The Parliament must eliminate any confusion about whether bank deposits – savings of individuals and business accounts – can be used to prop-up a bank, or banks, in the event one or all are threatened with financial failure.
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Parliament can easily do this by passing an amendment that categorically excludes bank deposits from such a resolution (aka ‘bail-in’) of banks under the new “crisis management powers” legislated in February for the financial regulator, APRA, the Australian Prudential Regulatory Authority. The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018, which was rushed through both Houses of Parliament in two days, with only a handful of MPs and senators present, has now been confirmed by a government senator to be exactly what the Citizens Electoral Council (CEC) said it was – “bail-in” for Australia.
As early as 2013, the CEC exposed the intent of the Bank for International Settlements, through its Financial Stability Board, for Australia and all G20 countries to adopt a bank bail-in policy, and published extracts from Treasury documents stating that bail-in was "in train in Australia".
In response to a constituent, on November 5, Senator Amanda Stoker, a legal expert, explained that in accordance with the Financial Stability Board’s standard for Total Loss-absorbing Capacity, all G20 countries including Australia had to have in place “legally enforceable mechanisms to implement a bail-in” that would “stop the ‘domino effect’ and reduce loss on bank shareholders, creditors and the Government.”
This raises the question, bail-in of what? The legislation states that certain categories of bonds can be bailed in, but in every other G20 country with a bail-in policy, bank deposits can be confiscated to benefit the banks, so why not Australia?
Last December 2000 members of the public made submissions to the Senate Economics Committee tasked with looking into the legislation in which they asked: was this bail-in, and were their deposits safe? The Committee, Treasury, the RBA and APRA all denied the legislation was a “bail-in” bill, and claimed deposits were not part of the “any other instruments” listed, that could be absorbed by the bank in resolution.
If what the government claims is true, and bank deposits cannot be bailed in, then parliament should state it in the law, amend the legislation to clearly and categorically exclude bank deposits from resolution under the Act.
Talk to your MP and senators: if they truly represent your interests, they will seek an amendment.