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.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.