Crikey’s Glenn Dyer and Bernard Keane appear to have turned over a new bearish leaf recently (thank goodness) and today’s missive is an example of the dividend:
Australian banks escaped the global financial crisis, so they say, but in reality the Australian financial system, and the big four especially, were bailed out by the Reserve Bank of Australia to the tune of close to $100 billion in extra liquidity, billions of dollars in new currency to meet a “silent” run on financial groups, and other mechanisms invented by the RBA to keep the financial system and the economy afloat in the last quarter of 2008 running into the first half of 2009.
…But regulators, and most especially the Australian Prudential Regulation Authority, have a deliberate policy of choosing not to publicise the results of so-called stress tests on banks. The head of APRA, Wayne Byres, told Senate estimates last week that the regulator had just conducted a stress test for property on the country’s banks — but left us none the wiser as to how the individual banks performed.
…Compare and contrast: the European Central Bank last Sunday released details of how the 130 major banks across the eurozone performed, while the European Banking Authority released details of its tests for all major banks in the EU. Banks were named, capital deficiencies assessed and data provided; the banks needing more capital were told how much and given a deadline.
…And the Bank of England’s Prudential Regulation Authority is in the process of finalising stress testing of all banks and finance groups in the UK for release on December 16, providing investors with a health check on all major UK lenders, including the two owned by the National Australia Bank, the Clydesdale and Yorkshire banks. In fact, we should know more about their health and ability to pass a stress test than we will about how their parent, NAB, passed APRA’s stress test.
…But wait, there’s more: the US Federal Reserve last week announced the terms of its latest annual stress tests of America’s biggest banks. According to the parameters for this test, 31 big US and global banks will have to show how they can withstand a spike in oil prices, a rise in the US unemployment rate and an increase in risky corporate loans.
I coined this veil of secrecy “invisopower” four years ago and it has not improved since. Crikey argues the stress tests should be made pubic via the Murray Inquiry and it is absolutely right.
