I do not know Andrew Thorburn, but I know Dr Ken Henry well and am proud to count him as a friend.
In February 2016 Jonathan Tepper (of the English research firm Variant Perception) and I spent a week traipsing around the outer suburbs of Sydney checking out property developers, mortgage brokers and even some bank branches.
It was dead easy to find widespread evidence of mortgage fraud. It was pervasive - fraud was the way of doing business. Jonathan Tepper wrote it up in a now infamous report on the state of the Australian property market.
Jonathan Tepper was widely mocked in the Australian press when our findings were published. However the findings we had were confirmed by the evidence put before the recent Royal Commission.
For the record we found that all four Australian banks were problematic but that National Australia Bank was the least bad of a bad lot.
I went to have a chat with Dr Henry who took our findings seriously and began the (admittedly difficult) task of improving the National Australia Bank.
He was open about the difficulties in doing so, open about the incentives both within the bank and outside the bank and was cognoscente how difficult this was going to be. But he started.
I am not trying to defend National Australia Bank. It was the best of a (very) bad lot. But it was still not very good and Dr Henry started the task of making it directionally better.
Anyway come the Royal Commission Dr Henry talked to the Commission in a frank and open way about the problems. It was Dr Henry being Dr Henry: honest, competent, and realistic.
It came off badly. I remember the grilling he got from the Royal Commission and understood what was happening. It was clear that what was required from the Royal Commission was kowtow, rather than honest frank discussion. Dr Henry looked bad even though he was probably the single most reliable and honest witness the banks put up.
The Royal Commissioner made specific findings against Dr Henry and Andrew Thornburn. This surprised me because on my research National Australia Bank was the best of a bad lot, both in absolute level of moral decay and in direction.
The Royal Commissioner I believe misinterpreted the relative honesty of National Australia Bank.
Direct criticism was made of Dr Henry and Andrew Thornburn and today they resigned.
I am not sure that any Australian banker deserved to come out of the Royal Commission unscathed, but in a relative sense injustice has been done. The most honest party at the Royal Commission has paid with their career for their honesty.
I don't think Kenneth Hayne (the Commissioner) has done the country or the cause of banking reform a good job. And that is a pity.
A post script is warranted: one of the key conversations I had with Dr Henry I had in the presence of Rob Shears from Valor Private Wealth.
Rob is a financial planner and a friend of mine.
He has regularly (and appropriately anonymised) told me of the financial condition of prospective clients, many of whom are loaded with inappropriate mortgages on (sometimes multiple) investment properties.
He is a very good window on bad bank underwriting.
Anyway he was in the room when I had a phone conversation.
Today he tweeted this:
One of our clients friends is a bank manager of a NAB branch. Within 48 hours of the phone call you made to Ken a few years ago (I was in your office at the time) there were significant restrictions put on certain investor loans immediately. Ken is honest and competent.
I was unaware at the speed at which NAB acted when reliably informed of bad practices. But it confirms my impression of how NAB (and NAB alone) took our report seriously.