Citizens Electoral Council of Australia

Media Release Monday, 18 August 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

Financial System Inquiry boss on ‘bail-in’:

Australia depends on foreign investment, so we must conform to foreign regulations

The banker Joe Hockey appointed to run the Financial System Inquiry (FSI) told a fiery public hearing in Melbourne late last week that because Australia depends on foreign investment, we have to conform to foreign regulations such as bail-in.

In response to a number of concerned audience questions about the bail-in law that Australia signed on to at the G20, under which depositors could have their savings confiscated to prop up too-big-to-fail banks, as happened in Cyprus in March 2013, FSI Chairman and former CBA boss David Murray initially downplayed the threat.

Murray claimed the FSI isn’t ruling bail-in in or out, but he asserted that bail-in means different things in different jurisdictions, so in Europe it has included seizing deposits, but, he surmised, in Australia bail-in will have to fit in with the existing Financial Claims Scheme (FCS) guarantee of deposits up to $250,000. (An unworkable guarantee, because the government only makes provision for $20 billion per bank, but about 80 per cent of Australian deposits are in the Big Four banks, which each hold around $400 billion.)

But then Murray spectacularly contradicted himself, by declaring that Australia is dependent upon foreign investment, which means: “Now if we are dependent on foreign capital, we cannot go and say to the capital markets of the United States and Europe, and their regulators, that ‘don’t mind us, we are going to have our own set of regulations irrespective of what you say’.”

When the questioner interjected, “But does that mean we’re not a sovereign nation?”, Murray confirmed we are not: “Well, I’ve made the point, quite clearly, that we are dependent on foreigners for savings,” he replied. “If we want to change that dependency, we’d better run the economy in a very different way.”

Murray also spent the evening deflecting questions on the importance of going with a full Glass-Steagall separation of everyday retail banking from risky investment banking, to protect depositors, instead of his proposal that Australia adopt the watered-down British version called ring-fencing. Only bankers oppose full Glass-Steagall, because they know their financial gambling depends upon unfettered access to other people’s money; Murray demonstrated in technicolour that he is a banker. The CEC is not alone is this observation. In the 18 August Australian Financial Review, former ANZ Bank director John Dahlsen charged, “The [FSI] interim report has been prepared by bankers, on behalf of bankers, for bankers.”

Demand sovereignty for Australia: Glass-Steagall, not bail-in

Murray has made it crystal clear that the fight against bail-in is a fight for economic sovereignty. The CEC is fighting to do exactly what Murray admitted is required for Australia to be sovereign—“run the economy in a very different way”. It is mobilising to build a groundswell of public support to force Parliament to legislate for a full Glass-Steagall banking separation to protect the everyday economy from speculators, and a new government-owned and run National Bank like the original Commonwealth Bank, which can pour public credit at low interest into a massive program of water, power and transportation infrastructure development, and into small and medium family farming and manufacturing enterprises, to revitalise Australia’s agro-industrial base and create hundreds of thousands of full-time, high-skilled, high-wage jobs.

If you haven’t already, make your voice heard in this fight by making a submission to the Financial System Inquiry. The deadline for submissions is 26 August, so you still have time.

Join the hundreds of everyday Australians who have written to the FSI, with the loud and clear message: No to Australia enacting a bail-in law, yes to a full Glass-Steagall banking separation, with emphasis on the full separation—not a sham ring-fence.

Click here to go to the CEC’s website for detailed instructions on making a submission.

To find out more about Glass-Steagall for Australia, click here for a free copy of the CEC’s magazine, Glass-Steagall Now!

If you have already received a free offer, click here to purchase a copy ($25).

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 1 year, so the CEC can remain registered. Click here to join the CEC as a member.

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