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SVB Collapse, Credit Suisse, Australian Bank bail-IN?

After the SVB and Credit Suisse crisis a bail-in, which is where the banks take their depositors’ money to save themselves in a collapse, is still possible in Australia.

I call on the government to categorically rule out a bail-in and properly fund the bank guarantee scheme.

Transcript

As a servant to the many amazing people who make up our one Queensland community I note that in the last few weeks we have seen with the failure of Silvergate Bank and Silicon Valley Bank what is in aggregate the largest banking collapse in US history. Australia is not America and it is not Europe. If everyone keeps their heads, we will be fine. Our big four banks are bastards, yet they are well capitalised. Nonetheless, it would be wrong to not take this opportunity to revisit how to save a failing bank.

I remind you that there are two choices: bailing out, with a large injection of taxpayer money, increasing debt for everyone, or bailing in, which is where the banks take their depositors’ money to save themselves. A bail-in still requires the bank to close for days or weeks, preventing customers accessing any money left in their accounts. Business are left without money to pay staff or suppliers. The effect on the economy is catastrophic.

Everyday Australians trying to pay for their shopping would find their account empty or their card suspended. Travellers may be stranded.

One Nation introduced a bill to prevent bank bail-ins and to protect the people. Labor and the Liberal-Nationals defeated our bill in 2020. One Nation did lead a successful campaign against the cash ban bill that the Liberals, Nationals and Labor proposed in 2021, so Australians can still use cash in an emergency. This is relevant again because President Biden initially chose to seize half of Silicon Valley Bank depositors’ funds and freeze the rest for up to three years. That’s a bail-in. What followed was a run on all banks, forcing the president to backflip and instead initiate a bailout.

Australia has a bank guarantee scheme, a bailout, but it’s a con trick. There’s no funding and no requirement to use it. It covers only $20 billion per bank—$80 billion total. This is supposed to protect $1 trillion in depositors’ funds. It’s eight per cent. I call on the government to categorically rule out a bail-in and properly fund the bank guarantee scheme.

March 22, 2023/8 Comments/by Sheenagh Langdon

Greedy Banks abandon the bush

National

The greedy major banks have closed more than 70 branches in rural, regional and remote Australia in just 42 days.

The banks are looked after by the Australian government extremely well, so they have a responsibility to serve Australians.

It’s another reason why we need a people’s postal bank.

March 8, 2023/5 Comments/by Senator Malcolm Roberts

Liberal/Labor running a protection racket for the banks

Speeches

Another party is in Government but it’s still the same old protection racket being run for the banks.

Whether it’s bail-in, regional branch closures or restricting cash, Anthony Albanese’s Labor Government is continuing the Liberal party’s tradition of running protection for the big banks.

Transcript

It seems Stephen Jones is to the Labor Party as Josh Frydenberg was to the Liberals: the bank’s man in the government.

Whether it’s defending the right of the banks to bail in the cash in your account; whether it’s turning a blind eye to banks closing their rural bank branches, which has increased this year under Minister Jones; whether it’s allowing the King’s currency to be shunned so the banks can force everyone onto electronic banking, with every transaction helping bank profits and every sale providing a data- and profit-rich environment for the banks; or whether, as it is today, it’s letting banking executives off the hook for egregious behaviour, that should be criminal.

These hideous, inhuman banking crimes were brought to light during the Senate’s Select Committee on Lending to Primary Production Customers in 2017, an inquiry that Senator Pauline Hanson got and that I chaired.

Four years later, not one of those victims has been compensated nor a banker prosecuted. Minister Chalmers is protecting the banks over the best interests of the people.

December 1, 2022/1 Comment/by Sheenagh Langdon

In support of a People’s Bank in Australia

Foreign Ownership

The Big 4 banks have been ripping Australians off for decades. Taking all the profits, they’re leaving regional communities in the dust, closing branches and strangling small business capital. We need a people’s bank in Australia.

I had the pleasure of speaking in support of people’s bank last week in Canberra

September 21, 2022/23 Comments/by Senator Malcolm Roberts

The Malcolm Roberts Show – Banking Activist Robbie Barwick

Podcasts, United Nations

After studying commerce at the University of Southern Queensland, instead of working as an accountant, Robbie joined the CEC, now Citizens Party, as a full-time staffer in its new HQ in Melbourne.

In the 30 years since, he has worked as a researcher, media liaison, campaigns director and research director, with a focus on Australian political history and especially the history of the Commonwealth Bank.

Robbie has been an active campaigner and has been at the forefront of many over the last decade, including:

a national bank
a Glass-Steagall separation of Australia’s bank
stopping the bail-in of Australian bank deposits, in which he worked closely with my office
reforming Australia Post and a post office “people’s bank”
justice for the hundreds of thousands of victims of Australia’s banks and financial institutions and reforming the financial regulators

Transcript

Speaker 1:

You’re with Senator Malcolm Roberts on Today’s News Talk Radio, TNT.

