Submission Covering Letter

Zoe Elizabeth Cotterill-Rogers,

10 July, 2020

Senate Standing Committees on Economics (The Senate Economics Legislation Committee) PO Box 6100 Parliament House CANBERRA ACT 2600 [email protected] .au

1 Submission

Zoe Cotterill-Rogers

10 July 2020

The Senate Economics Legislation Committee PO Box 6100 Parliament House CANBERRA ACT 2600 [email protected]

Dear Committee Secretary and Senators,

Inquiry into the Banking Amendment (Deposits) Bill 2020

On the 18th June, 2020 the Senate referred to the Economics Legislation Committee, for inquiry and report by 10 August 2020, the Banking Amendment (Deposits) Bill 2020 (“the Bill”).

The Bill, introduced by One Nation Senator Malcolm Roberts on the 27th February, 2020, is for an Act to amend the Banking Act 1959 and for related purposes.

The Inquiry website: https://www.aph.gov.au/Parliamentary Business/Committees/Senate/Economics/BankingDe posits

I am a retiree and wholeheartedly endorse the Bill.

The concerns that have led me to make this submission encompass, in particular, the potential impact the conduct of the banks, operating in the existing legislative framework and economic climate, could have on Australia’s economy and ultimately on the welfare of my family and the majority of Australians, that is, without parliamentary endorsement of the Bill.

My reasons follow:

1. The deficiency of current legislation.

1.1. The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018, No. 10, 2018 (“the Crisis Management Act”) amended the Banking Act, 1959 and the law in relation to the financial sector.

https://www.legislation.gov.au/Details/C2018A00010 https://www.legislation.gov.au/Details/C2020C00089

2 1.2. The consequence of enacting this legislation was to give the bank regulator APRA (the Australian Prudential Regulation Authority), who, though, appear to have been ineffective in their role to date, powers to “resolve” a banking crisis by enforcing a capital conversion or “bail-in” of certain creditors for the purpose of keeping failing banks buoyant.

1.3. Whatever the government says they will or won’t do in the event of a banking crisis pursuant to this legislation, these creditors are not clearly defined in the legislation: for both clarity and transparency they should be.

1.4. Elaborating:

In the Definitions at 11CAA in Subdivision B – Conversation and write-off provisions of the Banking Act, 1959 (“the Act”), reproduced below, you will see appear the words “(b) or any other instrument”:

“Subdivision B—Conversion and write-off provisions

11CAA Definitions In this Subdivision: clearing and settlement facility has the meaning given by Division 6 of Part 7.1 of the Corporations Act 2001. conversion and write-off provisions means the provisions of the prudential standards that relate to the conversion or writing off of: (a) Additional Tier 1 and Tier 2 capital; or (b) any other instrument.”

1.5. Consequently, when read with the remainder of the Act, it is unclear whether or not a financial instrument under the Act extends to bank deposits, so as to be included in any ‘bail-in’ that occurs in the event of a bank’s failure. Potentially, requiring investors and customers to pay with their savings for the gambling, irresponsible and uncontrolled practices of the bank causing the crisis, while the bank gets to carry on those same practices, harming our economy and people’s lives, many of whom have worked hard to accumulate their savings.

1.6. A verbal claim, or even confirmation in written correspondence, by the current government that deposits won’t be bailed in is insufficient and non-binding (ie, open to revision as a consequence of any change of mind or government) and, consequently, meaningless without legislative force.

1.7. Uncertainty has the propensity to undermine the publics’ confidence in banks, whose status and importance is evidenced by the governments’ willingness to prop them up and legislate to this effect.

1.8. Whatever the risk be of banks failing, if the government is genuine in saying it won’t bail in deposits, there is no reason for it not to support the Bill.

3 1.9. Common sense also dictates the need to ensure a banking structure and banking practices that don’t have the potential to lead to failure of the financial system in the first place requiring a bail-in of creditors, which our current system facilitates, as defined in more detail below.

