PM Malcolm Turnbull has trenchantly refused to bend on the question of an inquiry. Credit:Brook Mitchell But if the banks are now the upstanding corporate citizens they would have us believe then why are they so vehemently opposed to a commission of inquiry? For that matter why is the Prime Minister, Malcolm Turnbull, so trenchant about protecting the banks from the forensic and microscopic legal probing that a commission would involve? The answer to the second question is simple enough. It is no longer about looking after the banks. For Turnbull it's about looking after his own political future. He simply can't capitulate on his long-standing opposition to Labor's push for a royal commission. So he is stuck. The result of the Queensland election at the weekend and the move by rogue Nationals to cross to floor federally and vote for the establishment of the commission of inquiry has exploded the Liberal Party's last line of defence.

CLSA analyst Brian Johnson says banks have enjoyed almost unfettered pricing power. Credit:Jessica Hromas (Incidentally while National Party's support for a commission of inquiry has been largely characterised as payback for same-sex marriage, there has long been a lurking dislike by some Nationals thanks to the banking industry's treatment of farmers.) So it is now only a matter of time before the public will get to see why the banks are so scared. So much of the poor behaviour and practices of the banks has already been exposed over the past few years that is makes you wonder – what's left to find. It's more than likely that the bank chiefs themselves could be asking that very question. They probably don't even know what grenades are hidden inside these huge organisations beyond what has already been raked over.

The banks are sticking to the line – "nothing to find here". But with organisations that are this large, layered and complex there is almost no doubt that a commission, with its powers to compel witnesses and get access to documentation, there will be treasure troves. From the perspective of the banks, they don't know what they don't know. As CLSA bank analyst Brian Johnson writes: we note that this proposed banking RC would have general powers to investigate "other events as may come to light in the course of investigating the above past Australian RCs have tended to 'discover' issues well beyond their initial remit!" But the banks are sticking to the line – "nothing to find here".

Last month, for example, Westpac's head of consumer banking echoed comments of many in the industry when he said Labor's proposed banking royal commission would not uncover anything new, would distract from the real job and damage offshore investment in the Australian banking system. The reality is that even after numerous, more narrowly focused inquiries by the corporate regulator ASIC, a six monthly parliamentary grilling of bank chiefs, and an Australian Prudential Regulation Authority inquiry into Commonwealth Bank's governance culture and accountability, fresh scandals seem to emerge every few months. Meanwhile the banks had been trying hard to head off a commission of inquiry at the pass by undertaking a massive charm offensive. Banks had agreed to an open banking regime whereby customers could move between banks more easily, the abolition of ATM fees, and cuts to numerous transaction fees. They even openly supported the push for same-sex marriage. There has been movement from the banks on remuneration structures for tellers – less sales-based and more service-rewarded –while accountability for senior executives will be dealt with under the Banking Executive Accountability Regime, although the later was a government initiative.

And finally the government has hit the banks with the $6.2 billion bank levy – a move that could have met resistance had the banks not been so unpopular. Loading According to Johnson, "advocating a banking royal commission is a clear vote winner, regardless of whether it is the best mechanism to address some apparent structural flaws in the Australian banks". But here is the real practical problem for the banks, according to Johnson: "In the medium term we believe the threat of a banking royal commission likely crimps the previously unfettered pricing power of the Australian banks which has this far allowed them to reprice up variable housing loan rates to preserve profitability as post-GFC funding costs and regulatory capital requirements have risen."