One disturbing ASIC interview

Find below an interview with ASIC chief Greg Medcraft from the Centre for International Financial and Regulation. The context is Medcraft’s leadership of the the International Organisation of Securities Commissions as a part of the G20.

The beauty of this interview is that exposes exactly how scandals like those currently afflicting the CBA take root. Medcraft has no time for rules or regulations and is focused entirely on the notion that the “culture” of an organistion is the only point of contact that the regulator should approach, using such frightening tools as surveys. This is “light touch” regulation par excellence and I just wonder how Mr Medcraft sees cultural change transpiring without changing any rules.

Mr Medcraft came to this job with a questionable record in securitisation here and abroad. His knowledge is no doubt peerless. But as Chairman of the American Securitisation Forum in 2005, he was also at the coal face of the most destructive collapse in lending standards in history, yet here he is still endorsing “light touch”.

Mr Medcraft might want to take a look at the survey of his own operation’s culture currently on display in the senate document calling for a Royal Commission into ASIC failures.

It’s hard to avoid the conclusion that Mr Medcraft is about to royally set back international efforts to bring global wildcat finance into an alignment with a social contract that makes markets work for the good of all not just the few.

 

Comments

  1. The banks have clearly taken the view that their clients money does not belong to their clients but to the banks, and they liberally help themselves to it in the foreign exchange market.

    This bloke has turned a blind eye to the systematic looting of foreign exchange remittances. He’s not a regulator. He’s an enabler.

    • Charles Ponzi

      Agree. One can still get pregnant with a light touch. I would stay at least 12 inches away from this guy.

    • AURulesMEMBER

      ASIC has ALWAYS been useless – at least as far back as I have personal knowledge. That’s about 27 yrs -when I alerted them in writing & in phone calls about a Mining Co that was scamming leading up to the Crash of 1987.

      Since then there was 2 other occasions that I alerted then to fraud —

      NO response to any of these contacts except stupid
      form letter denials that there was anything they could do.

      You’re on your own out there. Do own due diligence which most of the time is not easy.

      Abbot & his $hit Ministers want to enable the Financial crowd to pick pockets. Guess Australians got the Govt they voted for.

  2. Crocodile Chuck

    “Mr Medcraft came to this job with a distinguished history of pioneering and innovation in securitisation here and abroad. His knowledge is no doubt peerless. But as Chairman of the American Securitisation Forum in 2005, he was also at the coal face of the most destructive collapse in lending standards in history, yet here he is still endorsing “light touch”.” (snip)

    Let’s position this correctly, shall we David?

    Medcraft headed up Global Securitisation for Societe Generale up to 2006-that last year famous for the ‘worst of the worst’ in terms of mortgage lending asset quality in the USA.

    SocGen (but not Medcraft personally) is being sued by MBS investors for over US$2B in schite assets, which were improperly conveyed to securitisation trusts.

    The fruit doesn’t fall very far from the tree.

      • interested party

        If this is correct……who the bloody hell vetted his appointment to the ASIC seat? That’s a head that needs to roll.

      • Medcraft was a Swan appointment. Gillard approved an ‘exemption from policy’ to allow the appointment to bypass usual transparency and merit criteria and the position was not advertised. Medcraft was a former ALP member and apparently close to Swan.

        His ‘go lightly’ approach and belief in self regulation has some merit although ‘purists predict that “when the shit really hits the fan”, Medcraft will come up short because his background is in markets, not the law. “They’re the defining moments for an ASIC chairman, when there’s a medieval focus on enforcement and punitive outcomes, and it’s harder for a non-lawyer to get on top of that,” an observer says’.

      • @interested party:

        “If this is correct……who the bloody hell vetted his appointment to the ASIC seat?”

        Same crowd that handles recruitment for Myer?

  3. Jake GittesMEMBER

    His ‘insight and argument’ about culture is a tautology which means he cannot logically understand the problem. This problem to deal with basic critical thinking is widespread in business.

    • Charles Ponzi

      Critical thinking doesn’t pay those who benefit from the current system. I would play dumb too if it made me lots of money.

    • migtronixMEMBER

      It’s widespread my friend, sadly in friggin everything.

      Simple reasoning is now a lost art…

  4. In relation to foreign currency transfers, there is clearly an arrangement in place that works to divert monies on a detour while in transit and while on that detour the funds disappear. Funds are effectively stolen while in transit. They are stolen by those entrusted to execute their transfer.

    I can cite my own recent experience. My overseas client’s bank has been instructed to pay USD to the ANZ in order to settle my invoices. But instead of paying the ANZ, the offshore bank pays (in this case) the CBA. The CBA should forward the funds in USD to the ANZ, but does not do so. The fact is we never receive any settlement or exchange advice from the CBA. There is no paper trail. There is at most a substitution of the stolen funds with lesser amounts in an alternative tenor. But this is not the same thing as forwarding the amount remitted. It is a switch-and-bait scam carried out under the nose of the public and the authorities.

    The CBA takes a colossal margin on what is purported to be an exchange of currencies. Because this is done pursuant to an “agreement” between all the banks it probably includes a profit sharing arrangement between them. This could not work unless all the banks were agreed on the mechanisms, and it would only be in their interests to agree to it if they were obtaining a financial advantage.

    My view is that I am entitled to receive given sums in USD but I have never received them. I have been paid other sums in another currency.

    The banks storyline is that the transfers are done this way by “arrangement”. So it’s organised. It’s not an error or an oversight. It’s deliberate. It is just a straight-forward conspiracy by the banks to deprive their clients of their money.