Malcolm Roberts:

Welcome back to Today’s News Talk Radio, tntradio.live. I want to welcome my second guest now, Robbie Barwick. I’m very proud to have worked with Robbie and his organisation, the Citizens Electoral Council. Welcome, Robbie.

Robbie Barwick:

Hi, Malcolm.

Malcolm Roberts:

I hope you’re listening to the first hour.

Robbie Barwick:

I was. I loved every bit of it. That was excellent.

Malcolm Roberts:

I’ve got a question for you before we take off, but first, I want to give you a proper introduction. So, Robbie studied commerce at the University of Southern Queensland. Instead of working as an accountant, Robbie joined the Citizens Electoral Council, now, the Citizens Party, as a full-time staffer in its new headquarters in Melbourne. In 30 years since then, he has worked as a researcher, media liaison, campaigns director, and research director with a focus on Australian political history and especially the history of the Commonwealth Bank. He knows government. He knows banking. He knows economics, and he’s a first rate individual. If he says something, it can be trusted. Robbie’s been an active campaigner.

Malcolm Roberts:

When I say campaigner, not electoral campaign, although he was a Senate candidate at the last election a couple of weeks ago. Robbie’s been an active campaigner working on many campaigns and it’s been at the forefront of the last decade, including a national bank, Glass-Steagall separation of Australia’s banks, stopping the bail-in of Australian bank deposits in which Robbie worked very closely with my office and with me, reforming Australia posts in a post office people’s bank, justice for the hundreds of thousands of victims of Australia’s banks and financial institutions, and reforming the financial regulations. So, welcome, Robbie. You’ve just done a marvellous job. You continue to do a marvellous job.

Robbie Barwick:

Oh, thanks, Malcolm. That’s very kind, coming from you.

Malcolm Roberts:

What do you mean coming from me?

Robbie Barwick:

You do marvellous work too, mate.

Malcolm Roberts:

All right. Thank you. Well, the key is I’d say that we share, that we both look upon ourselves as serving the people and that’s what I could see coming out of Ellen’s work. Before we get into questions about banking and currency and money, what’s something you appreciate, Robbie?

Robbie Barwick:

A good sleeping. No, I’ll add to that, outspoken senators like yourself and a few others, but I reckon, in my work, I always value meeting ordinary people around Australia who can feedback to me their direct experience of the economy of the world, their life, how it works. I never cease to be amazed, Malcolm, at how much Australia relies on ordinary people who are prepared to go that extra mile to keep the system going keep in their own little way. The nurse who’s worked a double shift and she’ll stay on another 15, 20 minutes because there’s not enough people there. And this is all unfunded stuff, right?

Robbie Barwick:

The people in industry who make sure that machine works, et cetera, because without them, we don’t have an economic system that actually goes the extra mile for them, that makes sure those things happen. So much of our essential services are held together with the equivalent of elastic bands and sticky tape, which is the efforts of the people who provide them. And the most recent one I discovered, which we worked together on as well, was how licenced post officers provide our postal services. And these are all small businesses working very, very hard for peanuts, right around Australia, very tough business conditions and they provide an essential service for Australians. So, that’s what I appreciate more than anything.

Malcolm Roberts:

Well, yes. And the only thing I would disagree with you on that and I do want to acknowledge the licence post office and especially Angela Cramp. The only thing I disagree with you is the term ordinary. I would call them and I do call people everyday Australians, because there’s nothing ordinary about any one of them.

Robbie Barwick:

That’s true.

Malcolm Roberts:

I know what you mean by ordinary. You mean average, typical, or every day. I know what you mean.

Robbie Barwick:

They’re not ordinary that’s for sure.

Malcolm Roberts:

No. And the whole economy based on them and what I think it boils down to, Robbie… Correct me if I’m wrong, you’ve been around a lot as well. … is that it boils down to a four letter word starting with C. They care. When you put a human in a position, most humans, almost every human, almost that they matter, then they show that care. The other thing about humans is that we know there are some fraudsters. We know there’s some crooks. There’s some dictators.

Malcolm Roberts:

We’ve had our Hitlers. We’ve had our Joe Bidens. We’ve had our globalist predators. We understand that, but the majority of people are honest and that the two words, care and honest, leave us vulnerable because most of us are caring. Most of us are honest and we think everyone else is like us. And so, when we are caring and honest, we can become vulnerable to the used car salesman, to the tyrannical global bankster, the global predator who wants to control us. And we become victims in a sense.

Robbie Barwick:

Yeah, that’s true.