1.10. It is most illogical to ignore and not restrain the speculative and risky banking practices currently permitted while merely legislating to manage a banking crisis, evidently anticipated as a consequence of those practices, by the enactment of the Crisis Management Act. This could of course more comprehensibly be accomplished by a structural separation of banks as effectively existed until the 1980’s, protecting deposits from the dangers of speculation and making more credit available for lending to enterprises that make a more productive Australia, rather than one built on inflation disguised as quantitative easing. By a separation of deposits from speculation, banks are not permitted to do anything that puts their deposits at risk, thereby, protecting both bank deposits and the economy.

1.11. Separating completely investment banking from commercial banking promotes good banking practices that bailing banks in or out doesn’t.

1.12. The Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry highlighted the necessity for banks to be limited to their core industry. The vertical integration of the banks providing additional services including financial advice, insurance and superannuation have been shown to be the root cause of rorts, overcharging and profit gouging.

https://www.openaustralia.org.au/senate/?id=2019-02-12.119.1

1.13. The idea of a structural separation of the banks is not new and has been endorsed by the likes of: Don Argus, former CEO of National Australia Bank and former Chairman of BHP; John Dahlsen, former ANZ director and former chairman of Woolworths, Herald and Weekly Times, and Southern Cross Broadcasting; Professor Alan Fels, former ACCC chairman; Former APRA Principal Researcher and ASIC Researcher Dr Wilson Sy recommended in his submission to the Royal Commission:

https://www.openaustralia.org.au/senate/?id=2019-02-12.119.1

https://treasury.gov.au/sites/default/files/2019-03/CEC Proposal Glass- Steagall July 2017.pdf

1.14. There have been so many advocating for structural separation of the banks that financial commentator Alan Kohler reported in The Australian on 3 December 2018: “I have been opening a random sample of the 10,140 submissions—just short ones from individuals. Without exception they called for the banks to be broken up and most of them, surprisingly, used the term ‘Glass-Steagall’— suggesting that the now-repealed American law that used to forcibly separate banking from insurance and investment banking be introduced into Australia.”

https://www.bankvictims.com.au/index.php/forum/welcome-mat/2784-alan-kohler- reviews-submissions-glass-steagall

4 1.15. Besides my concern that there was a need to introduce legislation that foreshadows a failure of banks, while appearing to do little or nothing in the interim, as described above, to prevent it occurring, the lack of specificity in the legislation is easily remedied by the Bill introduced on the 27 February, 2020 by Senator Roberts. Providing Australians with some peace of mind, at least, in regard to their deposits and savings, while affording some incentive to the banks to protect them.

2. Legislative instrument (the Bill) is Australians only guarantee that bank deposits won’t and can’t be bailed-in.

2.1. It is stated in the Explanatory Memoranda to the Bill:-

- “This bill will avoid doubt as to the meaning and intent of various provisions in the Banking Act 1959 in relation to bail-in…. to confirm that the conversion and write- off provisions of the Banking Act 1959 do not apply to deposit accounts as defined in the bill; and to confirm that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts as defined in the bill…

- Since the passing of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 there have been doubts as to the meaning and intent of various provisions in the Act as to the extension by the Act of power to APRA to implement, authorise or direct bail-in to deposit accounts where the instruments relating to the creation of such accounts did not provide for a power of bail-in being the writing off or conversion of deposit accounts.

- This bill will remove those doubts by confirming that the conversion and write-off provisions introduced into the Banking Act 1959 by the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 do not apply to deposit accounts.

- The bill will further remove doubt by confirming that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts.

- Deposit accounts are defined in the bill and include those accounts commonly understood as current or cheque accounts conducted by customers with Australia’s banks….

- The bill will: Remove doubts as to the meaning and intent of various provisions in the Banking Act 1959 as to APRA’s power to implement, authorise or direct bail- in to deposit accounts where the instruments relating to the creation of such accounts did not provide for a power of bail-in being the writing off or conversion of deposit accounts, by confirming that the conversion and write-off provisions introduced into the Banking Act 1959 by the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other measures) Act 2018 do not apply to deposit accounts.

