The McKinsey firm appears to develop academic theories for banks to use in clinical trials on their customers. Dr Evan Jones reports …
McKinsey is a household word that has acquired generic status for its product — like Hoover and Panadol. Here is a super-self-confident firm that implies super competence. Your firm is in the doldrums? Whatever its industry, we go in, transform its character and put it on the rails to a glorious future.
Such is its self-confidence, McKinsey openly publicises its wares in its bulletins and articles on the web. Thus, in the Autumn 2009 issue of its Quarterly, there are two articles of interest — ‘Understanding the bad bank’ and ‘The hunt for banking capital’.
These articles are of interest because of their chronological and substantive proximity to the explosive event surrounding the Commonwealth Bank (CBA) takeover of Bankwest in December 2008 — the subsequent CBA foreclosure of around 900 Bankwest commercial property borrowers.
Then CBA Chief Counsel David Cohen claims that the CBA belatedly discovered, after their hasty purchase, that these loans were all underwater — thanks to lousy Bankwest procedures exposed by the GFC. Foreclosed Bankwest borrowers who have gone public deny the claim — with supportive evidence.
Lacking disclosure by the CBA, Bankwest victims have had to speculate on the CBA’s modus operandi. The Banking Royal Commission, supposed to get to the bottom of things, has so far declined to do so.
McKinsey offers us two plausible possibilities.
First, separate out the bad parts of the portfolio into a “bad bank” — whether held internally or externally. McKinsey had especially in mind the toxic derivatives packages manufactured and acquired in massive quantities by its major Trans-Atlantic banking clientele, but it included purported troubled business customers in the mix.
Claims the McKinsey “bad bank” article …
