Unbelievable new insights into the resignation of Adrian Orr, if we had a functioning media this story would be leading every single media outlet…
Revealed: What Nicola Willis was told ahead of Adrian Orr’s shock Reserve Bank resignation
The Reserve Bank wasn’t planning to announce former Governor Adrian Orr’s resignation until after it had hosted a big international conference.
But the unexplained resignation was brought forward by five days to March 5 – the day before the conference, documents released to the Herald under the Official Information Act reveal.
The documents show Finance Minister Nicola Willis met Orr on February 24.
Then on February 27, Secretary to the Treasury Iain Rennie texted her in relation to Orr, saying he had spoken to the Reserve Bank board chairman Neil Quigley. The bulk of the exchange has been redacted from the documents made public.
On the morning of March 5, Reserve Bank staff sent Willis’ staff a draft press release for the resignation announcement, dated March 10.
But, a few hours later, the announcement ended up being made. Later that day, Quigley fronted media in a hurried press conference that appeared to be arranged at the last minute.
Economists from around the world, including former Federal Reserve chairman Ben Bernanke, were arriving in New Zealand at the same time for a conference to mark 35 years of inflation targeting, pioneered by Kiwis.
“Did the governor ever raise his voice with you?”
Another document released to the Herald details a list of questions Willis’ press secretary said journalists might ask, as well as some suggested answers
A line of questioning Willis was prepped to answer included: “Did you ever have disagreements with Adrian Orr?”
The press secretary advised Willis to respond: “I’m not going to discuss what happens in meetings that discuss confidential and sensitive matters.”
The press secretary suggested a follow-up question could be: “Did the governor ever raise his voice with you?”
Willis was advised to respond, “As I’ve said, my relationship with Adrian Orr was professional. It’s not appropriate for me to comment further on meetings that discussed sensitive and confidential matters.”
Separately, screenshots of texts between Willis and her press secretary show she told the press secretary not to discuss the nature of her meeting with Orr on February 24.
“Do not give the purpose of the meeting,” Willis said.
While Orr hasn’t spoken publicly since his resignation, Quigley has said he resigned for “personal reasons”.
Bank capital a known sticking point
There has been speculation Orr might have resigned over the fact Willis wanted the Reserve Bank to loosen the way it regulates banks, by allowing them to hold less capital than is currently planned.
Orr was a fierce proponent of making banks hold more capital – even if it eroded their profits – to make them stronger.
However, Willis thought the rules could be upping the cost and limiting the availability of bank lending, so in August revealed, via the Herald, that she was open to making the Reserve Bank change its rules.
…as TDB pointed out when it happened, the resignation occurred because Orr refused to back the steepness in the budgets Willis was aiming for and believed allowing the Banks to lower their capital requirements in case of another global financial meltdown would be disastrous to NZ.
They had a fight over it.
Orr then designed his resignation for the most amount of political damage the day before the Investment Summit and immediately afterwards, Nicola Willis is announcing a new gimp for the 4 Aussie Banks…
Reserve Bank announces review of bank capital requirements
The Reserve Bank is reassessing how much capital banks need to hold in reserve amid criticism its policy is too tough and costly.
Board chair Neil Quigley told the Finance and Expenditure Committee inquiry into banking that an evidence-based review of capital requirements will be undertaken by international experts with a report expected by the end of this year.
He said the review will take time, and cannot be rushed.
“We cannot just decide next week we’re going to do something different,” he said, adding the current requirements took two years to set.
Finance Minister Nicola Willis said higher capital requirements increased the cost of borrowing.
“It’s important that the Reserve Bank’s prudential regime preserves the stability of our financial system, while taking care not to not impose excessive costs in the process,” she said.
“I want to see settings that preserve financial stability while encouraging investment, job creation and income growth.”
…the real question now Adrian Orr has left is will the Big Australian Banks (who were angry at his demands for their capital levels) get a stooge who will lower their capital requirements.
Orr was hated by the 4 Big Australian Banks because he was the one demanding they hold high enough capital levels to look after New Zealanders because Orr knew in his heart of hearts that if a serious economic shock hit Australia or NZ that the 4 Big Aussie Banks would immediately cut our throat to protect their own.
As the next Global Financial Apocalypse is upon us, one wonders at the wisdom of allowing the 4 Big Aussie Banks the ability to cut and run from NZ?
Do people with accounts with those Banks understand the risks?
Will those people be incandescent with rage if the Government allows those risks to become deep problems?
Adrian Orr thought so and resigned in the most damaging way.
People don’t understand the enormity of this because the newsrooms are run by Millennials juggling mortgage payments, being present in wellness and the trauma journey of a lack of good book-a-batch options for young families in Bali.
