Earlier this week current Commonwealth Bank chief executive Ian Narev distanced himself from Mr Murray’s report, arguing that focusing just on property debt as a source of systemic risk doesn't make sense when looking at previous recessions. "History will tell you that if you look back at the early 1990s, the first thing that goes is institutional credit quality, that takes a bath, and then small and medium enterprise credit takes a bath, and then after that housing takes a bath," said Mr Narev on Wednesday. “The question I think we’ve all got to think about … is a lot less, is it home lending versus business lending?
The Australian Financial Review reports the comments, which come on the back of the interim report into the financial system by former Commonwealth Bank chief executive David Murray that raises similar concerns. “There’s enough leverage in society anyway,” said Mr Cooper, according to the AFR. “We leverage up our homes, the minute you buy a share you’re building leverage, there’s a lot of personal debt around and we’re seeing people going into retirement with more debt.
Read more here: Business Spectator