There's a storm raging outside the Reserve Bank as I sit down for a chat with governor Adrian Orr in his Auckland branch office.
It is literally wild weather, umbrella busting stuff, but it seems wrong not to grab the metaphor, given our governor's love of lively language.
It won't be the last colourful analogy in this interview.
The metaphorical storm is of course the turmoil that Orr and the Reserve Bank (RBNZ) have generated in the industry as they seek to raise the level of capital banks hold to guard against the risk of failure.
It's a storm that's blown across the Tasman, rattling the masters of the Australasian banking universe.
"Forget the radioactive fallout from the Hayne royal commission — the nation's four major banks have a bigger problem to worry about," wrote The Australian newspaper this week.
"If New Zealand's all-powerful regulator Adrian Orr has his way, the big four will be passing the hat around for the next five years to raise an extra $NZ25 billion in capital."
The image of Orr as an upstart central banker gunning for the "big four" has taken hold in the Australian financial media and spilled over into coverage here.
Orr's plain speaking, socially conscious approach - embracing climate change risk, using Māori spirituality to define the RBNZ's mission - has combined with the regulatory threat to bank profits to make for a headline grabbing combination.
How does it feel to be all-powerful?
"I just can't be bothered with that personality stuff," says Orr with a hint of exhaustion.
He doesn't want to push the line that the Reserve Bank is embattled, although he admits some of the more personal attacks have surprised and disappointed him.
"Our desire was to get the facts and data on the table throughout this [capital review] process."
Opinions and assertions are fine, he says.
"Assertions are part of that framework. [But] ongoing assertion? Thank you, we've heard you. We need to do the mahi now. And we will do it."
Bank bosses haven't been shy of talking tough.
The same article in The Australian quotes Westpac chairman Lindsay Maxsted declaring that his shareholders will not "take this on the chin" - that the outcome will be higher interest rates, less lending, or less investment in New Zealand.
"All those things are in play," Maxsted said.
How much of this is posturing is hard to say.
Orr says he's frustrated by the notion that this is a bargaining process with both sides bluffing in the hope of a more favourable settlement.
Chief among the bargaining chips, though, is the idea that Kiwis will face higher interest costs - as much as a full 1 per cent a year according to some scenarios.
Given that this nation is up to its neck in debt, public support for moves that cost us more has been unsurprisingly thin on ground.
"It's a challenge," Orr says.
"The fact that slightly higher interest rates could be an outcome ... people go: that's straight out of my hand, what am I getting for that?
"To say that what you're getting is insurance for something in the future, people don't really understand that."
The mortgage rate line goes "directly into the household", Orr says.
"Humans ... surprise surprise ... we're not very good at looking ahead. We should eat less, we should exercise more, we should stop smoking, so on ... when something directly impacts on your behaviour today it's a very personal affront."
Are the banks plucking worst-case scenarios?
Orr is diplomatic.
"The scenarios that have got the most press are the most extreme," he says.
Even from reports that were quite balanced (Orr cites the likes of ratings agencies Fitch and S&P) the most negative bits have been plucked out, he says.
Orr argues that we need a national conversation about risk appetite.
"What is a relevant level of risk to accept?" he says. "Not just for current, but all future generations?"
Risk assessment was something Orr spent a lot of time on in his previous role as chief executive of the NZ Super Fund.
But as individuals, we aren't great at it.
"People have a high risk aversion to parachute jumping when they are sitting on the ground discussing it with friends," Orr says.
"But if you are in a plane that's falling out of the sky, your appetite's probably quite a bit higher."
It's about setting a sensible balance right at the beginning, he says.
"We do it all day every day in so many activities ... this just happens to be a small adjustment to capital."
Small? That seems like a loaded word given the sums involved.
The RBNZ proposal is for an increase in Tier 1 capital held by the banks from 8.5 per cent to 16 per cent.
That could be - as the Westpac chairman says - a $25b imposition on the industry across five years.
KPMG estimates New Zealand banks made a collective net profit of $5.7b last year. New Zealand's banking system has assets worth $530b.
