The currently running Senate inquiry into bank branch closures has flushed out that while banks are claiming they are following their customers into a digital future, actually, they ae rather setting that agenda, removing ATMS and Branches and forcing people to go digital, whether they want to or not.
And some banks have all but admitted they are fudging the figures, to buttress their strategy, never mind the impact on real customers.
While politicians are keen to step back from the argument on the basis banks are commercial entities and should be able to make what ever strategic decisions they want, the truth is banks are a government protected species, who have received massive financial support from us tax-payers via the Term Funding Facility and other measures.
And to reinforce the argument that we are being lied to, according to a news.com.au exclusive article, a former ANZ employee has alleged that the bank is forcing customers out of branches and then using their absence to justify branch closures.
Phillip, a pseudonym told news.com.au that during the time he worked at an ANZ branch in a metropolitan area, staff were directed not to serve customers who came to the branch.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Breaking news, as Westpac reverses its decision to close some of its regional branches, in response to the pressure form the Senate inquiry (which we managed to get up). I discuss this with Robbie Barwick from the Citizens Party.
The job is not done yet, and we need to ensure the Treasurer reverses his support for a totally independent Central Bank!
Giving up authority over the RBA – The ultimate BETRAYAL of the Australian people https://youtu.be/EA7FhBZxfuM
For the final time in Australia, I caught up with Robbie Barwick from the Citizens Party. We looked at the progress towards the establishment of a Public Bank in the light of recent failures, and the inquiry into Regional Banking.
Importantly, there are just two more weeks to get your submission to the Inquiry. Have your say! and support the transformational policy.
Make a submission to regional bank closures inquiry
Submissions to the inquiry are due by 31 March. All communities, organisations, businesses, and individuals impacted by the banks’ war on cash are strongly urged to make a submission, including to support a government post office bank.
A submission can be a formal representation from an organisation, or as simple as a letter or email, which explains to the Committee your experience and views.
Elderly and vulnerable regional bank customers, who are disproportionately affected, are especially encouraged to hand-write or type physical letters and mail them to the Committee through the post.
Mail your submission to the Committee at this address:
Committee Secretary Senate Standing Committees on Rural and Regional Affairs and Transport PO Box 6100 Parliament House Canberra ACT 2600
Email your submission to the Committee at rrat.sen@aph.gov.au
Upload your submission, and get more information, at the inquiry website
For more information, phone the Committee on 02 6277 3511.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In the final part of my discussion with Ex-ANZ Director John Dahlsen, ahead of the closing date for submissions into the Senate Inquiry into Banking Structural Separation, we discussed the core questions, and what barriers really need to be overcome.
It promises to be a dog fight Royale. The four big banks can be expected to behave
like uncontrollable Pit Bulls, determined to savage Senator Hanson’s Banking
System Report (Separation of Banks) Bill 2019.
This Bill is about re-establishing confidence in the banking system by
separating ‘core banking’, called retail and commercial banking where deposits
are protected, from the risky wholesale and investment banking.
By Patricia Warren,Byron Echo Vol 33 #40 March 13, 2019 p21
By default the
recent Haynes Royal Commission has brought focus on how banks are currently
structured to do business. It’s their
power base and they will fight to defend it. Fur will fly because bankers do not want a firewall
between deposits and the flow of these into their trading activities. Bloodletting can be expected should this Bill
stand in the way of using your money to cover their gambling in high return
investments, including derivatives.
Learned from the GFC?
People are
reminded that it was the collapse of the derivatives market that brought about
the Global Financial Crisis 2007/08.
Nothing has been learned. In December
2018 “The notional value of the
derivatives cleared worldwide is 4.4 times world GDP, up from 2.8 times in
2008.” While not all derivatives
are evil, it is estimated that Australian banks are currently exposed to more
than $37Tr in derivatives and billions in short term debt. The global derivatives markets are vast,
unregulated, some deliberately untraceable in off-shore entities and commonly
off the books. Currently, there is
potentially US$540Tr of global derivatives set to ignite a global financial
crisis.
Divorce time
The idea of separating core banking activities from the higher
risk investment banking is not new.
Leading financial commentator, Alan Kohl wrote of his random sampling of
10,140 submissions to the Royal Commission, “ Without exception they called for the banks to be broken up and most
of them, surprisingly, used the term ‘Glass Steagall’ suggesting that the
now-repealed American law that used to forcibly separate banking from insurance
and investment banking be introduced into Australia”. Hanson’s Bill has been crafted after the Glass
Steagall and modified to suit the Australian conditions.
There is widespread support for the breaking up of the banks,
including that coming from former CEOs of major banks, academics and former
Prime Minister Paul Keating. In fact,
there are now more people supporting the breakup of the banks since the Royal
Commission than before it.
