Yeah, forget buyer beware, making informed decisions and personal responsibility. Let's regulate ourselves out of freedom and economic existence and deliver our shaved necks to the axes of bureaucrats and politicians.

Stop the bus, I'm getting off now ...

I think our unbalanced, messy economy nears a point, where fundamental philosophical questions have to be asked.

Please, read and understand this in context to other of my articles.

Walter

Yes she should head up the super facilitator, but not the super regulator.

Talk about self promotion!

We need a more sombre and knowledgeable person to be a regulator. Regulators need to understand the issues, as opposed to follow prescription, i.e substance over form.

To little to late would be a good epitaph for the securities commission.

Obviously not her fault, eh?

Can't say much more than say Roger has summed it up well. Totally agree.
Should also add that self promoters like this need to understand that the internet works both ways ( not like the old one way system of the newspapers )

"Prospectuses that talked about interest ‘earned’ actually misled many because much of that ‘interest’ was capitalised."
Doesn't anyone remember 1987, same problem, income statement showed profit but income was not received, i.e. interest disclosed in income statement but not received. Cure was statement of cashflows as statement of cashflows only deals with actual receipts and payments not accruals. Information was there, if not then regulator needed to step in.

John - quite right. The wide-eyed followers of the pied piper are the same types, whether the promised land is Ariadne, or Hanover.

Someone should tell them all that the opportunities aren't there anymore - that opportunities-per-person peaked in 1979 - and that the gamble is loaded in favour of the house.

Which leaks.

What is her salary by the way? How much does this (non)regulatory framework cost to run?

Any honourable person would have resigned from such a position by now.

Wot is/are Janie's credentials .......... Not one of those Doctorates from Oxford , like that Thompson woman , the immigration czar .......... never trust those Thompsons , shifty bunch the lot of them ......... and they dribble sweet green drool !

We should be following the Australian approach. They are light years ahead of us in this space.

Very prescient warning in '05 Bernard.
The issue of capitalising of interest helped create a huge problem

The property development sector was getting into trouble by late '06/early '07, look at how general sales volume was in decline with many developers requesting (and getting) extensions and roll overs. Prudence would dictate that many of the FC's loans should have been marked as impaired by then. They were, of course, kept on the books at full value.
The FC's were able to continue making obscene payments to shareholders and produce deeply flawed prospectuses with the intention of suckering in more unfortunate victims. It was all a game of "lets pretend" to the obvious benefit of shareholders.

In two years Jock Hobbs and co at Strategic paid out 150million to themselves, this at a time when the chances of recovering the interest was in serious doubt.

Apparently this is legal, so in that regard Jane Diplock is correct. What I don't understand is; why were there no checking systems in place to insist on a realistic, realizable value of the loan book?

Well said Bernard re Diplock she is a total disgrace, if she was muzzled by Clark/Cullen/Dalziel she should have resigned spelling out the reasons.
We need a super regulator to stop the duck shoving between various regulatory bodies and we need a new chief who market participants are quite fearful of.

I think the interest earned / interest received thing is a beat up. The cash flow statement should fill in the gaps here. What is more relevant is provisioning; related party disclosure; capital adequacy; auditor independence; audit standards and what most NZ'ers still have no idea about - that the Sec. Comm. specifically targeted the sector because it was becoming overheated. The whole debacle has been cleverly orchestrated by Diplock and her cohorts. They have targeted the company Directors as this is the easiest "out" for them and there cosy jobs, as opposed to going after a raft of other interested parties. If the Sec. Comm. seriously wants reform they need to look at the entire market, including Court performance, Credit Reporting by Agencies, Auditor/Trustee independence

The thing about this woman is that she has said almost nothing to all those mum and dad investors who have lost money in finance companies. What she has said, is in paid publication, where she has just regurgitated what others have said. Her 'advice' to hanover investors with the allied deal was a total joke.
She is supposed to be working full time in a job, but has been quietly missing in action over the NZ finance company crisis (finances version of the leaky building crisis), yet she still finds the time to write newspaper articles for commerical organisations, and appear on TV programs such as Q&As panel. Now she is blaming NZ regulation for the finance company problems. Well if that is the case, then these people who have lost money should received compensation from the government. If leaky home owners may be able to, then finance company investors are no different. At least leaky home owners have gained on their land values, with tax free capital gains on their LV.

