Isherwood on MF Global: Investigate ASIC, ban derivatives, NOW!

The fall-out in Australia of the collapse of U.S. derivatives giant MF Global reveals—yet again—that financial regulator ASIC is not protecting Australian superannuants and “mum & dad” investors, but is setting them up as the fall guys for the big financial speculators’ gambling losses, charged Citizens Electoral Council leader Craig Isherwood today.

“The government and their regulator ASIC [Australian Securities and Investments Commission] are betraying Australians, not protecting them”, Isherwood emphasised.

“Derivatives must be banned—it’s the only way to protect the population, and the physical economy which supports that population; instead MF Global has exposed ASIC as being in bed with the derivatives gamblers, allowing them to do things to Australian investors that aren’t even legal in the cesspool of the City of London.

“MF Global’s 20,700 Australian clients are finding out their money has gone down the toilet, because ASIC’s kinky loopholes allowed MF Global to hedge its own gambling positions with its clients’ money.”

Isherwood said ASIC’s appalling track record raises serious questions about how it fulfils its responsibilities as a regulator, and about the government’s complicity.

He cited personal experience with ASIC, when it threatened himself and other directors of the CEC with legal action in 2005, for publishing an edition of the CEC’s New Citizen newspaper that warned Australians that the global derivatives bubble was set to implode.

“This organisation, ASIC, tried to intimidate the CEC for warning Australians well in advance about the danger of derivatives, and now we see it allows big derivatives gamblers to screw Australians in a way that isn’t legal anywhere else”, he said.

“This is the same ASIC that vouched for the predators at Storm Financial (a front for Macquarie Bank, the Commonwealth Bank and Bank of Queensland), as they took down the life savings of thousands of Australians through margin lending.”

He continued, “In early 2009 I called for a thorough-going inquiry into the financial system—an Australian Pecora Commission modelled on the U.S. Senate’s 1932-1934 Pecora Commission which investigated the domination and manipulation of the U.S. economy by the powerhouses of Wall St., typified by City of London favourite J.P. Morgan Jr., including their role in bringing on the Depression. The Pecora Commission laid the indispensable groundwork for Franklin Roosevelt’s New Deal of infrastructure-centred reforms, to restart the economy for the benefit of the people. FDR’s revival and expansion of the physical economy of the U.S., was anchored on the Glass-Steagall Act which separated the speculative activities typical of Wall Street—then and now—from sound commercial banking.

“Because the government rejected my call in 2009, Australians are still being hit by these disasters today.”

Isherwood concluded by reiterating the CEC’s longstanding call for derivatives to be banned.

“MF Global was the fourth largest issuer in Australia of one of the craziest derivatives, CFDs [Contracts for Difference], which were aggressively marketed to foolish everyday Australians as the way to make money in a falling market. MF Global is also up to its neck in looting Australia’s agricultural industries, through derivatives gambling in agricultural commodities markets.

“Derivatives are a scam, nothing but gambling side-bets, which are used to fleece people and industry. They are the cancer of the global financial system, and Australia is riddled with them,” he said, citing the Australian banks’ collective exposure to about $17 trillion in off-balance sheet derivatives obligations.

“They must be banned outright, and the accrued obligations must be cancelled under a new Glass-Steagall law”, Isherwood demanded. “Anything less is another government betrayal of the people, but it is up to the people to force the government to take the right action. I urge all who wish to fight for this, to join the CEC.”