"I'm deliberately using 'small' because it's large when you talk about dollar billions ... it's small relative to the economic cost it's heading off and it's small relative to the profitability that's being made by the banks."
To put it another way, Orr says, just six dollars out of $100 lent by a bank are currently held by the bank.
"We're saying make it 10."
Banking is peculiar industry, he says.
Not only is it the most heavily leveraged industry in the world, it is also one in which fear of failure can itself create failure.
"One simple safety valve is to have a bit more skin in the game."
The banks know which way the wind is blowing, as many regulators around the world are demanding they hold more capital.
But they say the RBNZ's proposal is the most onerous in the world.
To ensure the process is robust, an independent review of the RBNZ's workings has been commissioned. Heavyweight academics from Australia, the US and UK will crunch the numbers.
It will inevitably be highly technical stuff.
But this is relatively uncharted territory and subjective judgments about New Zealand's unique profile will be hard to avoid.
"We certainly have different risks," Orr says. "There is the natural physical risk ... we're small, isolated dependent on trade, exposed to climate and other natural risk.
"We have a very low level of financial savings. We've been highly reliant on foreign capital and that foreign capital is highly concentrated in the form of debt and through the banks.
"Then the banking system is highly concentrated; four banks provide 85 per cent of the credit. And then that lending is highly concentrated around housing."
Much has been made of the RBNZ's apparently cautious call that risk weighting should be set for just one financial meltdown every 200 years.
"I struggle with those stats too," Orr says.
In reality meltdowns and natural disasters don't work like that, he says.
"Really it's a half a 1 per cent chance that it could happen in any one year. That works easier in my brain."
Orr is very keen that the lessons and costs of the global financial crisis aren't forgotten.
"It is phenomenal how quickly we forget horrendous events and we're back into the business as usual. That GFC, the utter and ongoing economic chaos it causes.
"We've had a generation of people who have been put out of financial security and have struggled to come back. You've got families that have grown up in welfare structures that would never have to have occurred."
The Australian banks were supported through that crisis with deposit guarantees and monetary policy support, he says.
The rest of society bore the costs, which he says are ongoing - "higher government debt, lower government expenditure on health, welfare and education."
Still, the threat of tighter credit is a tough one for many businesses to accept.
"Will it be the end of the world? No," he says. "If you see margins rise in some places, we don't think they'll rise by much at all. And certainly not to be the change variable."
In other words, Orr believes there is so much at play in retail lending rates that capital requirements will not be the major determinant.
Not the least of the other deciding factors is where he, and his monetary policy committee, put the official cash rate.
Then "one hopes there's competition in the first instance," he says.
A report by Forsyth Barr this week - while warning of higher lending costs and short term disruption to the sector - concludes that the process may ultimately result in more competition emerging.
Secondly, Orr says, he hopes we'll see New Zealanders reflect on the level of debt we take on in the first place - perhaps look to other forms of equity.
In the end, precarious debt levels are what this is all about.
Despite conservative levels of government borrowing, at 20 per cent of our GDP, private debt levels are approaching $500 billion or nearly 200 per cent of GDP.
"What's the saying? We all love progress but it's change we hate," Orr says.
"One of the wonderful things about economics and people is that we are highly flexible and adaptable."
If some sectors in a bank's lending book become less economic, "that's why you have a portfolio," he says.
"Even with some of the worst-case scenarios some of the banks have talked about, we know [they] will be well rewarded for the risk taken."
Meanwhile, the RBNZ's job isn't to second guess the next crisis. It has to assume it is coming and prepare, he says.
"That's not a prediction that's just, you know, if you're a fireman sitting in the firehouse you don't predict a fire, you just assume there will be one," Orr says.
It's a good analogy, he adds, never one to let a financial pun go by.
"They need liquidity as well."
What's next
• This month: The RBNZ will release submissions and a summary of what they say later in June.
• November: A final decision is planned by the end of November, with implementation of any new rules starting from April next year.
• There will be a transition period of a number of years (five in the current proposal) before banks are required to fully comply with any new rules.