One regulator at least picked there was a problem - in 2005

See the section on finance companies in this report: http://www.rbnz.govt.nz/finstab/fsreport/fsr_nov2005.pdf (PDF, size 700655 bytes)

What can I say.....Ah yes....I am surprised...(Well amazed actually).

Double Dippers from Dipton & Diplock, Cull-em and Hell-en back couldn't oversee, nor manage a HISS-UP in A BREWERY.

Yet they were and are ruining this country and the dis-United Nations and big business (To become a smaller business)....still.

When something that is supposed to be REGULATED and this monumental FINANCIAL catastrophe happens on ANYONE's watch, they should resign...en- BLOC.

(This has a FRENCH THEME).

(Or preferably be cast into the open caste MINES, they will NEVER work in.....in a million years).

Instead they are PROMOTED....way above their competence ...and station....and certainly...intelligence...at vast sums of MONEY.

Well the BUCK should always be recoverable from the CROOK and their surrogates and that includes those who TAKE by default, in not doing their jobs correctly....or more probably in collusion.....if not incompetence....or padding the old RESUME...

I am very SURPRISED that the TUMBRILS are not queueing up outside the doors of THEIR mansions, in the time honoured tradition...to make em more HONE-rabble.

I personally THINK that the NEW ZEALANDERS and others who were CONNED, RORTED and RAPED and PILLAGED, should take a lesson from the FRENCH.

Off with their HEADS of GOVERNMENT, RESERVE and MAJOR BANKS, and any HEAD OF DEPARTMENT who cannot make BUDGET, except their OWN.

You have been taken for a ride NEW ZEALANDERS.....and it was never gonna be FREE........GOLD CARD or not.....

I think we need a bit of NEW ZEAL in the COUNTRY and let us dispense with the OLD F__RTs and T__RTS....who POMPOUSLY spout drivel......NOT ME, NOT ME...ME...

Well they were ALL paid...for it to be....THEM....even in OPPOSITION.

Yet they still keep on steadfastly taking our dosh...which is a load of TOSH.

Let us stop em all eating CAKE ...at the expense of us ALL.

REVOLT......yes I am REVOLTING....but they were even more-so....MERDE.

Send her to Afghanastan with the SAS

Grant and D14 - no, no and hell no. Last thing I want is some prick on a blog analysing my expenditure and performance ;)

Wally : Gareth would do it gratis , for the sheer delight of seeing the thieving sods get their comeuppence . A trooper through & through , GM !

I recall John Key writing to Sullen Cullen and Mrs United Nations alias Helen Clark drawing their attention to the wild and wooly actitivites of Finance Cos,that was in approx 2005.I also heard alleged that the Labour MP for Christchurch East Lianne Daziel when approached by an investor saying he had been scammed for 400K?HER COMMENT WAS NOT TO WORRY THEY ARE "RICH PEOPLE'.

FYI Here's Chalkie in The Independent from February 2005.

"Cabinet has just rubber stamped an officials’ paper endorsing the commendations of the recently-reported Taskforce on Financial Intermediaries. The crux of the recommendations is that financial intermediaries or advisers be subject to a co-regulatory regime of which the kingpin will be – yes, you guessed it – the Securities Commission . Intermediaries/advisers will have to belong to approved professional bodies (APBs) which will be the frontline regulators responsible for keeping them in line. And the Securities Commission will be the state agency responsible for vetting or licensing these APBs.

