Financial regulators turn credit racketeers and kneebreakers

Public interest anybody? Via the Council of Financial Regulators turned bank credit racketeers and kneebreakers:

Quarterly Statement by the Council of Financial Regulators – October 2020

The Council of Financial Regulators (the Council) held its regular quarterly meeting on Tuesday, 29 September. The key issue discussed was the role of the financial sector in supporting economic recovery. The Council also had important discussions on cyber security.

With signs that the coronavirus is being successfully contained and state economies gradually reopening, much of the Council’s discussion focused on how the financial system can support economic recovery. A key focus was the importance of the continued flow of credit to the economy, particularly to small and medium-sized enterprises (SMEs). Members agreed that demand for credit among SMEs has been subdued and that improved confidence in the health and economic outlook will be critical to addressing this. There have also been some signs of tightening in the availability of credit, though this largely reflects the changed trading conditions, rather than tightening lending standards. Members discussed the proposed changes to regulation of lending practices recently announced by the Government. They agreed that these changes would support the supply of credit, noting that requirements for prudent lending by authorised deposit-taking institutions (ADIs) will remain in place through APRA’s lending standards. Members also agreed that ADIs should be prepared to use capital buffers to support the supply of credit to the economy.

The Council also discussed lenders’ temporary deferral of loan repayments. This has provided important support to households and businesses during the pandemic. The majority of loan deferrals expire in September and October, requiring lenders to process a large volume of individual assessments. APRA and ASIC are working closely with lenders during this process. While many borrowers with deferrals will be able to resume payments, some may need to work with their lender to determine an alternative approach. It is important that borrowers who cannot resume full repayments engage with their lender, or seek other assistance, such as through the National Debt Helpline.

The Council’s second key focus was cyber security. The Council met with the Department of Home Affairs to discuss government proposals for regulatory reforms to enhance the protection of critical infrastructure from cyber-attack. The proposals will interact with existing regulation of the financial sector and will require close coordination between the Council agencies and the Department. APRA outlined its renewed Cyber Security Strategy, which will form an important element of the financial sector’s framework for managing cyber risk. Members committed to further collaboration to support the Strategy. One existing area of collaboration is a pilot cyber operational resilience intelligence-led exercise being planned with several financial sector entities. Council members agreed to publish the framework for the exercise in the near future.

The Council approved a set of principles for maintaining open access to cash equity clearing and settlement services. The principles are set out in Application of the Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australiawhich is available on the Council’s website. The principles provide additional guidance on how expectations for the conduct of ASX, as the only current provider of cash equity clearing and settlement services in Australia, should be applied. Members also discussed the governance of ASX’s CHESS Replacement Project. Council members stressed the importance of the regulatory oversight of the project that is being provided by ASIC and the Reserve Bank.

The Council discussed a stocktake of the climate-related activities of member agencies. A key element in the period ahead will be the climate change financial risk vulnerability assessment announced by APRA in February. The assessment will involve the large ADIs estimating the potential physical impacts of a changing climate on their balance sheets, as well as the risks that may arise from the global transition to a low-carbon economy. This work is being coordinated by APRA in conjunction with the Council. Council agencies continue to undertake a range of activities to understand climate risks and to promote understanding and management of those risks by regulated financial entities.

The Secretary of the Department of Home Affairs attended for part of the meeting.

In short, the “regulators” support the immediate return to criminal mortgage lending explicitly described and proscribed by the Hayne Royal Commission as its number one recommendation just 18 months ago following an extraordinary procession of corruption and career wreckage for bankers:

Instead, regulators want banks to forego their only reason for being – the assessment of creditworthiness – and to be policed in that criminal endeavour by the very regulator, APRA, that was historically humiliated during the same Hayne RC for being captured and utterly ineffective in the policing of illegal lending. APRA has no granular criminal lending rules at all, only a few blanket overlays such as the lending buffer, which it has recently shredded, and will clearly do so again.

And, having unleashed this orgy of organised credit crime, these “financial regulators” demand mercilessly abused borrowers contact their banks immediately to pay back the loans that they could never afford in the first place.

We have reached a point at which the Australian political economy reality is indistinguishable from satire.

David Llewellyn-Smith

Comments

  1. Free market.

    There is a reason the Medici’s were so powerful – and we also have the Statue of David, Sistine Chapel, Birth of Venice and Mona Lisa.

  2. I love this line – “Members also agreed that ADIs should be prepared to use capital buffers to support the supply of credit to the economy“.

    It’s just like people invite you to a restaurant to celebrate their birthday and you have to pay for your meal – and buy a gift.!!!!!

  3. happy valleyMEMBER

    “We have reached a point at which the Australian political economy reality is indistinguishable from satire.”

    And we have likely reached the point when banks will be technically insolvent and that won’t be satire, but pending reality?

  4. Oh, ok, so, riddle me this: if ultimately it doesn’t matter where one gets the money to pay back the loan, then one could do some nice laundering since no questions are asked, hmmm?