As we consider trivial matters such as which political party will form the government of Oz can we find time to look at the serious side of life? What is important? Banking and the world financial system for starters.
If we extrapolate the well-publicised behaviour of Australia’s bankers to the rest of the world and make the reasonable assumption that financiers in other countries are at least as shonky, greedy and foolish as our people we can reach only one conclusion. The next global financial crisis is not far away.
The insiders of the G20 have drawn that conclusion and Australia has followed the club’s strategy and sneaked through our brain-dead Parliament the “Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018.
This is the notorious “Bail-in’ legislation. In a nutshell, it protects the financial system by legally stealing money from the accounts of depositors to prop up the banks. This is consistent with the behaviour of establishments worldwide. Protect the system and let the people go to hell in overdrive.
When Barack Obama bailed out the banks without so much as the “haircut” the bankers themselves were expecting amateur political economists like me thought it would have been better politics and better economics to keep the distressed mortgaged householders in their homes and let the banks crash. Nationalise them. Can you imagine a world without Goldman Sachs? Yes please.
Instead Americans were turfed out of their homes in their millions while the bankers pocketed their bonuses. As usual, the establishment put out a cover story to blame the victims. They were not “dole bludgers” this time or “welfare queens.” They were “Ninjas” – no income, no jobs, no assets. The best explanation I encountered for Obama’s policy was the heavy involvement of major European banks in American securities. The priority in Washington and New York was the preservation of America’s reputation as the world’s secure home for capital.
In Australia we are fortunate to have the Citizens Electoral Council (CEC) in Melbourne acting as unofficial watchdog on our banks. We are doubly fortunate because the official watchdogs – APRA, ASIC, the Parliament, the financial press and all the other bodies who should be watching the finance industry have proved themselves to be comprehensively useless, as our Royal Commissioner has discovered to his astonishment. In his latest broadcast the CEC’s Robert Barwick quotes the best-informed view of the bail-in legislation to have come from our Parliament. It came from the Queensland Liberal National Party Senator Amanda Stoker who is a senior barrister trained to read legislation and understand precisely what it means. This is a mighty handy skill to have in our Parliament.
In a letter to a constituent Senator Stoker wrote: “The legislation facilitates bail-in as a type of resolution power which is available for dealing with financial institutional distress. This was done after the G20 leaders endorsed a new Financial Stability Board standard for Total Loss-absorbing Capacity. Specifically, it builds on the Key Attribute which specifies that Financial Stability Board jurisdictions should have in place legally enforceable mechanisms to implement a bail-in. The purpose of the Total Loss-absorbing Capacity standard ensures there are mechanisms in place to stop the domino effect and reduce loss on bank shareholders, creditors and the Government.”
The passage of this legislation was disgraceful even by the standards of our Parliament in Canberra. The bill went through a thinly populated House of Representatives on 12 February. Two days later on Valentine’s Day it passed through the Senate where eight Senators sat. There was no division hence no bells were rung. Two One Nation Senators who were going to put forward a simple but vital amendment protecting bank deposit holders were outside the Chamber and missed the boat. After listening to former ANZ director and Woolworths chairman John Dahlsen I would look cautiously at Treasury’s view on this legislation. As for the two major political parties, their credibility on banking is zero.
Ever since the Hawke-Keating takeover Australian Labor has been a centre-right party. The Liberals are determined to reduce themselves to a rump of bible-bashing bigots. The Greens — Labor’s unofficial left wing and conscience – are unable or unwilling to rise above the level of back-stabbing, bitchy high-schoolers. Any human being subjected to endless pressure will reach a cracking point. Scott Morrison is under such pressure and he is fraying at the edges. He needs to bring the Bail-in legislation back to the Parliament immediately and insert the straight-forward, unequivocal amendment to specifically exclude depositors’ savings from the legalised theft known officially as “Bail-in.”
Then young Scott needs to clear the decks and bring forward Bob Katter’s Australian Glass-Steagall legislation to separate honest, everyday banking from the big end of town. This might even clear the minds of our squabbling tiny-tots in Canberra and get them to pull their heads out of their backsides for a few days. If the Government brings forward the banking separation legislation who will oppose them? Only the banks and who will support the banks? Labor would be looking sick indeed if it supported the banks on this matter. Senior Labor figures in Steve Bracks and Nick Sherry, now outside the Parliaments, are calling for bank separation. John Dahlsen says demerger is in the interest of shareholders and the banks, ideally, should go down that path voluntarily. He is deeply concerned about government guarantees being sucked into the derivatives vortex. Why should the savings of decent people be used as collateral for the speculation of high-flying ratbags?
We would all like to see the rogues’ gallery paraded before the Royal Commission receive their just deserts but it will take years to march them through the courts. We need Glass Steagall now. On more mundane matters, Sunday morning’s television programmes on sport and politics featured learned commentators dissecting the faults of the Australian rugby team at Twickenham and the Liberal team in Melbourne. They missed the main point. The English rugby players were sharp as tacks, fast, powerful and well-coordinated. They were a class above the Australian XV. Likewise, in Melbourne. Daniel Andrews and his team ran an excellent campaign after four years in government. The winners deserved their victories and are to be congratulated.
We will see one significant change in the wake of Labor’s Victorian victory. Rupert Murdoch will consult Sir Humphrey Appleby. “Which side are you on, Humphrey?” asked Jim Hacker. “The winning side,” replied Sir Humphrey. Rupert likes to be on the winning side. Expect him to invite Bill Shorten to lunch. Of course, Bill will have to pay for the hamburgers.
Jerry Roberts is a member of the Australian Labor Party.