Candour on NAB's difficulties during and following the global financial crisis got an unexpected airing at yesterday's hearings of the banking royal commission in Melbourne.In the wake of the financial crisis, "I was very closely involved in those matters, to discourage excessive risk taking by financial institutions," Ken Henry, chair of the bank told Rowena Orr, counsel assisting. Henry was Treasury secretary for ten years from 2001."Why do you think that the measures taken to address the global financial crisis didn't address this sort of [mis]conduct as well?" Orr asked.Henry agreed, "That's a really good question. "Speaking from the Australian perspective, the issues that confronted Australia in the global financial crisis had to do principally with balance sheet risks facing the Australian banks and in particular, funding and liquidity risk. "And when I joined the board of National Australia Bank at the end of 2011, those were the issues that were principally the focus of both APRA and National Australia Bank. "It was principally to do with balance sheet risk, for obvious reasons. "Matters relating to conduct came to the consideration of bank boards later in the piece in Australia, I think. "Earlier in Europe, that's true. And also in the United States, but the reason for that's also pretty obvious."It was really misconduct in those northern hemisphere markets that were the genesis of the global financial crisis. "It wasn't misconduct in Australia that was responsible for the precariousness of the positions confronting the Australian banks, it was their dependence upon offshore wholesale borrowings. So it was a funding and liquidity issue."