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Citizens Electoral Council of Australia

Media Release  Wednesday, 10 December 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
 

Murray inquiry sham leaves Australian depositors at mercy of predatory bankers

Joe Hockey’s banker-run inquiry into the banks has ensured that predatory bankers will continue to feed off the deposits and livelihoods of everyday Australians for their reckless financial gambling.

Banker David Murray’s final Financial System Inquiry report shields Australia’s too-big-to-fail banks from any banking separation that would protect retail depositors from the time-bomb of toxic derivatives gambling and other reckless speculation which dominate investment banking (total derivatives obligations of Australia’s banks is now up to $25 trillion).

Murray’s final report avoids any reference to Glass-Steagall, the name of the structural separation of retail and investment banking in the US which ensured no bank collapses between 1933 and 1999, the corrupt repeal of which led to the problem of TBTF banks.

Instead, it only references the “Chinese walls” internal separation called “ring-fencing” implemented in the UK, and only to claim it isn’t necessary:

“The Inquiry does not recommend pursuing industry-wide structural reforms such as ring-fencing. These measures can have high costs, and require changes for all institutions regardless of the institution-specific risks. Neither APRA nor the RBA nor the banking industry saw a strong case for these reforms.” [Emphasis added.]

This is a stunning statement: it was Murray himself, back in August, who first mooted ring-fencing for the Australian banks, which idea he personally endorsed. To raise it as he did, was to acknowledge the problem: the boring nature of safe retail banking is at odds with the reckless, speculative culture of investment banking. As former NAB CEO Don Argus put it on 17 September 2011, “What has to be done is to separate commercial [retail] banking from investment banking. I challenge any commercial bank board to really understand investment banking risk. It’s different and needs to be properly priced. But you actually don’t want it on a commercial bank balance sheet that comprises depositor funds.” [Emphasis added.]

Now Murray has rejected the need for even the weakest separation on the advice of his mates in “the banking industry”. Furthermore, his excuse for not recommending a separation—i.e. the expected “high costs” of separating—emphatically proves the case for separation: if the costs of separation are indeed so high, that can only mean that investment banking is so deeply intertwined with retail banking in Australia that the finances of every single Australian are in constant danger!

And to self-reinforce its banker viewpoint, Murray’s final report airbrushes from its record the more than 700 submissions by Australian citizens to the FSI demanding a full, Glass-Steagall separation of the Big Four TBTF banks. In the statistical analysis in Appendix 4 of submissions to the FSI by source and by subject, the fine print notes that the analysis “Excludes campaigns such as credit card surcharges and too-big-to-fail [i.e. Glass-Steagall].”

Just as former ANZ bank director John Dahlsen declared of the FSI’s Interim Report, the Final Report too is “by bankers, on behalf of bankers, for bankers”. It proves the Big Four TBTF banks are desperate to avoid any separation of their gambling activities from the deposits they hold, which underscores the urgent need for the full Glass-Steagall separation that the CEC has led the fight for.

That fight continues—join us.

If you haven’t already, sign the CEC’s statement, Glass-Steagall for the Common Good.

Click here for a free copy of the latest New Citizen newspaper, which includes the CEC submission to round II of the Financial System Inquiry.

SPECIAL ANNOUNCEMENT: The ALP, Liberals and Greens are ganging up to make it harder for other parties to contest elections, by tripling the membership requirement. If you support the CEC’s ideas, it is time to act by joining as an Associate Member for one year, so the CEC can remain registered. Click here to join the CEC as a member.

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