Book review: Insider's view of Swan's handing of the GFC

Ian Rogers
The need for the banking guarantee introduced into Australia in late 2008, at the height of the financial crisis, had its origins in a series of bleak high-finance meetings held in Washington in October of that year.

Jim Chalmers, then chief of staff to former Treasurer Wayne Swan, has produced the first insider Australian account, in book form, of those early days of the financial crisis.
GloryDaze__cover_pic

GloryDaze__cover_pic


After meetings of the IMF, the World Bank and G20 finance ministers, Swan responded to "the fear on ministers' faces… Hearing the views from around the table brought home to Swan the full magnitude of what the world was facing," wrote Chalmers.

These briefings were as significant in shaping the size and timing of the fiscal stimulus in Australia as they were to the hurried announcement of the guarantee on bank deposits.

Swan briefed Cabinet from the basement bedroom of an Australian diplomat, using the only available secure phone.

"While Australian banks had not invested in the risky assets that were sitting on the books of banks offshore," Chalmers wrote, "[the] images on the nightly news of bank panic overseas were making people worried that something similar could unfold at home."

"As governments around the world moved to guarantee their country's banks, ours were at risk of being shut off from funding markets, even though they were among the strongest and most capitalised in the world."

Chalmers wrote that the previous Coalition government failed to enact the Financial Claims Scheme "probably because it was unpopular with some parts of the financial services industry."

Chalmers also confirmed that the ban on mergers between the big banks - the long-standing "four pillars" rule - "was not a popular policy among the banks, and the industry was actively lobbying for its repeal in the early days of 2008."