5 - Further remove doubt by confirming that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts.”

https://www.aph.gov.au/Parliamentary Business/Bills Legislation/Bills Search Results/Result?bId=s1257

2.2. What is proposed are simple amendments to the Act that, according to the Citizens Party who assisted One Nation draft the Bill, does three things and nothing else:

- Stipulates that the clause “any other instrument” cannot apply to deposits;

- Adds an all-encompassing definition of “deposits” to ensure no deposits of any type can be bailed-in;

- Explicitly forbids APRA from undertaking a “back door” bail-in of deposits by ordering banks to change the terms and conditions on deposit accounts.

26 June 2020 - Citizens Party Media Release

https://citizensparty.org.au/media-releases/politicians-lie-about-bail-demand- they-pass-amendment.

2.3. This is extremely important when you consider that in those places around the globe with bail-in law it applies to deposits and, despite what promises are made in writing or otherwise, is likely to be a persuasive option in a banking crisis leading to a broad interpretation of “any other instrument” under the Act.

2.4. New Zealand, where the major banks are subsidiaries of Australia’s big banks, has employed the most explicit bail-in system referred to as: Open Bank Resolution (OBR). The Reserve Bank of New Zealand (RBNZ) provides detailed information on how its “longstanding policy” of OBR bail-in works, including of bank deposits.

https://www.rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution

2.5. The New Zealand scenario played out in Cyprus in 2012/2013 when the International Monetary Fund (IMF) stepped in and loaned Cyprus $10 billion, but that loan came with strings: the IMF demanded control over the Cypriot banking system. The IMF froze the entire system, freezing every account by controlling a handful of the country’s biggest banks. Wealth extraction followed on a grand scale.

2.6. Tim Wilson, the Liberal MP for Goldstein, revealed in a letter to a constituent that he thinks deposits can be bailed in, contrary to his own governments claim, but considers it is a risk that comes with depositing money in a bank when there are other options, such as buying precious minerals or holding non-deposited cash.

6 2.7. His argument is faulty when current legislation permits the banks to act recklessly and while legislative attempts are being made to limit cash. It also undermines the mutually beneficial and symbiotic relationship between investors, banks and a vibrant democratic economy.

REFERENCE SOURCE PARAGRAPHS 2.5, 2.6 and 2.7 26 June 2020 - Citizens Party Media Release https://citizensparty.org.au/media-releases/politicians-lie-about-bail-demand-they- pass-amendment

2.8. The inference would be that it is the intention of the government to bail-in deposits in a future banking crisis if the Bill is not passed into law.

3. Some historical background as to the necessity for specificity of wording in the Banking Act, 1959.

3.1. According to the Citizen’s Party, who assisted One Nation draft the Bill:

 “Bail-in is the policy developed after the 2008 financial crisis by the Financial Stability Board (FSB) based at the Bank for International Settlements (BIS) in Switzerland. It was devised to rescue failing banks by either writing off, or converting into worthless shares, a percentage of the deposits in the banks.

 Since the policy was announced in 2011 bail-in has been legislated in the EU, the USA, the UK, Canada, Japan and New Zealand. It has been used, in various forms, to prop up banks in Cyprus in 2013, multiple times in Italy and Spain, and in Portugal, Austria, Slovenia, the Netherlands, Denmark and other countries.  A few weeks after the shocking 2013 bail-in of two banks in Cyprus, which was the first time most people heard of bail-in, the FSB stated in a 15 April 2013 report that “[bail-in] legislation is in train in … Australia”.

 On St Valentine’s Day 2018 (with just eight Senators present), the Coalition government rushed a bill into law, now known as the Crisis Management Act, to conform Australia to the FSB’s agenda. It amended the Banking Act 1959 to give Australia’s bank regulator APRA sweeping powers to resolve banking crises, including specific powers to order bail-ins. The government, Treasury, APRA, and the RBA all claimed that the powers would apply only to financial instruments known as hybrid securities, nicknamed “bail-in bonds”, which have bail-in triggers in their terms and conditions. However, the language of the legislation is very broad, and where it specifies that conversion and write-off applies to the hybrid securities, it adds: “or any other instrument”. A legal opinion obtained by the Citizens Party confirmed the danger that this broad language could be applied to deposits. The government snuck its bill through the Senate before One Nation had time to move an amendment to exclude deposits.

