Mr. John Moran:

These are answered from the property perspective rather than from the policy perspective and some are with the benefit of hindsight. There is a key lesson to learn about regulation of bank lending. There should always be detailed central knowledge of the volume and nature of bank lending, including risk concentration in a sector, a location or to borrowers. Development lending should include a detailed assessment, not only of the land value, which is a snapshot in a volatile sector, but a detailed assessment of how the money will be paid back. We did not feel that happened and there should be sensitivity analysis contained within that. When preparing a development land valuation, one can turn around and say that if it goes right there is likely to be one outcome and if it goes wrong there is likely to be a different outcome. That did not happen and it is still missing in the industry.

All valuations for bank lending should be commissioned by the bank, paid for by the bank and with the duty of care exclusively with the bank. The practice of borrowers commissioning bank valuations should be ceased.