Banksters Fleecing and Threatening

Banksters Fleecing and Threatening

The Big Four banks have bluntly rejected Commissioner Kenneth Hayne’s mooted changes, in their virtually identical submissions to the banking royal commission’s Interim Report. We should assume that not only were their submissions probably coordinated with each other, they were also cc’d to the Morrison government, as a week later Morrison and Frydenberg reappointed APRA chairman Wayne Byres eight months early to ensure there would be no major changes imposed on the banks.

Hopefully Commissioner Hayne sees through these manoeuvres, but even if he does and recommends sweeping changes, there is no obligation on the government to implement them.

The ball is actually in the Australian Labor Party’s court, which is on track to be the next government: what will it do, to put the banks in their place and ensure Hayne’s inquiry can lead to real changes? Their support for Byres’ reappointment, albeit while questioning the timing, is not a good sign–there is a huge question mark hanging over Byres and APRA from the revelations of the royal commission.

The 8 November Australian Financial Review reported:

Banks hit back at Hayne’s interim report ideas
The big four banks have launched a strident defence of vertical integration, lending benchmarks and executive bonuses.
by James Frost

The big four banks have launched a strident defence of vertical integration, lending benchmarks and executive bonuses in a direct challenge to a series of radical and probing questions posed by Commissioner Kenneth Hayne.

The banks have baulked at suggestions that current practices are in breach of their legal obligations or in conflict with the best interests of customers…

[The banks resorted to threats:]

Commonwealth Bank in its submission has warned the royal commission to tread carefully with its final recommendations around lending or risk a massive transfer of responsibility from borrowers to lenders.

The banks have also pushed back on suggestions that would tilt the playing field too far towards the favour of customers [shock, horror!], warning of higher costs and reduced services.

NAB has warned of higher costs for financial services companies if Hayne was to proceed with a recommendation for structural separation, seeing many Australians priced out of financial advice altogether.

[What conflict of interest?]

Westpac, one of the few banks to push ahead with the vertically integrated model in which banks offer transactional and investment products, argued that conflicts occur everywhere and do not “arise from the structural features of a business”.

Say No To TPP II

The National Union of Workers posted on Facebook:

The Trans-Pacific Partnership trade agreement (TPP) has passed its first hurdle in parliament with the Federal Labor Party giving their support in the lower house last week.

The National Union of Workers is deeply concerned about the effects this legislation will have on workers and on our democracy if passed.

Twelve countries signed up to the TPP in February 2016, representing roughly 40% of the world’s economic output. The deal was designed to create a single trading zone, like the EU, to allow goods and information to be passed between countries more freely. The claim was that opening up trade borders would create more jobs.

However, TPP is a deal that puts the profit of large corporations before the safety and security of workers. It would intensify competition between different countries’ labour forces and undermine job security and pay rates for working people in Australia.
It would pave the way for companies to sue governments that change their policy in areas like health, education and worker’s rights. TPP would also make it harder for a government to favour state-provided services over the involvement of private companies.

In short, the TPP begins a process to undermine the social protections for all citizens while big business makes bigger profits and pays less tax.

The NUW has raised concerns around the ratification of TPP in the past and, like many in our movement, are deeply disappointed that this anti-worker legislation is back on the table. It should not be possible for a private company to sue our government for making choices that improve the lives of people in this country.

In the interests of every Australian the ALP must reconsider their support of TPP, rejecting it when it reaches the Senate – the promise of extra protections when in power does not negate the damage this bill will cause to whole communities in Australia.

One commenter wrote, “This is Shorten at his best. Labor stopped being for the worker years ago.”

Another wrote, “Why do people think Labour is any different to the Libs? All work for the same Corporation folks….”

Extend Banking Royal Commission Petition

Banking is an integral part of everyone’s life. Australians all depend on a fair and accessible banking system. A criminal finance sector affects each of us regardless of how much money we may have in the bank.

Public revelations, investigative journalism and the Royal Commission to date have identified bankers involved in; fraud, forgery, money laundering, rate rigging, drug trafficking, dealing with terrorism funds, superannuation rip-offs, financial planning abuses, and insurance scandals. Unfortunately, this is just the tip of the iceberg.