 Since the law passed, independent economist John Adams and banking expert Martin North have exposed how the loophole could be used to bail in deposits, through APRA’s power to make the banks change the terms and conditions of their deposit accounts to include bail-in terms, without notice. Adams and North reported in a 9 February video post on their YouTube channel, In the Interests of the People, that this process is under way (watch Australia’s Banks Are Preparing To Bail-In Retail Bank Deposits).

7  Australia is a member of the G20 which in 2009 directed the Financial Stability Board (FSB) at the Bank for International Settlements (BIS) to develop a policy to resolve future banking crises without needing taxpayer bailouts. Instead of requiring banks with deposits to stop the reckless financial gambling in derivatives that caused the 2008 crash, the FSB developed the abominable policy of “bail-in” to make depositors pay to prop up (resolve) banks when they fail.

 As a G20 member Australia endorsed FSB’s 2011 “Key Attributes of Effective Resolution Regimes”, of which Section 3.5 “Bail-in within resolution” mandates that banking authorities must have the power to “write down”, or “convert into equity”, “unsecured creditors”, which by definition includes depositors.

 The nations and jurisdictions Australia is closest to all have bail-in powers that apply to deposits; these include the USA, UK, EU, Canada, and most significantly, New Zealand, which has the most explicit deposit bail-in policy called Open Bank Resolution.

 In April 2013, a month after bail-in was applied for the first time to deposits in two banks in Cyprus, an FSB report called “Implementing the FSB Key Attributes of Effective Resolution Regimes—how far have we come?” revealed that “bail-in … legislation is in train … in Australia”.

 After some delay, in October 2017 the Turnbull-Morrison government introduced its bail-in law, the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017, at a time when pressure was building on G20 countries to comply with the FSB’s bail-in regime. In November 2017 ratings agency Moody’s complained in a release that among Asia-Pacific banking systems “only Hong Kong and New Zealand authorities have the power to bail in depositors” and that the rest of the region, which includes Australia, continues to lag behind Europe and North America “in implementing bank resolution and bail- in regimes as prescribed under the FSB’s framework”.

 The 2017 Crisis Resolution bill, now law, empowers the bank regulator APRA to order the bail-in of certain Tier 1 and Tier 2 capital securities which include bail-in in their terms and conditions, known as contingent convertible (co-co) or “bail-in” bonds; however, Section 11CAA Definitions defines that “conversion and write-off provisions” relate to: “(a) Additional Tier 1 and Tier 2 capital; or (b) any other instrument.” (Emphasis added.) Legal analysis confirmed that this broad language creates a loophole that could extend a bail-in to include deposits.

 The 9 February 2018 report of the Senate Economics Legislation Committee’s inquiry into the Crisis Resolution bill admitted the bill was based on the FSB’s Key Attributes (which include deposit bail-in): “The legislation proposed in the bill draws on these criteria in forming its plan for financial crisis resolution and resolution planning.”

 In response to submissions from the Citizens Party (then CEC) and thousands of concerned Australians, the government, Treasury, RBA, APRA and ASIC all claimed the bill would not bail in deposits and that deposits are protected up to $250,000 per person per bank through the Financial Claims Scheme (FCS). However, former APRA Principal Researcher Dr Wilson Sy pointed out that the FCS rules state it must first be “activated” for the deposit guarantee to apply, and there is no obligation on the government to activate it; then- Treasurer Scott Morrison conceded in a February 2018 letter to Ken Wyatt

8 MP that “the government retains discretion to activate the FCS when an institution fails”—an admission that would surprise most Australians and even politicians who assume it is an iron-clad guarantee currently in force. Moreover, the FCS is intended to apply only when a bank fails, whereas bail-in is intended to be applied earlier to avert a bank failure, so it does not protect deposits against a bail-in.

 The bill passed into law on 14 February 2018 in suspicious circumstances wherein the government rushed it through in the Senate with only eight Senators present and while the two Senators from Pauline Hanson’s One Nation weren’t in the chamber, despite One Nation having informed the government they intended to move an amendment to explicitly exclude deposits from being included in “any other instrument”.

