Stood-down ASIC chair James Shipton (AAP/Lukas Coch)

The government appears to be getting away with the extraordinary feat of evading responsibility for the debacle that has enveloped one of Australia’s most crucial regulators.

It is busily backgrounding journalists that it intends a restructure of the Australian Securities and Investments Commission and commissioners after deputy chair Daniel Crennan resigned yesterday and while it awaits an investigation into chair James Shipton, who has stood aside. There’s even whispers of an outsider being brought in to the shake the place up.

In fact this debacle is owned 100% by the government.

The Abbott government’s agenda was to emasculate an already timid corporate regulator that had let the major banks get away with appalling criminal misconduct toward their customers in the years before 2014. ASIC’s budget was slashed by Abbott even as its mishandling of the Commonwealth Financial Planning scandal was being forensically demonstrated in a major senate inquiry.

The budget cuts only ended in 2016 when political pressure from constant scandals forced the Turnbull government to drop its protection racket for the major banks.

In 2017, the government then tried to appoint Turnbull’s longtime friend, Liberal Party official and Godwin Grech correspondent John O’Sullivan from Credit Suisse to the ASIC chair in the wake of Greg Medcraft’s departure, before Labor attacked O’Sullivan’s links to the Liberals, torpedoing his appointment. Eventually the government opted for the son of 1980s-era Liberal MP Roger Shipton, James.

Shipton’s initial approach to regulation threatened a continuation of the watchpoodle years: he called for the big banks to be more “professional” and said he’d “stand ready” to use his powers if they didn’t, and endorsed enforceable undertakings — negotiated with the agreement of banks — as a useful tool of regulatory compliance.

Only after the Hayne royal commission demonstrated the utter uselessness of ASIC and its “deeply entrenched culture of negotiating outcomes” did Shipton get the message that he was expected to actually be the “tough cop on the beat” that the government, very rhetorically, had been insisting ASIC actually was. Finally, funding began to increase and the numbers of ASIC staff rose again after years of cuts.

But a more aggressive regulator — and, following Hayne’s advice — a more litigious one, wasn’t popular with the business community or with its cheerleaders in the media. The critical commentary pieces in outlets like the Financial Review began piling up, some celebrating ASIC defeats in court.

And the government had barely stopped — in a decidedly half-arsed fashion — implementing Hayne’s recommendations than it began dismantling banking regulation again. In September, the government suddenly announced it was removing responsible lending laws, which ostensibly required banks to exercise some responsibility in whom they lent to and how much (even if, as Hayne pointed out, they weren’t enforced), on the basis that they would crimp lending for the recovery.

It hadn’t bothered consulting ASIC on the shift — the regulator found out, commissioner Sean Hughes told Senate estimates this week, through the media on the day of the announcement.

Now ASIC, the so-called tough cop on the beat, has lost its leadership, including its chief litigator, to an expenses scandal, though Crennan says he was only intending to stay until mid-2021 anyway.

It’s almost as if the government really would prefer minimal corporate regulation and a weak corporate regulator after all, and the last few years of “tough cop on the beat” and “the powers of a standing royal commission” were for show in the face of unprecedented misconduct and crime by some of Australia’s most important corporations.