This is bad. The article is good. But the situation described is very bad.Here's Kate MacNamara on Orr and the RBNZ. It would be an open process, the bank said, welcoming all views. But that characterisation was soon at odds with the governor's behaviour.Numerous parties involved in the submission process described a pattern of behaviour by Orr of belittling and berating those who disagreed with him.Orr has penned his critics letters and threatened to broadcast them. He has confronted submitters on the sidelines of industry conferences. Sometimes he called them up at odd hours to tear a strip off them for their views.There is reason to believe that his pointed criticism has diminished the range of parties willing to participate in the debate.At least one corporation that submitted views
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The article is good. But the situation described is very bad.
It would be an open process, the bank said, welcoming all views. But that characterisation was soon at odds with the governor's behaviour.I have heard these stories as well.
Numerous parties involved in the submission process described a pattern of behaviour by Orr of belittling and berating those who disagreed with him.
Orr has penned his critics letters and threatened to broadcast them. He has confronted submitters on the sidelines of industry conferences. Sometimes he called them up at odd hours to tear a strip off them for their views.
There is reason to believe that his pointed criticism has diminished the range of parties willing to participate in the debate.
At least one corporation that submitted views at an earlier stage in the capital review (before Orr was governor) decided not to participate this time. The company is not in the banking business, though like most it cares what bank services are offered and at what price. But it ultimately decided it wasn't worth wading into such troubled water.
Non-bank lenders similarly withheld their views. Sources say they feared being singled out for other consequences (one non-bank lender active in New Zealand is owned by an insurance company, an area of business that is also under scrutiny by the Reserve Bank).
It is worth pausing here to consider Orr's position.
And here's the governance failure:
Orr's chequered behaviour is not something on which the Reserve Bank chairman, Neil Quigley, is prepared to act.Might those who would make formal complaints trust that their identities would be kept confidential, or that the particulars of any complaint would not identify them to Orr? Remember that Orr can destroy any of the companies he regulates at the stroke of a pen.
"I have not received a formal complaint from any party about the governor's interaction with them," he said. "The Board has full confidence in Adrian Orr's leadership."
Meanwhile, over at Michael Reddell's blog, ex-RBNZ's Geof Mortlock (or at least someone writing under that pseudonym), comments:
None of what we are seeing with Adrian Orr surprises me in the least. It is precisely what I had expected when he was appointed as governor. The problems so clearly revealed now for all to see were very much evident to me and many others when Orr was deputy governor and head of financial stability in the period 2003 to 2007. He created a sense of panic when there was no need for it. He engaged aggressively with Australian banks when mature, adult dialogue would have been far more effective and appropriate. He facilitated and abetted an aggressive and petulant fight with APRA, RBA and Aussie Treasury over trans-Tasman regulatory issues rather than seeking to resolve them in a considered, intelligent manner. He engaged aggressively with staff and routinely bullied them. He created a deep level of stress in the RBNZ among staff that contributed to the departure of some key people. I can attest to what it was like working with him. I and others departed the RBNZ because of the severe impact he had on morale and because of concerns over mismanagement of issues and because of the appalling culture that he and others created in the RBNZ. Bollard presided over much of this, either unaware or unconcerned, and did nothing to address the matter from what I could see.I understand that, inside the Bank, there is a view that opposition is grounded in interested objection to the heightened capital requirements.
Now that Orr is governor, his unsuitability for the job is evident for any impartial observer to see. The lack of judgement, unsuitable temperament, lack of maturity, inadequate knowledge of the issues and a serious failure to intelligently address the policy issues are all obvious to anyone who cares to look at his performance.
Sadly, the RBNZ Board seems to lack the competence or mettle to do anything about it. Its recent annual report was a pathetic effort at exercising meaningful scrutiny over Orr. Even more sadly we seem to have a minister of finance who is asleep at the wheel and either turning a blind eye to Orr’s appalling incompetence in handling the tasks entrusted to him or who is happy to see Orr playing an overtly political role that is totally inappropriate for someone holding office as governor.
It is time that the people with authority over Orr did something about his conduct, statements and handling of policy issues. The RBNZ’s credibility is at stake. And serious policy outcomes are under threat. Robertson and the Board need to take action to address the Orr problem.
For my part, I don't care what the capital requirements are so long as the underpinning analysis is adequate and the process makes sense. That process would have to involve a real consultation period after the full cost-benefit analysis of the proposed regulation is published.