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Dracula’s bank

Macquarie Bank “exists” in the realm of the “undead”, the mythological domain of Count Dracula and vampires. That’s because six months after the CEC issued a press release on April 4, 2008, entitled “Macquarie Bank a gone bunny?”, Macquarie was gone, destroyed by the global financial meltdown following Lehman Brothers’ collapse.

You didn’t know that, because based on what you see, Macquarie is still going. But what you see is a corpse, sustained only by feeds of blood provided by the federal Treasury. According to freedom of information (FOI) documents obtained by The Age newspaper and reported on May 17, just hours after Lehman Brothers collapsed on Sep. 15, Macquarie Bank fired off the first of many panicked emails to the Federal Treasury in Canberra, begging for protection. The email was sent by Trevor Burns, one of Macquarie’s many executives who are former political operatives; Burns was the chief of staff to Howard government minister-turned Macquarie exec Warwick Smith.

The next day, Sep. 17, a flurry of emails flew back and forth between Macquarie and ASIC, the Australian Securities and Investments Commission, which is located in the same building, 1 Martin Place, as Macquarie. Within days, by Sep. 19, ASIC banned the short-selling in financial stocks that was blamed for crashing Macquarie’s share price. Macquarie’s share price, which had fallen to $15.75 after almost breaking $100 a year earlier, surged 9% that day. However, Macquarie was able to continue its normal trading activities—activities which included short-selling the stocks of other, but non-financial, companies!

Within weeks, the federal government had guaranteed bank deposits and offshore borrowings by Australian banks like Macquarie. Macquarie set up a unit headed by “trusted” Packer family banker Ben Brazil, which became one of the biggest users of the guarantee, raising nearly $20 billion under the federal government’s AAA credit rating, which it would not have been able to do, and would have been at a much higher interest rate, under its own A credit rating. Even then, Macquarie rorted this mechanism, by on-lending the funds it raised cheaply to foreign companies, reportedly enraging Treasurer Wayne Swan.

All of this emergency action around Macquarie contradicts Macquarie spokesman Greg Ward’s claim that Macquarie was never in danger in 2008. The Age recounted: “In early 2009, Deutsche Bank analyst Ross Brown quipped to Mr Ward at Macquarie's earnings result: ‘If it wasn't for government guarantees we might not be sitting here having this conversation.’” Rumour has it, that conversation took place in a dungeon crypt, away from sunlight, garlic and crucifixes.


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