Bankers prefer us in debt, our children in debt and our governments in debt. This affects everyone`s quality of life – cost of living pressure, mortgage stress and a sub-optimal retirement. We need meaningful reforms now.

Rather than providing a relatively simple service of utility to the people and country, the banks – with government blessing – are putting profits and power ahead of the country’s interests.

Commissioner Hayne has the option to ask for more powers and time. We need to make our voices heard to help him make that decision.

The Turnbull Government refused to initiate a Banking Royal Commission until the banks authorised their preferred limited inquiry. The aim appeared to be a short inquiry to be done and dusted before the next election.

If you want a fair banking system, sign our petition to Extend the Banking Royal Commission now.
Commissioner Hayne along with three or more independent Commissioners must fully expose the crimes and dysfunction plaguing the finance system before he can recommend meaningful reforms that will change the culture and give all Australians a fair go.

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Tax agents used in a new scam

Fraudsters are impersonating both the ATO and tax agents in an attempt to scam funds from taxpayers.
Business Katarina Taurian 07 September 2018

Often using the threat of outstanding debt, these fraudsters initiate a fake three-way conversation with themselves, a taxpayer and someone impersonating a tax agent.

The tax office is warning taxpayers to be aware of this new scam, as members of the community have reported several attempts at fraud of this nature.

Scammers will also often tell a taxpayer a complaint has been made against them, that their arrest is imminent if they don’t pay a tax debt, or that a tax refund will be issued in exchange for bank account details.

Earlier this year, the ATO issued similar warnings over a myGov scam, after fraudulent emails promising taxpayers a tax refund were issued en masse, in an attempt to steal personal and financial information.

As always, the tax office is reminding the tax profession of the need to be vigilant as the regulators usually see a spike in scam activity at tax time.

APRA chairman misled Senate on mortgage fraud

From the CEC:

There is a case to be made that Australia’s bank regulator has colluded with the banks to hide massive fraud in mortgage lending. The Australian Prudential Regulation Authority’s (APRA) collusion includes suppressing its own research into lowered lending standards, and misleading Parliament about its knowledge of illegal misconduct by banks in mortgage lending.

In a 1 March 2018 hearing of the Senate Economics Committee, Greens Senator Lee Rhiannon questioned APRA chairman Wayne Byres on his knowledge of mortgage control fraud. The hearing was 11 days before the start of the first round of hearings of the Financial Services Royal Commission, which the issue of mortgage control fraud would dominate. Perhaps unaware of how much the royal commission knew, Byres responded to Rhiannon’s questions with APRA’s trademark obfuscation and deflection. Documents subsequently released by the royal commission, however, show that Byres lied.

Rhiannon asked Byres, “In relation to your investigation into mortgage fraud, which APRA has not made public, has APRA found any evidence of illegal misconduct in the mortgage market by the major lenders?”

Byres ignored the point of the question and instead denied that APRA was looking into mortgage fraud. “I wouldn’t say what we’ve done is specifically a review of mortgage fraud”, he said, adding that they have looked “generally” at lending practices and controls. He then claimed that APRA had not found evidence of illegal misconduct.

With this reply, Byres misled the Senate. APRA was investigating mortgage fraud. The proof is revealed in documents made public by the royal commission on 23 March, which included reports to the major banks by accounting giant PricewaterhouseCoopers, of targeted reviews PwC had conducted in 2017 into the banks’ mortgage lending controls. As PwC’s reports made clear, APRA had ordered the reviews.

Targeted reviews

In PwC’s May 2017 report to Westpac entitled “APRA Targeted Review of data used in residential mortgage serviceability assessments”, PwC states explicitly in the Executive Summary that APRA had ordered the reviews due to concerns about mortgage control fraud. “On 12 October 2016, APRA issued a letter to the Bank and 4 other large banks requesting that they undertake a Review into the risks of potential misrepresentation of mortgage borrower financial information used in loan serviceability assessments”, PwC noted. “In its letter, APRA referenced assertions made by commentators that ‘fraud and manipulation of ADI residential mortgage origination practices are relatively commonplace’.” (Emphasis in original.)