 Later in 2018 economist John Adams and banking expert Martin North demonstrated, confirmed by independent legal opinion, that banks are able to change the terms and conditions of deposit accounts under orders from APRA and virtually without notice to enable the deposit accounts to be bailed in under the 2018 law. “

https://citizensparty.org.au/media-releases/fightback-against-bail-begins-demand- senators-pass-one-nations-bill-stop-theft

LINKED REFERENCE SOURCES

https://www.fsb.org/wp-content/uploads/r 130419b.pdf

Media Release Wednesday, 23 June, 2020 Citizens Party

https://citizensparty.org.au/media-releases/dont-believe-morrison-wont-bail- deposits-unless-he-puts-it-writing

https://www.youtube.com/watch?reload=9&v=EZ4efmSDwz4&feature=youtu.be

https://www.fsb.org/work-of-the-fsb/policy-development/effective-resolution- regimes-and-policies/key-attributes-of-effective-resolution-regimes-for-financial- institutions/

4. Risk of banks failing: banking practices, fraudulent auditors and ineffective regulators.

4.1. There is a very real risk of banks failing, not only identified by the implementation of legislation providing for a banking crisis, but additionally for the reasons outlined below.

4.2. Evidence of unscrupulous banking practises came out of the recent Banking Royal Commission. However, hampered by potential conflicts of interest and limited terms of reference, it was prevented from investigating for instance: banking “structure”; the banks’ auditing firms; the regulatory body and potential conflicts of interest. Consequently, we have not been made fully conversant with the extent of the risk banks expose Australians to.

9 4.3. Yet concerning enough, it appears, to warrant hurried broad legislation being enacted to take effect in the event of a crisis of those “too big to fail” banks before a thorough investigation, discourse and digestion of those practises and risks is complete.

4.4. On my analysis regulatory bodies have a tendency to become corrupted, in main part due to the acceptance of a revolving door between the industry being regulated and the regulators of that industry, in addition to other inherent conflicts of interest.

4.5. The banking industry appears to be no exception: “high-powered executives from banks take key positions in the regulatory bodies, such as ex-UBS chief John Fraser taking over as Treasury Secretary in 2013-18 and former senior investment bankers holding six of the nine positions on the executive of bank regulator APRA; regulators then retiring to plum banking positions, such as former Treasury Secretary Ken Henry becoming chairman of NAB (and who it seems had a hand in designing the terms of reference for the banking Inquiry ) and former RBA governor Glenn Stevens joining the board of Macquarie Bank.”

4.6. The big banks donate to the major parties, so does the Australian Banking Association which lobbies for them, as do the four principal global accounting firms (KPMG, Ernst and Young, PricewaterhouseCoopers (PwC) and Deloitte), who audit the major banks and monopolise bank auditing worldwide, and who were exposed as being complicit in the crimes of banks and big corporations in the report: Reforming the Auditing Industry, commissioned by UK Labour Party’s shadow chancellor of the exchequer, John McDonnell.

REFERENCE SOURCES FOR PARAGRAPHS 4.4, 4.5 AND 4.6 ABOVE

http://visar.csustan.edu/aaba/LabourPolicymaking-AuditingReformsDec2018.pdf https://cairnsnews.org/category/banking-royal-commission/ https://www.smartcompany.com.au/business-advice/legal/the-murky-business-of- political-donations-by-the-big-banks/ https://www.michaelwest.com.au/big-four-governments-binge-on-consultants-goes- ballistic/ https://periodicdisclosures.aec.gov.au/Default.aspx https://cecaust.com.au/media-releases/audit-big-four-banks http://cecaust.com.au/releases/2019 01 18 Big Four Audit.html

4.7. It seems that it takes a bank whistleblower, such as that disclosed by an investigative journalist like Adele Ferguson, rather than the regulatory body or a Royal Commission, to reveal that a bank is likely continuing it’s bad practices.

https://www.adeleferguson.com.au/

10 4.8. Then there are the repeated scandals of those four global auditing firms: KPMG, Ernst and Young, PricewaterhouseCoopers (PwC) and Deloitte. Between them they audit 98 per cent of the world’s biggest banks and corporations and write the tax laws that enable corporations to evade tax, and dominate the offshore tax havens like the Cayman Islands that exist for tax evasion and money laundering. Two of KPMG’s biggest clients, British banks HSBC and Standard Chartered, were caught in 2012 by US authorities in massive money laundering operations.