"Sharebrokers have been around a while and are a fairly homogenous, gentlemanly lot, but the commission still seems to have made a hash out of keeping an eye on them. But financial intermediaries will be a more challenging kettle of fish, encompassing the likes of financial planners, investment advisers, mortgage brokers, insurance agents, timeshare salesmen and possibly some real estate agents and a few other worthies.… Keeping some of that lot on the straight and narrow will require a regulator on top of its game, and – given its trackrecord to date on the co-regulatory front – Chalkie reckons the Securities Commission has more than a bit of work to do to prove itself worthy of the task Cabinet is entrusting to it."

cheers
Bernard

So who watches the" WATCHERS" Other than you Bernard a concerned citizen,The lady has credit card will travel .Hope our elected representatives will coming out of hiding,or to put it the way Muldoon said it ,are they a bunch of shivers looking for a spine to crawl up.

As the liquidator of two finance companies, the stories I could tell, you would view as increditable but unfortunately they are factual. I agree with your analyst Bernard.

You can never stop the ROT, unless the deadwood and dross is expunged, then you have to re-build with CONFIDENCE, not con-fidence tricksters.

As long as the same people have their hand in your pockets, there will never be a First Fix, never mind a long-lasting re-build.

The biggest problem with dealing with any person who wants to invest your money, is what THEY think is in it for THEM.

Same goes with the Banks, Councils, Government Departments, Social Welfare drop-outs, CAR DEALERS, LAWYERS, REAL DEAL ESTATE AGENTS.....and the lowest of the low, the people who you expect to look out for the INTERESTs of the investors, they all THUNK it is THEIR money they are playing with.....NOT...OURS.

Anyone who condones that viewpoint is the problem.

The problem is we have way to many shysters and shon-key people in places of so-called POWER.

Well the POWER is with the PEOPLE....and when the MAJORITY wake up, we may get a better deal, not a RAW deal.

We do not need to import any SHON-KEY people to bail-out the CRAFARS and other go-fers....we need good honest workers with the right attitude, not more people BENT on stitching up New Zealand again...and again...and again.

A Blue-Chip country we are.....but not in the right sense....YET.

I am afraid that there is a belief in this Country, that the Country owes them a living, so they TAKE that living at the expense of those who SAVED and they THOUGHT...invested....

PITY they didn't know all the CONS were PROs at the subtle ACT of THEFT.

We do not need to import any NIGERIAN scams, we could actually teach them a thing or two.

Unfortunately ours usually wear suits, with very deep pockets to fill.

I repeat my MANTRA almost daily, because there is no CHANGE for the better.

I had hoped a CHANGE of Govt would solve a few million issues of these takers.

Apparently not....no fair deal here in PARADISE...no honesty of Government, so we allow crooks to take us over....with RULE OF LAW....IT WAS MY RIGHT, AN HONEST JUDGE OF CHARACTER .....yeah right...

So a RANT just tell the rest of the WORLD how shon-key we are to deal with as a National disaster is all I can do.

Because the TRUTH is ...we give to aid the rest of the WORLD, even though we have been ROBBED by our own.........which is a different kind of DISASTER of a man made kind.

We made it happen by inertia.....not a damn earthquake, nor other ACT of the GODS.

Labour let us down, Maori Party is just that....Greens, were so GREEN it was un-real.

Now the National Crime Syndicates are massing their strengths to take the rest.

They have no mandate, just a majority...and the MAJORITY...suck....

It is time to ACT....but that is just as bad......nowhere to...HIDE...

Ho Hum...All Change, No Change.

A bad PUN or two....and a RANT...is all they are really worth.

Stevek......

Believe me, they all knew what was going down. Some didn't want to stop the music, others thought the system was well managed (lol!) and others just looked the other way.

It's great that those who ripped people off are being brought to justice but the Sec Com had a clear role to play and they didn't do anything. Heads should roll....

1996-1997
Fed renders Glass-Steagall effectively obsolete

In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent).

This expansion of the loophole created by the Fed's 1987 reinterpretation of Section 20 of Glass-Steagall effectively renders Glass-Steagall obsolete. Virtually any bank holding company wanting to engage in securities business would be able to stay under the 25 percent limit on revenue. However, the law remains on the books, and along with the Bank Holding Company Act, does impose other restrictions on banks, such as prohibiting them from owning insurance-underwriting companies.

In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.

In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm.

