Deep T.


Australian banks’ giant mortgage capital rort

I’ve waded through Matt Comyn’s presentation of CBA’s results and some things struck me as, bluntly, lacking clarity. There’s no doubting CBA has a valuable franchise inherited mainly from its government owned history and its does have leading tech in delivering customer outcomes, but when it comes to the capital and liability side of the


How to control the banksters

The banking system is broken, propped up by every day taxpayers for the benefit of a few, mainly in the FIRE sector. Mortgage loans are the cancer that’s eaten away whatever financial stability Australia had previously. Our own politicians might smell that something is rotten with MegaBank, but how many realise that their careers and


Megabank and APRA: Unquestionably average

Australia you’ve been conned, hoodwinked by APRA to ensure that the too big to fail taxpayer guarantee of Mega Bank (CBA, NAB, ANZ and WBC) continues unabated. Another example of the game of mates, where APRA gains by pointing to a job well done on system stability, even while the risk rests squarely on the


14-point plan to address Australian inequity (revisited)

To recap, my last post was about my tribe of children being disillusioned. They all were very down on the future: the overblown housing market; job and earning prospects are crap to non-existent; foreigners are buying the country unabated; over-paid and corrupt bankers; and the appalling choices of leaders in politics everywhere. Whilst they haven’t


Deep T. would like you to meet STUART

Many things that occur in society defy rational or logical explanation. Society does not behave like the universe where science continues to unravel the workings through theory, experiment and testing. The universe is rationally predictable through the laws of science. Society or people are not, as collectives of humans influence their own outcome and that


Fast and Luci with the truth

Luci Ellis, RBA’s Head of the Financial Stability Department gave a speech last Friday, Reforming and Financing the Post Crisis Future . The hairs on the back of my neck picked up when I read the following: APRA set the local rules to require banks using their own models to hold more capital against housing mortgages


The dark heart of Australian banking

Sighhhh. I’ve written about this in detail a few years ago but nothing has changed and the deceit continues. All of Mega Bank’s divisions continue to present to the market deceptive figures about the strength of their balance sheets and the amount of capital Mega Bank holds compared to banks in other parts of the


The banker’s age of entitlement is powering

In my last post, I pointed out the gross inadequacy of APRA’s treatment of Mega Bank as Australia’s D-SIB (Domestic Systemically Important Banks). In essence APRA have stated that although Mega Bank needs to carry a meagre 1% extra capital because it’s a D-SIB, because of other spurious reasons Mega Bank does not actually need


APRA embraces too-big-to-fail

I’ve come out of my self imposed exile, to point out the howler of bank regulation of 2013. There’s been no or little main stream press on this and no comment that I could find and little wonder. APRA saw fit to release this Information Paper on 23 December 2013. This paper is very important


How to fix the CLF

There’s been much recent discussion on MB and from contributors to this blog on the merits of the RBA’s conditional liquidity facility (“CLF”), as well as more broadly recently following a series of articles by Chris Joye at the AFR. I’d like to try and make clear the importance of the CLF and the interconnectedness


We must bail-in the creditors

Recently I’ve read and heard opinions expressed that securitisation, particularly residential mortgage backed securities (“RMBS”), are no longer relevant to the Australian financial system. Nothing could be further from the truth. RMBS is central to maintaining the solvency and liquidity of all banks/ADIs in Australia and cometh the offshore credit squeeze are likely to be


How to make macroprudential policy work

The RBA governor’s speech this week certainly stirred up a few pieces of controversy, not least has been pointed out by MB’s Houses & Holes and Unconventional Economist when Mr Stevens suggested the pointlessness of macroprudential policy: We need, however, to approach such measures with our eyes open. Macroprudential tools will have their place. But


APRA sleeps through its own stress test

Sleeping with the enemy can be a very dirty but necessary task in order to make meaningful change. But that should not mean going easy. The headlines around APRA’s recent bank stress testing and financial forecasts reflect a common view that essentially all’s fine, the future will reflect the past and a plan is in place


APRA is pushing up the Australian dollar

Whilst the RBA and politicians dance around addressing the strength of the Australian dollar, crushing many productive sectors of the economy, APRA and Mega Bank use policies that pass massive risk to the taxpayer and inflate the level of the AUD. How so? The traditional and “official” view is that if a financial institution or


Who’s responsible for the risk?

The life of a banking system analyst can be lonely indeed. One tends to both offend and support all various interests at different times. I’ve been accused on MB of being a supporter of both Karl Marx and Ayn Rand whilst being a rent seeker for the non-Mega Bank Australian ADIs. I can honestly say I’m not


Basel takes aim at Mega Bank

The Basel committee has been busy and has finally released a consultative document, “A framework for dealing with domestic systemically important banks” (D-SIBS). This document sets out recommendations to local regulators (APRA in Australia’s case) on how local banks, which carry the risk that if they fail, it may cause systemic failure, should be regulated for


The deposit dilemma

The variability within the Australian economy seems to be a mystery to some and simple to others but I doubt many have considered the “deposit dilemma”. In the following paragraphs I am going to outline an hypothesis about how Mega Bank (the big four) has a sleeper hold on the Australian economy due to the


Ratings agencies are the great enabler

The opinions of a few people in a small number of credit rating agencies (CRAs) dictate the operations of a significant part of the global debt markets.  As debt markets rule the financial markets, this is a very powerful position and comes with great responsibility. Yet CRAs are free to provide whatever opinion they decide.