  5. bolstroodMEMBER

    In my experience Banks(In my case Nat. West) were going to charge $5000 to transfer $30,000 to me from England to Aus.
    I bless the cousin who told me of Forex.

    Greg Medcraft looks to be doing good work for the people who put him in the job

  6. Hang on…the financial industry seeks no-regulation when times are good and lots of ‘regulation’ (govt assistance) when it all turns to $h!t.

    If there hadn’t been govt intervention in 08-09, wouldn’t the resultant agony/gnashing of teeth resulted in much greater appreciation for risk and the subsequent mitigation of risk from there-on?

    Or am I merely touting idealistic, Libertarian claptrap?

    • am I merely touting idealistic, Libertarian claptrap?

      No you are currently making sense. Start talking about a zero-regulation free market and you will be in the claptrap arena.

  7. I don’t have the time to watch the video, but this earlier comment from The Patient Zero of American sub prime securitization gives a disturbing view into his mindset

    ”Personally, being a free enterprise person, I would rather people sort out the issues between themselves rather than involving ASIC,” he said.

    Read more: http://www.theage.com.au/business/asic-chief-sets-sights-on-financial-advisers-20140624-3ar9t.html#ixzz35axEUBrz

    Is he living in an pre 2004 bubble when Greenspan was considered a Maestro? Because, since then ,Greenspan had to make a humiliating admission in the US congress that he was wrong about self regulation.

    • ”Personally, being a free enterprise person, I would rather people sort out the issues between themselves rather than involving ASIC,” he said.

      To me, he sounds intrinsically lazy. In all likelihood he possesses more than enough wealth at his age to coast through the remainder of his life, and appointments like these are just icing on the cake. He is no doubt under resourced to some extent, and in no position to take on every vice in his target market. But ASIC could certainly do better with what they have.

      Medcraft is a typical example of an overpaid and over protected public servant appointed on the basis of goodness knows what, who will have to stuff something up on a grand scale to lose his appointment. But more than that, he will have to upset someone who matters, such as his political and finance industry overlords. It is inconvenient for him that this CBA thing has taken on such a high profile, especially given that this almost never happens. Damned tenacious whistleblowers and Adele Ferguson.

      He has been tried and found wanting, and hopes to ride the storm until complacency and fatigue renders the fiasco no longer newsworthy.

      He has been around long enough to know that, given the opportunity, many people won’t do the right thing. His ‘feel the vibe’ style ramblings about culture have as much substance as the emperor’s new clothes.

      Another oxygen thief extraordinaire.

  8. Anyone using a financial planner owned by a bank or other asset pusher is mad.

    Fee for service is the way to go with the contract requiring the planner to act bona fide in the best interest of the client and rebate all commissions and other benefits prorata (eg provision of office space, computers, services.

    This ought be supplemented by a government owned, very low fee series of say 5 default funds
    Aussie bonds
    Aussie equity
    International equity
    International bonds
    Cash
    with the default setting of a persons super being 20% in each and quarterly rebalancing.

    Costs are a huge concern when yields are 4%. A 1% fee is a 25% tax on your income.

    Virtually no active managers outperform over 5 years when evaluated net of fees.

  9. ceteris paribus

    When Medcraft has finished witn corporate compliance, we should get him in charge of the Criminal Law. He could deregulate that too.

  10. footsoreMEMBER

    Did anyone else who watched the video find his responses similar to that of the churches whenever they are under scrutiny?

    “If there is a problem it is in-house and so it should be dealt with in-house. No need to look properly or put anything in place to ensure we don’t do it again.”

    And imagine if a person is a simlar position if the justice position spoke in the same way about drug cartel abusing current gaps in the, or lack of, law.

    Also I’d suggest adding another word to the title, ‘One VERY Disturbing ASIC Interview.’

  11. Still doing nothing eh? What a surprise!

    He divulged he’d read about his own appointment in the newspaper!

    http://www.abc.net.au/insidebusiness/content/2011/s3377460.htm

    That interview set the tone & was a waste of a good opportunity by AK to skewer a non comittal Medcraft. Sidestepping regulated exchange traded futures which caused the collapse & blaming unregulated CFD’s for the woe’s of MF Global.

    I must be having a perception crisis at the moment, wherever I look, anyone in a position of ‘power’ reminds me of a creepy Gollum……… & in some form or another they’re all after my precious ring!

  12. ASIC are an absolute disgrace. I know for a cold hard fact that they are suspending the licenses of financial advisory businesses for far, far lesser infringements than CBA’s systematic abuse of client’s trust – in some cases for purely administrative oversights and minor inadvertent breaches of privacy law. And they do this, apparently, in order to make an example for the other small fish out there. But for Australia’s largest bank, ASIC applies very different standards of investigation and enforcement. They entire regulatory and political system has been captured by our big four banks. Any Royal Commission should be expanded to include the big four + the regulator. The current inquiry being headed by the entirely complicit David Murray is a sham, and absolutely mocks the notion of an independent inquiry. It is like asking the mafia to review itself and then propose the framework for its own self-regulation. What a joke.

  13. Sheesh! Anyone would think you lot don’t trust banksters and regulators to … oh, let’s say … implement a new globally-linked mega-market in CO2 securities trading in a manner that actually reduces emissions and so saves the planet.

    Oh wait …. you DO!

    FMD.

  14. Here is a behavioural insight for this fool: ASIC is like a sheltered workshop for the proverbially useless.

    There is no way a culture will change if they are TBTF. Sure they might put lipstick on a pig to satisfy the regulator but the second he walks out the door things continue as usual.