ASIC chair defends subprime role

by Adam Smith28 Nov 2011

ASIC chairman Greg Medcraft has defended his role as head of a French bank accused of playing a part in the US subprime crisis.

Medcraft previously served as head of securitisation at French bank Societe Generale. The bank is now subject to lawsuits in the US which allege false and misleading statements regarding subprime mortgage transactions. While Medcraft is not named in the lawsuits, he told the ABC he believed appropriate controls were in place at the bank.

"From my point of view, the appropriate internal controls were put in place in all the businesses that I was responsible for around the world," Medcraft said on the ABC's Inside Business.

Medcraft left it to the bank to defend the allegations brought in the lawsuit, but said he believed controls on the "structuring and advisory" of securitised products were in place. He also claimed he was not responsible for the sales, syndication or trading of securitised debt products.

"what I was responsible for was the structuring and advisory of the securitised products. That division did report to me. And, you know, in terms of what I've said previously, I guess they are allegations. I can't really comment any further on that because clearly I've signed confidentiality undertakings with the bank in leaving," Medcraft said.

While Medcraft defended the use of securitised debt to raise capital, he conceded that "there were issues" with its use in the United States.