Bob Katter moves Australian Glass-Steagall bill

Not unreasonable stuff from Bob Katter:

Need for this bill

It is obvious that Australia’s Big Four banks and Macquarie are devoted solely to their own usurious profits at the expense of the population as a whole. We must therefore break up these “vertically integrated”, self-centred and crime-ridden behemoths and return to the sort of tightly regulated banking system which existed under our original Commonwealth Bank, which was dedicated to the Common Good. Towards that end, the Citizens Electoral Council has drafted the Banking System Reform (Separation of Banks) Bill 2018, an explanation of which follows.

General outline

Given the onrushing global financial crisis, this present legislation is proposed for immediate implementation within the current Australian banking structures and institutions. It mandates the separation of normal retail commercial banking activities involving the holding of deposits, from wholesale and investment banking, which are rife with risky activities; and, whilst guaranteeing deposits in commercial banks, removes explicit and implicit government guarantees for any such activities outside of the core business of normal commercial banking. It also proposes to provide strict accountability and Parliamentary oversight of the activities of the Australian Prudential Regulation Authority (APRA) as the banking regulator, which since its establishment in 1998 has not only overseen, but actually fostered the growth of Australia’s present, speculation-centred, crime-ridden financial system.

Australia’s present financial system, particularly those aspects introduced during the waves of deregulation that followed from the 1981 Campbell Report, which allowed its present concentration in the “Big Four” too-big-to-fail (TBTF) banks plus Macquarie and the mixing of normal commercial banking with speculation-ridden investment banking and other financial services within the same institutions, is recognised to be a disaster which fosters financial speculation at the expense of the real, physical economy and the majority of the population. Moreover, the City of London/Wall Street-centred global financial system, of which Australia’s banks are an integral part, itself now faces a new collapse.

The Australian and international media have featured repeated warnings from present and former officials of the Bank for International Settlements, the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the U.S. Federal Reserve System, as well as former leading bankers and other prominent commentators, that the world is headed towards a far greater financial crash than that of 2007-2008.

This inevitable prospect has been caused by the waves of “free market reforms” enacted since the breakup of the fixed-exchange-rate Bretton Woods system in 1971. These reforms include privatisation, deregulation, manipulations of fluctuations in currency exchange rates, and the creation of over US$1 quadrillion in speculative instruments known as derivatives, such as the mortgage-backed securities that provoked the 2007-2008 crash and are once again soaring in number.

This new global bubble in the trans-Atlantic system, including Australia, is not simply a bubble in one part of “the market”, such as mortgages. Rather, the relentless “quantitative easing” by central banks, totalling an estimated minimum of US$12 trillion since 2008, has created an “everything bubble”, including car loans, student loans, corporate loans, the U.S. stock market which has exceeded US$30 trillion, the bitcoin bubble, and others.

And on it goes.

We can do better than the old system but the general point is well made.  Banks need to be heavily regulated utilities otherwise the exorbitant privilege of creating money leads to massive personal corruption and bubble distortions.

Full proposal here.

Houses and Holes
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  1. At least it stops people focusing on the money laundering and destroying the country via the property market.

    • The loud beeping would be useful to let all the thieves in the area know you are carrying cash.

      • Why do you think I used to visit ATMs? To watch penguins? I think you will find that people go to ATMs to withdraw banknotes.

      • Jacob are you not depositing hundreds of thousands of undeclared dollars for transition to Hong Kong via CBA tellers? Because if you’re not, you’re missing out on an excellent opportunity to ‘Get ahead'(tm).

      • AngryMan, sorry if my earlier post seems rude. Thieves can sit on a bench at the Burwood One shopping centre and see people withdraw cash from the ATM. In Bundoora many years ago, a grandma got robbed at 11 pm just after she withdrew money from an ATM.

        @pingupenguin, lol!

    • Stephen Morris

      Weren’t the machines originally designed that way deliberately to ensure that people didn’t leave their cards behind? You couldn’t get your cash until you’d recovered your card.

      If someone went to an ATM with the objective of getting cash it was much less likely that they’d leave with their card but no cash than with their cash but no card.

      It may reflect a change in the way people spend that they are now more likely to remember their card than their cash.

      • Even StevenMEMBER

        I believe Stephen is right. Personally, I am 100% ok with the way ATMs distribute cash.

        I think we have bigger issues than this. To even raise it is robbing this forum of intelligence.

      • Stephen, cars now come with a petrol tank cap that is wired to the flap so nobody leaves a fuel tank cap behind:

        I was in a bus the other day and someone left a Mazenod College jumper behind. I was in the train and some Irish tradie left his sunglasses behind – so I told him that just before he left the train. An Asian guy who used an ATM just before me left cash in the ATM and I told him.