This proves that APRA clearly ordered the banks to conduct targeted reviews of mortgage fraud. Yet the royal commission is unlikely to have had this evidence, had it been up to APRA. Later in her questioning, Lee Rhiannon asked Byres if APRA should be proactive in providing information to the royal commission, but Byres replied, “We’ll wait and see what the royal commission asks.” His extraordinary excuse was he didn’t want to “swamp them with things that are not relevant to them”. Byres’ idea of what’s “not relevant” appears to have included PwC’s reports.

A few days before Byres’ testimony, Lindsay David of LF Economics had tipped off the royal commission about the targeted reviews. This was around two weeks before the royal commission’s first round of hearings, which were on mortgage lending. LF Economics specialises in forensic analysis of misconduct within the mortgage market, and has probed into the details of many of the numerous cases of mortgage fraud that the Banking and Finance Consumer Support Association’s (BFCSA) Denise Brailey, the leading expert on mortgage fraud in Australia, has exposed through her tireless advocacy for bank victims. (CEC Research Director Robert Barwick interviewed Denise Brailey for the 22 and 28 March 2018 episodes of the CEC Report, available on YouTube channel CEC Australia.)

According to David, LF Economics first became aware of the targeted reviews in mid-2017, but had been informed that they were “so unfavourable they would never see the light of day”, he recalled. At the time he was consulted by the royal commission staff, they were unaware of the existence of the targeted reviews—indicating that APRA had not revealed them. It was David’s tip-off that led the royal commission to request copies from the banks, and make them public on its website.

So why would Byres go out of his way to deflect the attention of the Senate committee away from the fact that APRA was looking into mortgage fraud? And why would APRA not share this with the royal commission? It goes to the collusive relationship APRA has with the big banks, which former ANZ director John Dahlsen denounced in the 21 August Australian Financial Review as “incestuous”. APRA is notoriously secretive, with the power to suppress information through strict secrecy restrictions. It has a track record of using its secrecy to cover up risks and fraud in the banking system. Due to its excessive secrecy, APRA is effectively unaccountable, which breeds the arrogance on display in committee hearings.

APRA is complicit in the banks’ reckless lending, which has created a dangerous housing and debt bubble that threatens the Australian economy. It allowed the banks to lower their lending standards in the early 2000s, to be able to massively expand their lending to homebuyers and investors who, like the US “sub-prime” borrowers whose defaults sparked the 2008 global financial crisis, couldn’t afford normal loans. In March 2007, APRA suppressed an explosive internal report which warned that the lowering of lending standards had led to the banks lending 3.5 times more credit for mortgages than would have been the case under the previous, higher standards. And APRA repeatedly lowered the so-called “risk-weighting” of mortgage loans to make them far more profitable than any other lending, and to fake the appearance that banks were raising their capital to the “unquestionably strong” levels of 14.5 per cent, whereas real bank capital stayed at less than six per cent.

In short, APRA incentivised the excessive mortgage lending that motivated the banks to resort to fraud. It’s a fair bet that Byres hoped to keep APRA’s awareness of the problem under wraps, to protect the illusion that it is a “sound” prudential regulator. He wasn’t banking on the royal commission process, however, which has destroyed this illusion and opened the possibility of fundamental reform of the banks and regulators.

Join the fight to break up the banks and reform APRA!

The mortgage fraud by the banks that APRA has covered up massively expanded Australia’s housing and debt bubble. Now the borrowers who couldn’t afford their mortgage in the first place are threatened by rising interest rates, which will trigger increasing defaults and ultimately crash the bubble—and the banks. The CEC’s Banking System Reform (Separation of Banks) Bill 2018, which Bob Katter MP introduced in Parliament on 25 June, will break up the banks, by separating the commercial banks with deposits from all other financial activities, and bring APRA under strict Parliamentary control. This will enable the government to implement measures that clean up retail banks used by the public in a way that stops them from crashing, and stops APRA from using its “bail-in” powers to steal our savings to prop them up.

Contact your MP today to demand they debate Bob Katter’s bill! The government wants to shelve it, so we must force them to debate it, which will force all MPs to either support it, or justify why they won’t—and in light of the revelations from the royal commission, which have led to many calls to break up the banks, that will be very hard.