She has to go. For this govt's credibility, she has to go now. She has "presided" (in abstentia) over the worst debacles you could imagine short of banking failure. The whole non-bank sector - which she was sole regulator of pre the RB getting involved - has collapsed. She did not seek greater powers, she did not go to parliament and lay out where this was heading and what was needed, she did not intervene in any meaningful way.

Govt's don't like to fire regulators - it plays havoc with confidence. But, in this case, the Dip-shift era of the Sec Comm is so busted in its reputation, the govt would benefit massively from a firing and putting a credible interim in there to transition to the new super-regulator.

As is always the case with Diplock, over the period Berrnhad writes about, she was playing a political game, interested in land grabs and power plays. She has shattered confidence. The only good thing, frankly, is that the Sec Comm is so so so so broken, and its reputation so so so shot, that it cannot be the base for a super-regulator. That would be a complete joke - and this govt has to know it. The only thing to do is to start again with a clean sheet of paper, and design something that works - not something that is a mild departure from the shambles that is the Sec Comm today.

Her article in the herald is a poor joke. The super-regulator was clearly not her idea, and to see her transparently trying to make it look like it is, and that she should get the job, or that it should be the Commission beefed up, is just typical of the focus on power and politics rather than outcomes.

In addition, in case people haven't noticed, the world is getting faster and more technical. It would be only by fluke that a bunch of good generalists (i.e. Commissioners) would really be able to keep up and stay current.

It is not just Diplock that needs to go, but the whole Sec Comm, and need to start again with something people can have confidence in.

Iain,

I'm certainly not accusing Jane Diplock of being a 'crook' or any of the other people on your list. Please avoid accusing people of being 'crooks'. I'll leave it for now on the grounds it's obviously a rhetorical ploy and a phrase flung about liberally without much meaning or specificity.

But in future please don't accuse people of any sort of criminal acts without evidence (that I've checked).

cheers
Bernard

Bernard you have certainly raised questions....
Personally I think your are just touching the tip of a huge iceburg...
Where Government bureaucrats have spent yrs 'empire building' picking up their salaries , giving the impression all is well and going thru the motions.
During boom affluent periods this is easy to do, when things tighten up just going thru the motions starts to show up.
One huge area that just doesnt seem to get hit is DoC.

I will compliment you on good work when you take the same tact in other areas of Government Depts.
Like I said this is just the tip of the ice Burge that goes right thru our bureaucracy.

Mark Hubbard Says: (In re : Should Jane Diplock be the new super regulator)

“Yeah, forget buyer beware, making informed decisions and personal responsibility. Let's regulate ourselves out of freedom and economic existence and deliver our shaved necks to the axes of bureaucrats and politicians. Stop the bus, I'm getting off now.”

It would seem that Mark Hubbard is a member of Libertarianz. I am led to this conclusion by his carefully reasoned argument and the fact that the name “Mark Hubbard” occurs in the list of candidates in the Libertarianz web site.

“Buyer beware” is an excellent principle. It does, however, not seem to be consistent with the Libertarianz belief in the essential goodness of humankind. Be that as it may; “Buyer beware” implies the necessity of the process of “due diligence”. However, finance companies have been using methods that are designed particularly to frustrate due diligence, with considerable success. At least one accountant has been taken in. Now Libertarianz believe that fraud should be considered a crime. Who can honestly disagree? The problem is that a fraud is usually only detected after the event. The money has gone. The banks in the Cayman Islands, and similar places are unlikely to co-operate. The point of strictly policed regulations is to prevent fraud. It seems to me that a totally deregulated market would lead to less investment rather than more. To illustrate, imagine that there were two competing financial markets, one strictly regulated and policed to prevent fraud, with powers to deal with fraudsters if any managed to evade the regulations; the other would be unregulated and investors would have to depend on their own wariness. Who, in their right mind, would invest in the unregulated market, even if the unregulated market advertised higher profits?

On the criterion of strict policing, it would probably be safer to go for new blood in the position of super regulator and more bite than bark.

On the criterion of strict policing, it would probably be safer to go for new blood in the position of super regulator – with teeth.