The banks are powerful and effective lobbyists exercising undue
influence not only in the market place where they work like an oligopoly but
with both major political parties to which they reportedly have donated $2.6m.
Their relationship with Treasury and the regulator, Australian Prudential
Regulatory Authority (APRA) has been described as ‘incestuous’.
Currently there is approximately $2.8Tr held in deposits as
unsecured loans in Australian financial institutions of which over 80% is
concentrated in the four big banks. Banks are currently paying very little interest
on deposits whilst using a significant proportion of funds to trade in high
risk areas.
BAIL IN
Under Australia’s BAIL IN legislation, where there is no explicit
exclusion of deposits in the law, deposits are exposed to cover the gambling
risks of financial institutions in times of financial crisis in the global
system. So, if the derivatives market
collapses, as it did in the GFC, then cash will be used to BAIL IN and stablise
failing global institutions be it from peoples’ term deposits, business
operating and superannuation fund accounts. Politicians have refused to amend the
Financial Sector Legislation Amendment (Crisis Resolution Powers and Other
Measures) Act 2018 (FSLA) to exclude deposits from this and hence are
protecting the bankers and their risk taking behavior.
Deny Risk
CEO’s of the major banks and other leading financial institutions
deny that deposits are at risk. They argue they are controlled by APRA’s
prudential standards and that ‘currently’
and ‘as the legislation sits’, only
‘capital instruments’ can be called upon to stablise a failing
institution. But APRA can change this
under the secrecy provisions of the FSLA to capture deposits as part of BAIL
IN. There is a loop hole which allows
APRA to change its standards to include ‘instruments’ ‘that are not currently considered capital under prudential standards.”
Failed
Gatekeeper
No CEO responded to concerns raised directly with them months ago
about that provision. Nor did APRA! APRA has failed as the gatekeeper on our financial system.
APRA takes recommendations directly from the International Bank of
Settlement (IBS). This means our
financial institutions are influenced by the motivation of the central bankers
to protect the global financial system above depositors.
Under the
Banking System Reform (Separation of Banks) Bill 2019 it is intended to break
that direct connection. Instead, APRA must
not only come before an Australian parliamentary committee for “prior express written approval and consent” to
act before implementing any recommendations or decisions of any foreign bank,
or foreign authority but have Parliamentary approval to change its prudential
standards for the purpose of regulating our financial institutions.
Public Inquiry
Parliament’s
Senate Standing Committee on Economics is currently holding a public inquiry on
the Bill and calling for submissions.
It is a numbers game and broad based support of the Bill is needed to
counter what can be expected from the banks, Treasury and APRA.
Submissions
need only read: I support the Banking System Reform
(Separation of Banks) Bill 2019 and I support the separation of retail commercial banking
activities involving the holding of deposits from wholesale and investment
banking as proposed in the Bill. Submissions
need to be sent to economics.sen@aph.gov.au or mailed to the Senate Standing Committee
on Economics PO Box 6100 Canberra ACT 2600 by 12 April 2019. If you want your cash made more secure then
you’re encouraged to make a submission.
Alternatively, there is always under the
mattress.
I discuss the latest on the Senate Inquiry into Banking Separation (Glass-Steagall) with Robbie Barwick from the CEC. We have a significant opportunity to drive the change to benefit Australians and Australia.
The Senate has initiated an inquiry into the structural separation of
the banks, following the Hayne report, and the bill represented to the
chamber.
I discuss the critical issues surrounding this with businessman John
Dahlsen, who was a director at ANZ for many years. John and I were
both mentioned in the Hansard on this topic!
There are so many compelling reasons to support structural
separation, yet there are powerful forces which will resist the concept.
The bottom line is structural separation would be good for customers,
good for shareholders, and good for businesses seeking finance; and
reduce the structural risks in the banking system thanks to derivatives
and too big to fail. So why is structure a dirty word?
This will help you to prepare a submission to the inquiry when its formally sought!
The Senate has initiated an inquiry into the structural separation of the banks, following the Hayne report, and the bill represented to the chamber.
I discuss the critical issues surrounding this with businessman John Dahlsen, who was a director at ANZ for many years. John and I were both mentioned in the Hansard on this topic!
There are so many compelling reasons to support structural separation, yet there are powerful forces which will resist the concept.
The bottom line is structural separation would be good for customers, good for shareholders, and good for businesses seeking finance; and reduce the structural risks in the banking system thanks to derivatives and too big to fail. So why is structure a dirty word?
This will help you to prepare a submission to the inquiry when its formally sought!
We review the recommendations from the PC Report, out today, which highlights that much needs to be done to put power back into the consumer. We are being taken the the cleaners at the moment…
Last Thursday, the House of Representatives Standing Committee on Economics released their third report on their Review of the Four Major Banks. They highlight issues relating to IO Mortgage Pricing, Tap and Go Debt Payments, Comprehensive Credit and AUSTRAC Thresholds.
