By IAN VERRENDER
Once upon a time, back when investment bankers ruled the world, Macquarie Bank's Nick Moore and his cronies were pushing the hierarchy to rid the organisation of its banking licence.
All those restrictive regulations, the constant oversight by the Australian Prudential Regulatory Authority and the capital tied up in safe investments were holding Macquarie back, they argued. It was time to break free and pursue the fabulous profits to be made from infrastructure.
That was 2007, shortly before the financial world as we knew it came to an end. Instead, the Macquarie boss Allan Moss wisely decided to split the group, retain the banking licence and let Moore run his own empire.
While Moore ended up taking control of the group, his beloved infrastructure division became its Achilles heel and the staid old investment banking operations took centre stage earnings-wise.
That's timing for you. Moss walked away before the storm swept through company and nearly sank it, while Moore ended up in control even though it was his division that almost crippled the group.
If it wasn't for the banking licence, Macquarie probably would not be here today and we'd be reporting on the liquidator's hearings.
It is about at this point in the column that Macquarie's chief financial officer, Greg Ward, fires off his usual complaint that goes something along these lines: ''If you check our statements at the time, you will see that Macquarie Group was adequately capitalised and could meet all its obligations.''
And he's right. Except that he ignores the obvious acute crisis of confidence that sent Macquarie's shares from $98 to $17 and the impending margin calls that may have bankrupted large numbers of executives had the corporate regulator not stepped in in the nick of time and banned short-selling of financial stocks.
And let us not forget the federal government guarantee on banks borrowing overseas, a masterstroke by Kevin Rudd and Wayne Swan. Macquarie dived into the taxpayer guaranteed pool and spread almost $20 billion of our largesse around the globe, snapping up debt wherever it could, providing an income for the Silver Doughnut and helping prop up those massive bonuses. That's your taxpayer funds at work.
It wasn't a one-way street. It also allowed our political leaders to strut the world stage boasting about Australia's superior banking system and regulations. Just imagine the chaos and the embarrassment if we were responsible for the forced sale of everything from Thames Water to ports in Gdansk, toll roads in South Korea and airports across the globe.
But what of the future? In the space of four months, Macquarie has gone from upbeat, to quietly optimistic, to mildly depressed. Yesterday it announced a 25 per cent profit downgrade on its first-half earnings compared with last year.
That things could change so much in such a short period of time is astounding. While there will be much discussion of the global economy, the uncertainty in the US and debt problems in Europe, the crucial element is that Macquarie has lost its mojo.
A few years ago Macquarie was a global leader. Every investment bank in the world was trying to figure out the infrastructure scam; how could Macquarie buy all this boring rubbish at way above market price and make such enormous profits? By the time everyone else figured it out - you hived it off into a separate structure, gouged out fees and paid the dividends out of debt - Macquarie was so far ahead of the pack that those following were simply propping up asset prices and making it even more successful.
But that bubble has burst. Macquarie may have profited with one final gouge of the likes of Macquarie Airports, when it exited with a massive termination payment, but unfortunately those golden days are gone.
It now must rely on such dull fodder as stockbroking, foreign exchange, commodities trading, bond selling and its deal-making engine room, Macquarie Capital.
That's the kind of stuff that every other investment bank in the world does, and most of them are bigger and better connected. Even more worryingly, its expansion and its rehabilitation has focused almost exclusively on North America and Europe, the two areas most likely to endure the most pain for the longest.
As an organisation, Macquarie has an enviable history of reinvention. It has traversed the decades with clever innovation, catapulting itself onto a global stage against far more experienced and better capitalised organisations with daring strategies and single-minded devotion.
But the mood within the place has shifted. Where it was once on a never ending growth trajectory, more recently it has been downsizing, including a round of redundancies.
That knee-jerk response to market conditions has affected Macquarie's culture and the loyalty of those who work there.
The collegiate atmosphere that once dominated the organisation and set it apart from its rivals has diminished. Partly that is a result of its shift from the unlisted public domain - where the employees owned almost all the capital - to the stockmarket, where outside investors demand immediate results and accountability.
Macquarie has survived a near-death experience. But unlike its North American rivals it has not bounced back to anywhere near its former glory, and the future, so far, looks uninspiring.