Citizens Electoral Council of Australia

Media Release Friday, 1 December 2017

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

Turnbull caves in to demands for banking royal commission, but orders it not to investigate APRA

Prime Minister Malcolm Turnbull and the banks have jumped before they were pushed, agreeing 30 November to a banking royal commission that they hope they can control. The justified fury of the Australian people, who have neither been assuaged by the government’s assurances nor swayed by the banks’ scare campaign, has forced the government into this action. Just a day earlier Westpac’s head of businesses banking David Lindberg warned that an inquiry could push the nation into recession and “economic collapse”. Yet within 24 hours Westpac and the other three major banks wrote to Turnbull suddenly claiming to support a royal commission.

Turnbull, a.k.a. Mr Goldman Sachs for having made his fortune with Wall Street’s most predatory bank, is now desperate to control the outcome. Within minutes of receiving the letter from the Big Four, he released a joint statement with Treasurer Scott Morrison announcing the terms of reference. The royal commission would not be “the inquisition into capitalism that some have called for”, it stated.

Turnbull will obviously do everything he can to ensure that, but as former Prime Minister John Howard warned on Sky News on 23 November, royal commissions can get out of control. Attacking the idea of a banking inquiry as “rank socialism”, Howard said that “you put a successful segment of the Australian business community in the dock, and that’s what happens, and royal commissions go on and on and often go beyond their remit”.

APRA off limits

Turnbull pre-empted legislation for an inquiry so he could determine the terms of reference, which are much weaker than those which the Greens and rebel Nationals had been negotiating. The most glaring and most telling difference is that Turnbull’s terms of reference order the commission not to inquire into the Australian Prudential Regulation Authority (APRA).

Term 5 states: “The Commission is not required to inquire into, and may not make recommendations in relation to macro-prudential policy, regulation or oversight.” (Emphasis added.)

This means that the Royal Commission is not allowed to look into the powers and practices of APRA, even though it is the bank regulator, and the banks committed the abuses that triggered the royal commission under its supervision! In fact, in terms of the banks’ rural and businesses lending practices which have especially incensed the National Party, APRA incentivised them to aggressively and destructively foreclose on farms and businesses, by rigging their capital “risk-weightings” to make home loans far more profitable than business loans.

So why are APRA’s operations the one area of the Australian banking system off limits to the Royal Commission? For the same reason Turnbull’s government has been trying to discreetly legislate sweeping new crisis resolution powers for the regulator: APRA is part of the global regulatory structure centred in the Bank for International Settlements (BIS) and Financial Stability Board based in Basel, Switzerland. Before he took over as chairman of APRA, Wayne Byres was Secretary General of the BIS’s Basel Committee on Banking Supervision.

This international apparatus has zero credibility in terms of bank regulation, having overseen the frenzy of speculation that caused the global financial system to collapse in 2008, a collapse still ongoing. It allowed the banks worldwide to speculate in financial bubbles, including the various national property bubbles, and gamble like crazy in toxic and often fraudulent derivatives, running up a $1.2 quadrillion ($1,200 trillion) global bubble of derivatives gambling debts. Then, when the system crashed, it rushed to implement a global “bail-in” regime to protect the Too-Big-To Fail banks, by forcing their innocent customers to pay with their life savings to keep them afloat, instead of forcing the banks to change their ways. Turnbull’s APRA bill, the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017, is intended to bring Australia into line with this global regime.

So it can coordinate the global bail-in regime to protect banks, the BIS apparatus demands operational independence for its various national agencies, such as APRA (in fact APRA’s Wayne Byres wrote the BIS policy insisting there must be no “interference” from governments). Turnbull is ensuring that the royal commission can not make recommendations for Australia’s banking system that get in the way of the BIS-APRA bail-in agenda.

Banking system in damage control—make your submission!

The CEC and its supporters can claim credit for forcing the government into this blatant defence of APRA, by their efforts to expose and stop the APRA bill. The CEC exposed that the bill definitely gives APRA powers to bail in hybrid securities that it allowed the banks to sell to hundreds of thousands of self-funded retirees and other retail investors, by converting those securities into worthless shares, as well as other broad powers that in an emergency could be used to seize deposits. Following thousands of calls and emails, the Greens referred the bill to the Senate Economics Legislation Committee for scrutiny. It is now clear that this infuriated Turnbull, the banks and APRA, and forced their hand on the royal commission so they could draft the terms of reference to block any more scrutiny of the APRA bill and the structure of the banking system. Turnbull and Morrison’s joint statement revealed as much, declaring: “We will ensure that the Inquiry will not defer, delay or limit, in any way, any proposed or announced policy, legislation or regulation that we are currently implementing.”

The CEC’s mobilisation is shaping these developments, so now is the time to escalate. The Senate Economics Legislation Committee inquiry into the APRA bill is now the most important inquiry in Parliament, as it is investigating the issue the government doesn’t want touched! The submission period for Senate inquiry closes on 18 December—write a letter to the committee today!

(Click here for instructions on how to make your submission.)

Click here for a free copy of the 22 November issue of the Australian Alert Service, which documents the disastrous instances where bail-in has been imposed in Europe.

To join the fight for a national bank and to re-nationalise our privatised assets, click here to join the CEC as a member.

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