https://cecaust.com.au/media-releases/morrison-banning-cash-so-australians-cant- escape-bail-negative-interest-rates

4.9. The UK’s Tax Justice Network “estimates that transfer pricing is used to evade over US$500 billion in taxes globally, while banks, corporations and the ultra-rich hold between $21-32 trillion in “offshore” jurisdictions. These are the Big Four’s clients. In the UK, the centre of the global offshore network, the Big Four actually write the tax laws they then use to help their clients avoid tax; in Australia, Treasurer Josh Frydenberg’s “High Level Advisory Panel” on tax is dominated by five executives from EY, three from Deloitte, five from KPMG and seven from PwC .”

http://taxboard.gov.au/about/advisory-panel-members/

https://www.michaelwest.com.au/joshs-shark-pool-meet-the-treasurers-tax-advisors/

https://cecaust.com.au/media-releases/cash-bans-turn-australia-financial-surveillance- state

4.10. The Australian Government paid $643 million in accounting fees to these four global auditing firms, including KPMG, who has been convicted of numerous financial crimes, tax evasion and money laundering and reported to have paid $500 million in fines alone for their financial crimes. “The government’s audit advisory outfit, the Financial Reporting Council, is also stacked with Big Four types, as is the Australian Accounting Standards Board, and of course much of the public service…which is how the Big Four manage to garner $700 million a year in consulting fees.”

https://www.michaelwest.com.au/joshs-shark-pool-meet-the-treasurers-tax-advisors/

https://www.exposingtheblackeconomyreport.com/conflicts.html

https://www.cpaaustralia.com.au/-/media/corporate/allfiles/document/podcast/black- economy-taskforce-transcript-cpa-australia-podcast- ep17.pdf?la=en&rev=70e31f2bb7b3444cb2403cfb35d8992d

4.11. Even the regulator APRA is asserted to outsource much of its detailed examination of the banks to the Big Four auditors, making it as blind as the politicians and public.

https://citizensparty.org.au/media-releases/eys-wirecard-scandal-reminder-bail-danger

11 4.12. The major banks appear to be shielded by their global auditing firms, basically permitting the banks to self-regulate, despite the massive conflicts of interest:

"They don't just audit, they advise on financial transactions. They advise on financial products. They package up derivative products… They are right in there and they are heavily conflicted….We are relying on them to tell us everything is sound. You can't review that industry without looking at the auditors.“ (Richard Brooks)

https://www.abc.net.au/news/2018-06-25/banking-inquiry-should-investigate- accountancy-firms-brooks-says/9904592

4.13. While leading cashless payments processor Wirecard collapsed in June owing almost US$4 billion, with billions missing from bank accounts pointing to massive fraud. Auditor Ernst and Young didn’t appear to do its most basic job of checking that Wirecard’s money even existed: for three years having signed off on Wirecard’s books without confirming the company’s claim that the missing billions were in bank accounts in the Philippines. “The financial technology company is the first member of Germany's prestigious DAX stock index to go bust, barely two years after winning a spot among the country's top 30 listed companies with a market valuation of $US28 billion. “It is frightening how long Wirecard AG was able to operate without being objected to by the auditors," Partner (of German law firm Schirp & Partner) Wolfgang Schirp said.”” While going ignored were: “dogged allegations from whistleblowers, reporters and speculators that its revenue and profits had been pumped up through fake transactions.”

https://www.smh.com.au/business/companies/the-money-s-gone-wirecard-collapses- owing-5-8-billion-20200626-p556c6.html

4.14. In Australia Ernst Young has already been exposed for its corrupt collusion with NAB to hide that the bank was knowingly selling bad products to customers.

https://www.smh.com.au/business/banking-and-finance/time-s-up-for-henry-but-also- the-billion-dollar-audit-club-20190802-p52dak.html

4.15. When it comes to the fitness of our banks and protecting the money deposited in them, this cannot be assumed when both the bank’s regulators and auditors have proved unreliable for that purpose.

