Throughout this year, the Turnbull Government has rejected calls for a banking Royal Commission on the grounds that the Australian Securities and Investment’s Commission (ASIC) already has all of the necessary powers to investigate claims of misconduct and prosecute accordingly.
Today, The AFR has reported that the big banks are preparing to launch a defence in the courts against ASIC’s request that they settle claims of manipulating the benchmark bank bill swap rate:
Bank officials told The Australian Financial Review that they interpreted reports that the Australian Securities and Investments Commission expected the banks reach a financial settlement over alleged interest rate rigging as a sign ASIC were losing confidence with their case…
The regulator is seeking $1 million per transgression implying ANZ could face a total fine of $44 million while Westpac could be hit with a $16 million fine. NAB could be fined up to $52 million and late on Friday ASIC lodged a statement of claim against the bank…
“We are working on our defence and there is no talk of a settlement,” a banking official said…
Another banking source said that “trust between the banks and ASIC was disintegrating” as their respective positions became more entrenched…
ASIC chair Greg Medcraft is understood to be keen to reach an agreement to avoid the costly court process…
But the banks, which are budgeting tens of millions of dollars that they would have paid in settlements, may deplete ASIC’s $80 million war-chest.
The way I see it, this is a make-or-break case for ASIC.
The rate-rigging scandal should be a slam-dunk to prosecute, given the banks were caught red handed manipulating the bank bill swap rate. So if ASIC does fail in its bid to prosecute, then it proves that it is a ‘toothless tiger’ regulator and bolsters the case for a banking Royal Commission to investigate:
- bank manipulation of the bank bill swap rate;
- the 1000-plus examples whereby borrowers’ loan documentation has been forged by the banks (see here, here, here and here); and
- overall dodgy lending standards.
ASIC better not fail, yet again, to bring the banks to justice.
