Citizens Electoral Council of Australia

Media Release Wednesday, 3 September 2014

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

Hockey’s chief economist turns bank lobbyist: time to end government of, by and for the bankers

Six months after Joe Hockey’s chief economist Tony Pearson menacingly “advised” representatives of the CEC to stop warning people about the dangers facing Australia’s banks from derivatives gambling, he has shifted over to lobbying for the banks to influence government policy. Pearson shifts from government to private employment with ease—his career has gone from the Reserve Bank, to ANZ, to Hockey, and now to the bank-funded Australian Bankers’ Association (ABA).

Pearson and the CEC came to verbal blows in early March when the CEC hosted Japan’s former Deputy Director of the Ministry of Finance and representative to the IMF, Daisuke Kotegawa, on a visit to Canberra. Kotegawa shared the benefit of his years of experience dealing with banking crises to warn the Australian government of the dangers of derivatives gambling and that depositor bail-in of banks will be a disaster for the economy; he urged Australia to adopt a full Glass-Steagall separation of retail banks from investment banks to protect the economy.

However, Pearson had no interest in Kotegawa’s advice. He brazenly acted as if the Australian banking system has no problems—no overexposure to the property market, no regulatory failings such as ASIC ignoring financial advice scandals, no derivatives risk. He made wild statements in defence of derivatives gambling, such as, “If you’ve ever bought an airline ticket on-line, you’ve bought a derivative.”

Pearson’s only interest was in blasting the CEC, for its campaign to expose the financial gambling that has taken hold of Australia’s banking system, and to mobilise Australians to contact politicians about the plans for bail-in legislation in Australia, which the Financial Stability Board had reported to the G20 was “in train”. He was angry, because he personally had had to respond to letters from MPs and constituents concerned about bail-in. Acting as if the 2008 derivatives meltdown that crashed the global economy hadn’t happened, Pearson became very menacing and attacked the CEC for “frightening” Australians about derivatives speculation being a risk to the banks.

As then-chief economist to the Treasurer, Pearson worked in the office that sits at the apex of Australia’s financial regulatory structure of Treasury, APRA, ASIC, and the Reserve Bank.

Now he’s a lobbyist for the banks, as the ABA’s executive director of industry policy. In a related move, the ABA has hired an officer of the notoriously-soft bank regulator ASIC (Australian Securities and Investments Commission), Aidan O’Shaughnessy, to join Pearson as policy director of industry policy.

The ABA shamelessly admits in the 2 September Australian Financial Review that it has hired the two to help the banks influence the setting of government policy. ABA chief executive Steve Munchenberg explained it is part of a new strategy which will include traditional lobbying, but “we want to play a more active role as an industry in setting the broader policy agenda around the industry as well.”

Their move to the ABA coincides with the final stages of the Financial System Inquiry, which Pearson helped Hockey to establish under the chairmanship of banker David Murray. Little wonder then that a former ANZ Bank director John Dahlsen attacked the FSI’s interim report as prepared “by bankers, on behalf of bankers, for bankers”—the same charge applies to the way the FSI itself was set up.

The CEC will continue to fight for Glass-Steagall to protect the people from gambling-addicted bankers, and a National Bank so that representative government, not private banks, is in charge of the financial system.

Fight with us!

Click here to have a free copy of the CEC’s submission to the FSI on the dangers inherent in Australia’s banking system, and the Glass-Steagall solution, mailed to you.

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