4.16. The auditors simply cannot be trusted, not only due to their conflict of interests, but because they do not properly examine the assumptions underlying the banks’ trading in high-risk derivatives, which have the potential to spark unexpected bank failures that could force the regulator to order bail-ins of deposits in an attempt to sacrifice bank customers to save the failing system once again.

https://www.abc.net.au/news/2018-06-25/banking-inquiry-should-investigate- accountancy-firms-brooks-says/9904592

4.17. The risk to everyday Australians from banks and the current banking structure is further enunciated by the enablement of banks to amass huge profits by gambling with customers’ deposits, used to underwrite their huge derivatives bets, said to be collectively amounting in Australia to more than $40 trillion.

12 https://www.macrobusiness.com.au/2018/06/australia-sitting-ticking-derivatives- nuclear-bomb/

https://www.abc.net.au/radionational/programs/rearvision/financial-derivatives-their- rise-and-rise/3042320

https://www.abc.net.au/news/2014-06-12/kohler-controlling-derivatives/5515666

http://theeconomiccollapseblog.com/archives/5-u-s-banks-each-have-more-than-40- trillion-dollars-in-exposure-to-derivatives

4.18. We should be further alarmed due to the consequences of the action taken in the recently called pandemic, resulting in a devastation of our economy and Australians’ livelihood and wellbeing. The enforced response has been to increase the economy’s financial precariousness by handing out more money and increasing debt, while not making us any healthier or safer.

https://www.prageru.com/video/what-is-the-medical-impact-of-the- lockdown/?utm source=Main+Mailing+List&utm campaign=86474af625- EMAIL CAMPAIGN 2020 04 09 06 29 COPY 01&utm medium=email&utm term= 0 f90832343d-86474af625-170447537

https://www.theguardian.com/society/2020/may/08/more-people-dying-at-home-during- covid-19-pandemic-uk-analysis

4.19. What additional debt is Australia creating, along with other countries, and where is the hand-out money coming from to stimulate these economies during the current asserted global pandemic threat? It will, of course, be adding further critical fuel to the fire of potential banking mismanagement.

4.20. Consequently, there is an event greater need for investors and depositor’s funds to be protected, particularly those in or approaching retirement, which growing percentage of the population will otherwise require government financial support.

4.21. A failure of any or all of the ”too big to fail banks”, and likely ensuing demise of the economy due to the ripple effect, means the government and, consequently, the Australian tax payer are left funding current as well as future retirees in the event wealth is transferred away from them. Not forgetting that the burden of any consequent financial devastation of the people of Australia will also fall on government shoulders.

4.22. Australians may never trust their money to banks again in the event of systemic bank failure and confiscation. Unless further restrictive Orwellian type measures are employed, any threat to confiscate bank deposits will only act as a disincentive to investment and, consequently, limit productive lending by our banks.

13 5. Public Hearing

5.1.I wholeheartedly support the Bill, so as to specifically protect our hard earned savings in banks from any kind of bail-in, it also affords an opportunity for Australians to be included in the discussion.

5.2.I urge the Committee, in its’ discretion, to hold public hearings, so that parliamentarians, politicians and the public can hear from genuine experts, including legal experts, as to why there is a need for clarity, specificity and transparency in the Banking Act.

5.3.It is imperative that Australians be made fully aware of the potential consequences of a failure to ratify the Bill: the tremendous financial impact that could ensue for them and the economy in the event of a banking crisis, the anticipation of same reflected in the enactment of the Crisis Management Act.

5.4.A public hearing would contribute to ensuring a fair and transparent inquiry, instead of having the outcome pre-determined by the major parties and banks behind the scenes, as it will otherwise appear.

6. Summary

6.1. I believe Australians would be better served by having a strong banking and financial system not the currently structured banking system foreshadowed to fail, as we have seen occur in other countries.

6.2. Consequently, it is imperative that everyday Australians are at least afforded protection by the passing of the Bill, introduced by One Nation Senator Malcolm Roberts on the 27th February, 2020, into law.

Kind regards,

Zoe Cotterill-Rogers

14