Bail-In 2017

Mobilise against Treasury's 'Crisis Management' bill

Download the new CEC flyer to take to your MPs!

Senate APRA inquiry flooded with hundreds of submissions

On initial estimates the Senate Economics Legislation Committee received upwards of 800 submissions on the APRA bail-in bill, by the 18 December deadline. Due to the overwhelming public response, and the Christmas-New Year break, the committee secretariat has said they won't have the submissions published on the inquiry's website until the end of the first week of January.

This is a stunning achievement! All CEC supporters and subscribers who participated and contributed should be proud of it. The scale of this response is a warning to all MPs that the APRA bill is not something they can ignore as "technical amendments", but is a real threat to the financial security of their constituents.

The CEC's role—and therefore yours—in this has been indispensable. It was the CEC which detected the bill, uniquely understanding the significance of the Treasurer's August press release, which he issued on a Friday afternoon to avoid publicity. The government clearly hoped to sneak this bill through Parliament, while MPs and the public were distracted by the gay marriage and dual citizenship issues, but the CEC's mobilisation forced it into the Senate committee. And now CEC activists have flooded the committee with submissions.

This success sets the stage to defeat the bill in early 2018. We will continue to mobilise all through January in preparation for the committee hearings that will be held in late January/early February. We are capable of destroying the mythology about APRA, and stopping this bill, so be prepared for a massive escalation.

Download the new CEC flyer which includes CEC's submission to the Senate inquiry to take to your MPs!

Keep reading for more background on the APRA legislation.

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Citizens Electoral Council of Australia

Media Release Tuesday, 9 January 2018

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://www.cecaust.com.au

APRA update:

Think your bank deposits are guaranteed? Think again!

A former principal researcher at bank regulator APRA has revealed in a submission to a Senate inquiry that, contrary to government reassurances, Australian bank deposits are not guaranteed.

This explosive revelation shreds the government’s repeated assurances that its new bill to give crisis resolution powers to the Australian Prudential Regulation Authority (APRA) will not allow the “bail-in” (confiscation) of bank deposits, because they are guaranteed up to $250,000 by the Financial Claims Scheme (FCS).

In the cover letter to his submission to the Senate Economics Legislation Committee’s inquiry into the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017, Dr Wilson Sy asks Committee chair Senator Jane Hume: “As a matter of urgency, I need to ask: are you prepared to have your savings in bank deposits confiscated to save insolvent banks? What about the millions of voters you represent? How would they react if you allow this to happen to them?”

Dr Sy charges that the bill “gives the Government and APRA new discretionary powers to confiscate bank deposits”, and that it should be rejected.

(Dr Sy’s submission, “Protect Deposits Not the Fraudulent System”, is the first submission posted on the Senate inquiry’s website, and can be accessed here.)

As a Principal Researcher at APRA in 2004-10, during which time he was briefly acting Head of Research for a time, Dr Sy is one of the most qualified people to comment on APRA and the powers it will be given by this bill. Both the 2008 global financial crisis and introduction of the Financial Claims Scheme occurred while he was at APRA.

FCS guarantee not activated

The essential point that Dr Sy makes is that the FCS is not an absolute guarantee. He quotes the FCS website, which makes clear that the FCS will only take effect if the government activates it when an ADI (Authorised Deposit-taking Institution—a bank, credit union, building society etc.) fails. “That is, when a bank fails, i.e. becomes insolvent, the Australian Government or APRA then has the discretion to decide whether or not to activate the FCS”, he says. “Hence, it should be emphasised that:

Bank deposits are not protected or guaranteed at all.

Under the Banking Act 1959, Dr Sy explains, APRA is responsible for two potentially conflicting objectives: the protection of depositors AND the promotion of financial stability. This depositor protection is “illusory”, he asserts, because the Banking Act doesn’t state which objective has priority.

Under the new bill, however, APRA will have the discretionary power to decide which objective has priority; alarmingly, it will be able to make such a decision “in secrecy”. Dr Sy references Subdivision D, Section 11CH (p.24) of the bill, which states that APRA may decide that its orders must be kept secret if it is “necessary to protect the depositors of any ADI OR to promote financial system stability”. (Emphasis added by Sy.) The replacement of “AND” with “OR” confirms that the objectives are in potential conflict. “Therefore”, Dr Sy continued, “it is important to recognise that the Bill allows APRA discretionary powers to decide secretly whether to protect depositors or to promote financial system stability.”

Quoting a 2012 Reserve Bank of Australia paper, which stated that the priority of regulators, mandated under Commonwealth legislation, is to “pursue financial stability”, Dr Sy concludes:

“Therefore, the evidence collected here strongly suggests that the Bill is designed to confiscate bank deposits to ‘bail in’ insolvent banks to save the financial system.”

