1) People are often stupidNow Gareth Morgan writes in the New Zealand Herald on problems in the Reserve Bank to do with banking supervision,
2) Bureaucrats are the same stupid people, with bad incentives.
But despite a plethora of taskforces, we still haven't paid any attention to the standard of competence that has undermined the Reserve Bank's prudential supervision of the banking system, which time and time again can be shown to have been the largest single piece of policy negligence of the past 20 years.and
The officials responsible for it should at least be subject to an inquiry - not as part of a witch hunt but to make them justify (or not) the directives they've made to the banks - the bill for which we as taxpayers now have to fund.
A public self-examination is overdue for Reserve Bank governance of the banks - and we all agree, don't we, that taxpayer-guaranteed banks these days are little more than arms of government lending policies. Bring it on.There are many question to be answered about the banking sector and its regulation. Officials from the Reserve Bank and other government departments should be held accountable for their actions. Problems with the Government guarantee scheme and South Canterbury Finance only highlight the need for a "public self-examination".