It is hard to have much sympathy for David Hisco in the circumstances of his departure from the ANZ Bank but he deserves credit for at least one notable contribution to New Zealand's wellbeing today.
It began, "Auckland house prices and the New Zealand dollar are overcooked. Having been in banking since 1980 I have seen this movie before. The ending is pretty much the same – sometimes a little plot twist but usually messy."
The piece went to discuss the already obvious risks facing borrowers and repeat the often-made point that property prices can go down as well as up. But in the course of that familiar script he dropped two announcements.
"I doubt banks can keep lending at the current large volumes," he wrote, and a little further down, " . . . the current situation will see ANZ implement even tougher criteria for investment loans as house price inflation spreads from Auckland to other regions."
In the middle of 2016 this was a bombshell. The housing market had been booming since a brief lull after the global financial crisis and still there seemed no end to it.
The Treasury, Reserve Bank governors, economists and financial commentators had been issuing the same warnings for years. The Reserve Bank had introduced loan-to-value limits the previous year and the National Government had set a "bright line" test for liability for capital gains tax on investment property.
ANZ boss worked to turn tide on property prices. Photo / Ted Baghurst
These came into force in October and November, 2015, but by March the market had absorbed them and real estate was roaring again. Prices kept rising by the month and scarcely a day passed when newspapers did not report more stunning records for house sales in Auckland. Then the Hisco piece appeared.
It took a day or two to sink in that the chief executive of the country's largest trading bank had just declared it was pulling back on mortgage lending.
The decision to do so publicly would not have been Hisco's alone but as chief executive he carried the risk that the bank might be handing business to its competitors.
It was soon evident the competitors agreed with him. By the end of 2016 finance was becoming harder to find, and virtually impossible for apartment developments.
Auckland house prices barely moved in the last quarter of that year and have been steady without falling very much for the past three years.
The big four trading banks are as important as the Reserve Bank to the stability of the financial system. The central bank keeps in close touch with them and the trading banks can correct monetary policy misjudgments.
They sometimes, for example, do not pass on official cash rate cuts that are out of line with the interest rates trading banks have to pay for their international borrowing.
Economic stability depends on the two banking tiers working in unison. It worries me that over the past year the Reserve Bank has been at odds with the trading banks, and the ANZ in particular, on their capital requirements.
Ever since the 2008 global crisis central banks worldwide have been discussing how to ensure trading banks do not repeat the poorly secured mortgage lending that led to the crisis.
That discussion is rather less urgent in Australia and New Zealand because our Australian-owned banks, bless them, had been wary of the debt instruments that proved disastrous in the United States and Europe.
Nevertheless, the RBNZ has taken it upon itself to propose that trading banks here be required to hold higher reserves as a ratio of their lending than the banks' Australian directors think necessary or good for investment in the New Zealand economy.
The Reserve Bank even censured the ANZ for a breach of its existing capital rules last month.
I don't pretend to understand how trading banks know how much they can safely lend at multiples of the deposits they hold, but they are in a better position than the Reserve Bank to make commercial judgments.
None of this has anything to do with Hisco's departure, according to the chairman of ANZ in New Zealand, Sir John Key. He said Hisco has been let go over the accounting of expenses Hisco thought he was entitled to claim.
Clearly Hisco has fallen foul of a crackdown on fringe benefits by the parent bank in Australia where banking has had a media mauling in recent years.
His perks may have been outrageous but he did well to help turn the tide on house prices. Business leaders seldom speak out for the public good. Let's give him that.
