Australia's banks are launching a new campaign to educate policymakers and regulators about the ins and outs of their business, the Australian Financial Review reported on Monday.
The banks feel defensive since the debate over the Future of Financial Advice (FOFA) reforms, in which they were depicted as semi-corrupt fraudsters preying on the elderly and uninformed, and the recent outrage over mortgage interest rate rises.
Good luck to them. This seems a more productive use of their public relations dollar than campaigns on climate change.
But if this campaign breaks the deep connection between Australian politics and anti-bank populism, it will be the first to do so in 12 decades.
The banking crisis of 1893 set in train more than a century of populist political demagoguery about banking.
Our modern Labor mythologists sometimes skip over the comically propagandistic "money power" doctrine that formed such a large part of Labor politics in the first half of the 20th century. According to money power ideologists, a cabal of bankers — British bankers, Jewish bankers — owned every major industry and asset and controlled Australian politics.
The money power doctrine was not an obscure theory held only at the margins of Australian politics.
Jack Lang, the former NSW premier and Paul Keating's mentor, was a money power conspiracy theorist.
John Curtin's mentor, the Scullin government minister Frank Anstey, was the author of an anti-banking, anti-Semitic book called the Kingdom of Shylock (have a look at the digitised version, if you want to be stunned at how overtly racist Australian labour thought it could be).
Driven by this sort of thinking, in 1945 Curtin government introduced burdensome and harmful regulatory controls on Australian banking that slowed economic development and pushed ordinary borrowers into the shadow banking sector for decades.
While it is true that some economists excited by the possibilities of the new Keynesian economic thinking had urged Labor to introduce banking restrictions, it was the crude money power populism that led to the most harmful of those controls: caps on interest rates and an outright ban on foreign banks in Australia.
Anti-bank hostility even played a role in the deregulation of banking four decades later. When Keating ended the ban on foreign banks in 1985, he did so because he believed it would undercut the "drones" of the Australian banking industry. The banks had been made lazy and powerful because of the protection his Labor predecessors had granted to them.
When the Reserve Bank decided to break the back of inflation in the early 1990s, exacerbating on one of the worst economic downturns in Australian history, Keating directed popular anger towards the banks.
A 1991 inquiry into banks — A Pocket Full of Change — encouraged people to send in their complaints with bank services, interest rates, customer relations. Anything they could think of. Nearly a 1000 submissions and complaints were sent in. This distracted attention from the government decisions that caused the crisis in the first place.
A Pocket Full of Change is largely forgotten now. But in retrospect it was very significant.
Our semi-regular freak-out about whether banks are adequately passing on Reserve Bank interest rate cuts can be traced back to Keating's decision to recast old money power rhetoric in a new guise: to present banks and bankers as uniquely profit hungry and exploitative, and to do so as cover for government policy.
Hence the recent kerfuffle about the major banks' decision to increase mortgage rates independent of the Reserve Bank.
The Reserve Bank's cash rate has been held steady at 2 per cent since May 2015. But in October the big four banks decided to increase the interest rates they charged on variable mortgages. Westpac went first, and the rest followed. Bill Shorten thinks that this increase was "just corporate greed".
But the rate increases are explicitly in response to a policy decision by the Australian Prudential Regulatory Authority that the banks should hold more capital against mortgages. Of course the banks were going to pass the cost of that regulatory requirement onto consumers.
Have the banks raised rates more than they need to, as Scott Morrison tried to argue? Given the likelihood of even more stringent capital requirements in the near future, it's hard to blame the banks for being cautious.
In the debate over the FOFA reforms much was made of the need to protect uninformed investors from predatory financial advisors. It's true that many people don't understand the world of finance and banking.
But this doesn't just make them vulnerable to unscrupulous financiers. It also makes them vulnerable to unscrupulous politicians who want to obscure the consequences of their own policy decisions.
If the banks want to change that dynamic, they're going to have to shift the weight of a century of Australian history.
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