Can’t be funded

Dr Sy’s revelation is further, damning evidence that the FCS is not a real guarantee. The Citizens Electoral Council had already exposed in 2014 that, by the regulators’ own admission, the FCS doesn’t have the money to guarantee deposits in any of the Big Four banks, which hold 80 per cent of all deposits! This was first acknowledged in a 19 June 2009 meeting of Australia’s Council of Financial Regulators, comprising APRA, ASIC and the Reserve Bank, which noted in its minutes that a failure of one of the Big Four banks would “exceed the scheme’s resources”. Later, the Financial Stability Board in Basel, Switzerland, which is in charge of imposing a bail-in regime worldwide, noted in its 21 September 2011 “Peer Review of Australia” that the government’s $20 billion provision per bank “would not be sufficient to cover the protected deposits of any of the four major banks”, which each have more than $400 billion in deposits. The CEC presented this evidence in its submission to the Senate committee inquiry.

Defeat the APRA bill

Most members of parliament are assuring their constituents that the APRA bill—which virtually none would have read—does not mean deposits will be able to be bailed in, because deposits are guaranteed under the FCS. Dr Sy’s revelation explodes that myth. This is not an academic question. With all signs pointing to a near-term collapse of the so-called “everything bubble” comprising property markets in Australia and elsewhere, the US stock market, Bitcoin, and the US$1.2 quadrillion global derivatives trade, a looming global financial crisis threatens Australia’s banking system. It is urgent, therefore, that Australians demand their MPs reject this bill outright, and go with the Glass-Steagall banking regulation instead, which guarantees deposits and financial stability by separating commercial banks with deposits from all forms of financial speculation. As Dr Sy says in his submission: “The global financial system needs fundamental structural reform which many countries believe is the restoration of the Glass-Steagall legislation which had worked well for many decades until it was corruptly or mistakenly repealed at the turn of this century.”

What you can do

Before Christmas, upwards of 800 everyday Australians flooded the Senate committee inquiry with submissions opposing the APRA bill and demanding Glass-Steagall. The Committee is expected to hold hearings in either late January or early February, by which time it is imperative that every MP and Senator is confronted with the truth about this bill.

1. Forward this release, the CEC’s submission (download here) and Dr Sy’s submission (download here) to your local federal MP and Senators before the end of the month. If possible, print copies and deliver them in person.

2. Sign and share the CEC’s latest petition: “Global crash coming—Australia needs Glass-Steagall and a National Bank”.

Previous media releases

APRA update: Think your bank deposits are guaranteed? Think again!
9th of January 2018

Like Australia, India under pressure to pass bank ‘bail-in’ law
20th of December 2017

APRA is the ‘monster that protects the banks’
13th of December 2017

The Big Lie exposed! Australian financial system under APRA almost wiped out in 2008 GFC
7th of December 2017

CEC of Australia at epicentre of fight to block dictatorial powers for global megabanks’ “regulators”
4th of December 2017

Turnbull caves in to demands for banking royal commission, but orders it not to investigate APRA
1st of December 2017

Europe to extend ‘bail-in’ to guaranteed deposits—don’t give crisis powers to banking technocrats!
29th of November 2017

Tell Parliament today: don’t let APRA steal our savings, break up the banks instead!
24th of November 2017

Success! APRA ‘bail-in’ bill referred for parliamentary scrutiny—have your say!
21st of November 2017

APRA ‘protects’ banks; time for bank regulation that protects people
15th of November 2017

Questions MPs must ask before they vote on the APRA crisis management—‘bail-in’—bill
8th of November 2017

Bail-in bonds ‘a ticking time bomb’
3rd of November 2017

Collapse of APRA’s property bubble has started—Glass-Steagall now!
2nd of November 2017

One month to stop APRA bank bail-in law
31st of October 2017

Stop Morrison rushing through emergency powers for APRA. Tell your MP: replace APRA with Glass-Steagall, national bank
19th of October 2017

New CEC petition: Global crash coming—Australia needs Glass-Steagall and a National Bank
13th of October 2017

Don’t let Treasury bureaucrats fob off calls for Glass-Steagall
14th of September 2017

Tell your MP: dictatorial powers for APRA will not prevent a banking crisis—go with Glass-Steagall now!
12th of September 2017

Four days to have your say on banking ‘crisis management’ bill vs. Glass-Steagall
5th of September 2017

Tell the Treasury: Don’t ‘manage’ the banking crisis, avert it—pass Glass-Steagall now!
22nd of August 2017

Europe contemplates freezing bank accounts—Glass-Steagall urgent!
3rd of August 2017

CEC's campaign against bail-in powers, 2013-2016

The evidence of a bail-in law planned for Australia

Warning, Hybrid Bail-In Bonds

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