Citizens Electoral Council of Australia

Media Release  Wednesday, 6 March 2013

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

Isherwood: RBA’s $380 billion bank bailout fund isn’t enough

The Reserve Bank’s plans to have by 2015 a $380 billion bucket to bail out Australia’s banks won’t be enough in a derivatives meltdown, Citizens Electoral Council leader Craig Isherwood insisted today.

Isherwood was responding to the report in today’s Australian Financial Review by Christopher Joye that the RBA was building a mega-bailout fund so Australia’s banks could continue to cheat on the Basel Committee’s new post-GFC capital requirements.

“A lot of Aussies will be wondering why there’s a bank bailout fund at all,” he said. “Aren’t Australia’s banks the strongest and most profitable in the world?”

“Unfortunately, the banks’ reputation is an illusion. It’s pointless comparing our banks favourably to the rest of the world, because the world’s banking system is in crisis.

“The difference is other countries know they are in crisis, whereas Australia is in denial.”

Isherwood pointed to the RBA’s bailout fund, and its recent talk of needing to print money like its counterparts in the U.S., Europe, Britain and Japan, as evidence that Australia’s financial authorities know Australia’s banks are in trouble.

“The elephant in the room is the $20 trillion in outstanding derivatives bets held by the Australian banks, mostly by the big four,” he said.

“The 2008 GFC meltdown proved dead right every warning about derivatives issued by the CEC, our U.S. associate Lyndon LaRouche, or others such as Warren Buffett who in 2002 called them ‘financial weapons of mass destruction’.

“Yet since then, the Australian banks have gone on a derivatives gambling binge, increasing their exposure from $13 trillion to near $20 trillion in just four years.

“And CBA, supposedly the most profitable bank, has gone the hardest, to the point where it has suddenly decided to no longer disclose its full derivatives exposure—a decision that in the wake of the GFC should be regarded as a scandal, but is being covered up.”

Isherwood repeated the CEC’s call for the Australian government to enact a Glass-Steagall-style separation of deposit banking from riskier investment banking, funds management, stockbroking and insurance, which he said is the only way to protect both deposits, and the functionality of day to day banking services.

“Australians should remember that prior to the GFC, every country now in crisis claimed their banks were the strongest in the world. The people in the U.S., Britain, Ireland, Spain etc. now know it wasn’t just a mistake, it was a lie.

“The CEC is not accepting the lie,” he declared. “Join our nationwide mobilisation to get Glass-Steagall enacted here before the next global shock.”