        Some forget to take their kid out of the car on a hot day. Some have reversed over their own kid (hence reversing cameras are mandatory in USA?).

        The ATM could give both the card and cash in an envelope or allow the account holder to set what comes first (the cash or the card). Over 10 years ago, an ATM I used did give out envelopes!

        Some taxi drivers would fill the taxi with LPG and drive off without removing the hose! The bowsers are actually designed to deal with that situation – there is a valve that allows the hose to be ripped off the pump without destroying the whole pump.

    • Got a letter from the bank the other day. Thinking it was the usual spruik for yet another credit card or insurance I left it unopened for days. When I did eventually break it open I almost choked – it informed me that I had forgotten to take the money with me from an ATM transaction and that the bank had now reimbursed me – with interest! All in an apologetic tone and ‘sorry for any inconvenience’. Never too late to be surprised.

      • sisyphus, that is unbelievable! So unbelievable that I am not sure if you are serious. Just makes you wonder why they can not spit out the money and card from the same chute at the same time?

  2. What does it say about this country that this is the guy who comes up with a reasonable solution.

    • Stephen Morris

      It says that the metropolitan media – preaching to their metropolitan audiences – maintain a constant barrage of sneering criticism and condemnation aimed at rural and regional Australia, and at anyone identified with rural and regional Australia, notwithstanding that these are the regions, people and industries which enjoy a comparative advantage on world markets and which sustain the metropolitan Australian populations who generally do not.

      Proprium humani ingenii est odisse quem laeseris.

      • Exactly SM! Then they move out to the sticks & try to enforce their clueless arrogant groupthink through council appointments & general interactions like bushies know nuthin’. They just gotta feel superior – compensating for something……..

    • Read again. Citizens Electoral Council. They are a separate political party.

      If anything it vindicates the anti-establishment movement,

  3. The banks are already voluntarily spinning off a lot of wealth management stuff etc, if only because its nowhere near as profitable as retail banking and it makes their ROE look weaker than it otherwise would, But I suspect their timing might be bad, and mortgages may not prove to be the money spinner they have been up until now.

    In any case this seems a bit wide of the mark, leaving Macquarie aside, the big four aren’t engaged in prop trading or the kind of activities US banks were to any great extent. Much bigger misdoings with their core retail activities we shouldn’t get distracted from.

  4. Why not just go to the heart of the matter with a one sentence Bill.

    “The Commonwealth ends the creation of money by private banks”.

    • Or, simpler still, and WAY more effective: go back to a gold standard. A gold standard would hold banks to account in a way that regulations simply can’t — in fact, a regulator would almost not be needed at all (okay, perhaps a small one).

      Banks would not be able to generate the out-sized profits they do today; bank CEO’s, as a result, would be paid closer to $500k a year rather than the absurd $16m they do these days; and the main avenue of profitability would become loans to businesses rather than loans for speculative activity as home prices would rise at snail’s pace and therefore rendered what they were always intended to be: a consumption item not a financial asset.

  5. H&H i know you don’t use twitter but there are some good tweets about Julie Bishop’s botox injections (apparently on tax payer account) going wrong. Might want to borrow some of those pics for your botox economy articles.

  6. A shame that the proposal came from such a crazy group:

    Carbon Trading is Hitler-style Genocide!

    The global carbon dioxide cap-and-trade scheme which British imperial stooge Kevin Rudd is now attempting to ram through the Australian Parliament, and similar legislation pending in the U.S. and other countries, will reduce the world’s human population by billions

    • The Citizens Electoral Council are a tiny bunch of total nutters occupying a parallel universe.. I am surprised to hear even Bob Katter giving them oxygen.

    • Agree, kiss of death – as much chance to get through as any proposal to curb immigration coming from One Nation.
      Mind you, I did sign the CEC’s petition for Glass-Steagall on the street, only to later find out how out of orbit, their other views are.

  7. Easiest way to fix a multitude of societal and financial ills. A simple and effective idea from a generation who went through all this already and said “never again”. Short of setting up a competing ‘gov’ bank so we can vote with our feet, a great idea – perhaps both! How can we support this initiative from an unexpected champion of the idea?

  8. Even StevenMEMBER

    Glass-Steagall won’t address the fundamental problem – credit creation (through ‘normal’ lending activities).

  9. To quote an old book “The love of money is the root of all evil”

    Not money, the love of it. People can’t be trusted not to cheat, lie or exploit others for their own gain.

    Harsh as that sounds, its not a criticism of humanity, rather an understanding of it. This is why there needs to be heavy regulation of the money industry and dire consequences for breaking the regulations. If there is an easy way to siphon off a dollar and no repercussions people will do it. Its humanitys base instinct to take the easiest route.