Looking back at the issues The Committee raised since inception in 2016, they have had a significant impact on the banks and again shows how the landscape is changing, outside of a Banking Royal Commission. It also suggests The Commission will not necessarily deflect scrutiny!
Here are the key points from their report:
Since the House of Representatives Standing Committee on Economics commenced its inquiry into Australia’s four major banks in October 2016, the Government has announced significant reforms to the banking and financial sector to implement the committee’s recommendations.
The Treasurer requested that the House of Representatives Standing Committee on Economics undertake – as a permanent part of the
committee’s business – an inquiry into:
the performance and strength of Australia’s banking and financial system;
how broader economic, financial, and regulatory developments are affecting that system; and
how the major banks balance the needs of borrowers, savers, shareholders, and the wider community.
In November 2016, the committee published its first report, which followed the first round of hearings a year ago in October 2016. The report contained 10 recommendations to reform the banking sector, including calling for new legislation and other regulatory changes to improve the operation of the banking sector for Australian consumers. In a second report in April 2017, following hearings in March, the committee reaffirmed the 10 recommendations of its first report and made an additional recommendation in relation to non-monetary default clauses.
In the 2017 Budget, the Treasurer announced the Government would be broadly adopting nine of the committee’s 10 recommendations for banking sector reform. These recommendations include putting in place a one-stop shop for consumer complaints, the Australian Financial Complaints Authority (AFCA); a regulated Banking Executive Accountability Regime (BEAR); and, new powers and resources for the Australian Competition and Consumer Commission (ACCC) to investigate competition issues in the setting of interest rates. The government also adopted the committee’s recommendations in relation to establishing an open data regime and changing the regulatory requirement for bank start-ups in order to
encourage more competition in the sector.
The Committee’s Third Report makes the following recommendations to Government:
The committee is concerned by the increase in transaction costs merchants
now face as a result of the shift to tap-and-go payments. These costs are
ultimately borne by customers. If the banks do not act by 1 April 2018, regulatory action should be taken to ensure that merchants have the choice of how to process “tap and go” payments on dual network cards. At present merchants are forced to process these transactions through schemes such as Visa and MasterCard rather than eftpos. It is estimated that this forced processing costs merchants hundreds of millions of dollars in additional annual fees at present;
The Australian Competition and Consumer Commission, as a part of its inquiry into residential mortgage products, should assess the repricing of interest‐only mortgages that occurred in June 2017;
Despite many commitments by banks in the past to implement CCR, little
progress has been made. The Government should introduce legislation to mandate the banks’ participation in Comprehensive Credit Reporting as soon as possible; and
The Attorney‐General should review the major banks’ threshold transaction reporting obligations in light of the issues identified in the Australian Transaction Reports and Analysis Centre’s (AUSTRAC) case against the Commonwealth Bank of Australia.
Interest Only Mortgage Loans
Specifically on the IO loan situation, while the banks’ media releases at the time indicated that the rate increases were primarily, or exclusively, due to APRA’s regulatory requirements, the banks stated under scrutiny that other factors contributed to the decision. In particular,banks acknowledged that the increased interest rates would improve their profitability. A key reason for such an improvement is that the major banks increased rates on both new and existing interest-only loans in June 2017. This is despite APRA’s interest-only measure only targeting new lending. As of 6 October 2017, analysts at CLSA estimated that the banks’ net interest margins increased by up to 12 bps following the rate increases announced in June and March.
The improvement in net interest margins is forecast to be so beneficial for Westpac that several analysts upgraded their outlook following the price announcements in June 2017.
The ACCC is currently conducting an inquiry into residential mortgage products. This inquiry was established to monitor price decisions following the introduction of the Major Bank Levy. As a part of this inquiry, the ACCC can compel the banks affected by the Major Bank Levy to explain any changes to interest rates in relation to residential mortgage products. The inquiry relates to prices charged until 30 June 2018.
The committee recommends that the ACCC analyse the banks’ internal documents to assess whether or not they are consistent with their statements in their June 2017 media releases and subsequent public commentary. In particular, the ACCC should analyse the banks’ decisions to increase interest rates on existing borrowers despite APRA’s measure only targeting new borrowers. Further, the ACCC should consider whether the banks’ public statements adequately distinguish between new and existing borrowers. The ACCC should consider whether the media statements suggest rates on existing interest-only mortgages rose as a direct consequence of APRA’s regulatory requirement. It will be important that the ACCC conducts granular analysis of the financial modelling of the banks. The ACCC will need to understand the true financial impact on the banks of APRA’s regulatory changes, and assess that impact against the public statements of the banks.