This is as huge a political resignation as you can get and it hints at enormous changes in the background that will have massive consequences to all the money you have in your bank.
Who honestly believes the 4 big Aussie Banks won’t gut us like pigs if shit turns South?
Adrian Orr didn’t.
Bring out the Gimp!
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Willis – “I want to see settings that preserve financial stability while encouraging investment, job creation and income growth.”
Clearly she is not interested in “preserving financial stability” for NZ’s or she wouldn’t be looking to reduce bank safety standards.
There has been no shortage of lending availability, (arguably too much), just in the wrong areas. Namely towards speculating in existing residential housing, causing 30 years of out of control inflation and mounting household debts. So much so, returning interest rates to some level of normity causes a lot of pain.
Willis should be directing banks lending away from unproductive speculation, namely property investors competing with fhb’s buying up existing houses and into productive areas for job creation, investment and income growth.
Well said, Nicola wanting her cake while shovelling it down her gullet.
All she wants is to lower capital requirements to increase the money supply and create another property boom to pacify long term National voters disgusted not by their parties rabid agenda but by their lack of massive tax free capital gains that they are accustomed too.
Well Nicola may have her wee cry of exaltation after forcing Orr out but she will end up face down in the wet sticky patch wondering what the hell happened when it all turns to custard.
Because, the system is so broken and at such an advanced level of the ponzi that the exponential increase in house prices is no longer sustainable and the fractional banking system is no longer viable as a tool for money creation by private banks and subsequent pseudo-growth.
Yes …and remember …this is the person who stated that she had “delivered” after completely fucking up the ferries deal without an alternative on the table and then landed the taxpayer with a 300- 500 million dollar contract cancellation fine.
But wait …there’s more…borrowing 14 billion dollars to give the majority of tax cut money to the top end of town naively hoping to ‘stimulate’ the economy with Ben and Jerry ice cream and movie ticket sales…instead… ‘stimulating’ the economies of the Gold Coast , Rarotonga , Fiji and Bali as ‘the squeezed middle’ high tailed overseas for a sojourn on the extra cash she borrowed and doled out.
And let’s not forget borrowing 3 billion to help out the poor hard done by struggling landlords with their multiple property portfolios along side the struggling poor hard done by cancer stick selling tobacco companies also receiving handouts….
Yes… she’s an economic wonderkid that’s for sure….hard to match that level of intelligence!
Luxon should sack both Willis and Seymour for being so utterly incompetent …but the conundrum is….how does an utterly incompetent person sack an utterly incompetent person.
I asked my auto service center if they would repair my GPS as it was giving incorrect distances, locations and map directions. The voice was also using ambiguous language. The mechanic said no problems our technician has a degree in English literature.
Willis sinking another ship .glad I Don’t have millions in the bank
Quigley and Orr should have been gone years ago – they allowed jucinda and labour to engage in outrageous money printing during Covid – then trebled the number of staff – and imposed standards on banking requirements which were significantly greater than the same banks had on them in Australia putting us at a significant disadvantage .
Paul Dalziel, a professor of economics at New Zealand’s Lincoln University, confirmed to AAP FactCheck that Ms Ardern is not responsible for decisions related to money printing.
“The Reserve Bank of New Zealand has independently set monetary policy in pursuit of pre-determined Policy Targets Agreements (PTA) since a major reform of its Act in 1989. Thus, there is no basis to claims that Jacinda Ardern (or any other politician) has printed any money,” he said in an email.
Prof Dalziel said the government steers the direction of the Reserve Bank through the PTA. However, the decisions made to achieve those targets come solely from the Reserve Bank, which he said “makes that decision to the best of their ability on the information available at the time, independent of anything the government thinks they should be doing.”
He added: “Decisions about quantitative easing during the COVID response were made independently by the Monetary Policy Committee, and implemented by the Reserve Bank without any reference to politicians.”
Professor Martin Berka, head of the School of Economics and Finance at Massey University, said the claim shows “ignorance of basic economics”.
He added: “Governments do not print money, and certainly prime ministers do not print money, in the vast majority of countries on our planet.”
The one person who will win the next election for the left is Barbara Edmonds the smiling assassin ,let her loose on Willis in a debate and it will be all over for the coalition. Barbara gets her going every time with her calm clever questioning and it works every time, Willis ends up squawking like a fish wife and it’s wonderful to see. Barbara really gets her where it hurts and Willis just can’t hide her disdain of “look at me I am better than you”. My prediction is Barbara will win us this next election. Keep on smiling Barbara
Despite the money printing artemis we still have one the lowest debt levels in the developed world unlike our American mates they have trillions of bonds out there. And Jacinda’s government dealt with an epidemic whereas nicky no boats as mentioned by Grant above borrowed billions for the wrong reasons putting us in much more debt.
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