This week, I read a report in the New York Times about the failure of U.S. bank Washington Mutual. When Washington Mutual was seized by federal regulators in September, it was called the biggest bank failure in U.S. history.

The article contains the chilling tale of a senior mortgage underwriter, detailing the enormous pressure she and colleagues were put under to increase the number of loans underwritten, with staff who refused to approve “dubious” loans being punished.

Thankfully, the level of regulation in Australia makes it unlikely we would ever find ourselves mired in a sub-prime mess like that which is engulfing the U.S.

But surely, given the concern about the state of the global financial system, and the measures undertaken by our Federal Government to guarantee deposits in our banking system, and wholesale funding, isn’t it time to review the way we do business in Australia, particularly in relation to over-reliance on sales targets?

It is particularly disturbing to hear bank CEO’s talking about how difficult the next 12 months will be and how growth will slow, yet at the same time hearing reports from members that the same banks are increasing their sales targets. It simply makes no sense in the current crisis to be pressuring staff to sell more credit.

What is necessary is to put a serious dent in our debt culture is the removal of the link between pay outcomes for finance workers, and sales volumes of credit products. And to restore some sensibility into the way sales targets are set and managed. It is time our finance companies adopted our Charter of Responsible Lending.

Tell us what’s happening at your bank.

What’s happening with sales targets at your bank since the meltdown, and the Federal Government’s assistance package? Have your targets decreased? Have they increased?

Vote in our online poll (opposite) Have your targets for sales of credit products decreased since the financial crisis intensified?

Have your say on our Online Forum

Read the New York Times article