm of economics. Like well-meaning doctors, economists have been dispensing prescriptions that “should work”, while the patient continues to die.

But standard prescriptions have their place – among them removing commissions, imposing salary caps, imposing fee caps, revoking licences and setting minimum jail terms, all of which would change the balance of risks and rewards and help put money back into the pcokets of ordinary Australians.

Of course, even applying traditional economic prescriptions require political will.

Perhaps surprisingly for a group of “dismal scientists”, 20 of Australia’s leading economists believe that change is possible. It isn’t the economics that is dismal, it’s the dearth of political courage to do what’s needed.


This is an edited version of a review for the Economic Society of Australia, available here.The Conversation



Gigi Foster, Professor, School of Economics, UNSW and Paul Frijters, Co-Director, Wellbeing Program, London School of Economics and Political Science

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Pakistani Muslims Abduct Young Christian Woman, Family Says


Mother beaten on two occasions for trying to recover her; police refuse to prosecute.

LAHORE, Pakistan, May 6 (CDN) — Muslims who kidnapped and forcibly converted an 18-year-old Christian woman to Islam severely beat her mother on two occasions to discourage her from trying to recover her daughter, lawyers said.

Muhammad Akhter and Muhammad Munir on April 25 broke into the home of 50-year-old widow Fazeelat Bibi while her sons were at work and beat her because they were upset at her continuous demands that they return her daughter Saira, Christian Lawyers Foundation (CLF) leaders told Compass.

CLF President Khalid Gill said that neighbors’ calls to the police emergency number went unheeded as the men beat her in Lahore’s predominantly Muslim Bostaan Colony.

On April 18 Muhammad Akhter and members of his family had beaten her with clubs and ripped her clothes when the widow, having received a tearful phone call from her kidnapped daughter that day, went to their house to argue for her release.

In Saira’s telephone call to her mother, received at the house of Muslim neighbor Musarat Bibi, who is a constable, the young woman was crying as she said that Munir and Akhter were spreading false rumors that she had eloped with Munir, Fazeelat said. She said her daughter told her how Munir, Akhter and Munir’s sister Billo Bibi had kidnapped her, stolen the jewelry of her dowry, forced her to convert to Islam and were pressuring her to marry Munir.

At the time she was kidnapped on March 10, Saira was engaged to a young Christian man of Youhanabad, a large Christian slum on the outskirts of Lahore, Fazeelat Bibi said.

“Saira’s brothers and I were very joyful because we were about to fix her wedding date,” she said.

Previously the radical Muslim family lived next door to the Christian family. On March 10 Munir, who is Akhter’s uncle, came to the Christian family’s home and told Saira that her mother was ill at her hospital workplace and wanted to see her immediately, Fazeelat Bibi said.

“Then Muhammad Munir deceitfully abducted Saira,” she said. “It seemed as if Saira had vanished into thin air. At first my three sons and I sons searched for Saira, but our efforts were futile.”  

She accused Munir, Akhter and Munir’s sister Billo Bibi of kidnapping her daughter. They have continued to threaten to kill her if she persists in trying to recover her daughter, she said. Her daughter, she added, has called her “persistently” from Charrar village saying that she has been kidnapped, forced to convert to Islam and is being pressured to marry Munir against her will.

“This also reveals that Saira has not tied the knot with Munir yet,” Gill told Compass.

The distraught mother said she approached Kotlakhpat Police Station Inspector Rana Shafiq seeking help to recover her daughter, but that he flatly refused. The inspector told her the issue could be resolved at the local Bostaan Colony meeting, she said; the rulings of such a meeting of local elders, known as a Punchayat, have the equivalent of court authority in Pakistan.

Fazeelat Bibi said that several such meetings produced no resolution to her daughter’s kidnapping, but that while present she heard the false rumor that her daughter had wed Munir. At the meetings she also learned that the Muslim men were keeping Saira at Charrar village outside Lahore.

Fazeelat Bibi told Gill and CLF Secretary Azhar Kaleem said that she was somewhat satisfied to learn at the meetings that her daughter was at least safe, but her relief vanished after the April 18 call from Saira. Her daughter told her that she had tried to escape three times, she said.

Once again the frail, 50-year-old woman sought the help of Inspector Shafiq, and again he refused to help, the CLF leaders said. Gill and Kaleem said that Shafiq was explicitly inclined to favor his fellow Muslims in the case, and that he told her to move to a Christian slum as no one would help her in Bostaan Colony.

Gill, who is also head of the All Pakistan Minorities Alliance in Punjab Province, and CLF Secretary Kaleem said they believe that Akhter, Munir and Billo Bibi had heavily bribed the inspector to keep him from prosecuting the Muslims.

Shafiq declined to respond to Compass calls, and the registrar of the Kotlakhpat police station, Abdul Qayyum, said Shafiq was not available for comment.

Saira was just 2 months old when her father, Pervaiz Masih, died and her mother and three brothers moved from their native Yansonabad village to Lahore in search of a better life, Fazeelat Bibi said. She said that she began working as a sanitary worker at a hospital in order to support them, while her sons began working as day-laborers when they reached their teenage years.

Saira is her only daughter, Fazeelat Bibi said.

Report from Compass Direct News