Malcolm Roberts:

Yeah. So, our strength is also our vulnerability. Now, listen for our listeners, they won’t know this name that I’m about to use, Craig Isherwood. He’s a Citizen Electoral Council National Secretary when he wrote an astounding paper, very simple, but for very, very powerful paper called, “The Australian Precedents for a Hamiltonian Credit System”.

Malcolm Roberts:

Now, Robbie gave me that paper when we were starting to discuss this show, Robbie gave me that paper and I read it on my way to Darwin for holiday. And I read it again on the way back. And the second time I read it, I got so much more out of it. Now, Ellen hit exactly the first question. If you don’t mind, Robbie, this is the question I had. If you don’t mind, we’ll park our earlier discussions and just go through this paper and see where we go.

Robbie Barwick:

Sure.

Malcolm Roberts:

Okay.

Robbie Barwick:

Let’s do that.

Malcolm Roberts:

I knew you’d be up for it. Okay. So, the very first point that I wrote as a key point is that Reserve Bank of Australia admitted to me in Senate estimates hearings that money is created in electronic journal entries, Ellen Hodson Brown reiterated that. She confirmed it. The question that I said was, “Who creates money?” It’s not whether it should be created or not. Clearly, for the system of credit, it needs to be created. Otherwise, people can’t invest. So, it needs to be created. The key question then is, “Who should create it?” And that’s exactly where Ellen got with her comment as well. That’s the key question. Is that the key question? Who creates credit?

Robbie Barwick:

Who controls the creation of credit? One thing to understand the financial system is so fluid and there’s so many clever people out there, Malcolm, always looking for an angle. You can forbid private banks from creating credit and they’ll find a way to create it anyway. So, your local store creates credit when they give you credit by selling you stuff something on credit. Credit is a pretty basic concept, actually. So, it’s more about who controls that. And that’s where the best form of control. Apart from having certain well-regulated banking system, the best form of control is to have a public banking presence that defines the terms for the whole system.

Robbie Barwick:

And so, the private banks have to work within those terms, because if they stray too far away from that, they won’t be competitive with the public bank, right? And so, the public bank can make sure that the creation of credit is fair, it’s productive, et cetera. And the private banks know that well, okay, they need customers. If they don’t have depositors, they’re not going to be banks. There’s a standard that they have to live up to. That’s served Australia very well for a long time, but it really does come down to the control. Who controls it? And my favourite quote, which isn’t in that Craig Isherwood article, although it might be, but the Labour Party once, upon a time in Australia, fought very hard on these issues.

Robbie Barwick:

We call it the old Labour position was about. Who controls money? And they called it the money power. Who controls the money power? And this became a name for the private banks. They called them the money power. They had this chokehold over Australia and they said the money power has to be brought under the control of the people. And by the people, it means the democratically elected government.

Robbie Barwick:

And John Curtin said in 1937, when he launched labor’s election campaign that year, which was seven years after the beginning of The Great Depression and this period of intense upheaval where the role of money was central, he demanded labour will legislate until the Commonwealth Bank would be able to control credit of the nation, rates of interest, direction of general investment, and currency relations with external markets. And he concluded, he said, “If the government of the Commonwealth deliberately excludes itself from all participation in the making or changing of monetary policy, it cannot govern except in a secondary degree.”

Robbie Barwick:

Meaning someone else is in charge of the economy, not us, not the people through their government. And so, what he was saying, it’s not just a good idea. It’s a question of sovereignty. A nation can’t be sovereign if the people through their elected government doesn’t control the credit of the nation.

Malcolm Roberts:

Okay. So, is it fair to summarise it by saying whoever controls the money creation controls the country?

Robbie Barwick:

100%.

Malcolm Roberts:

That’s what I thought you’d say.

Robbie Barwick:

There is no more definitive power in a nation than that.

Malcolm Roberts:

And as you pointed out, it’s all about sovereignty as well as economics. And to me, it seems that my job as an elected representative is to serve the people. If you’re a grocer at a corner store, your job is to serve the people. If you’re a policeman, your job is to serve the people. Now, policeman’s job becomes a little bit more difficult because at times he has to apprehend someone and bring justice or at least arrest them to try them before the courts to ensure justice is conducted. But that service that’s the critical thing. At the moment, correct me if I’m wrong, I’m looking for your view, the people serve the banks rather than the banks serving the people. Is that a fair statement?

Robbie Barwick:

That is a fair statement. You can read a version of the explanation or the description of this in Adele Ferguson’s book that she wrote just towards the end of the Banking Royal Commission in 2018. And you’d be familiar with Adele Ferguson, Malcolm, the investigative journalist in Australia.

Malcolm Roberts:

Yes. Yup.

Robbie Barwick:

She had a lot to do with highlighting bank issues that led to the Royal Commission, but what she documents in that book, Banking Bad, I think it’s called, a play on the show Breaking Bad, is how from the time of the privatisation of the Commonwealth Bank onwards, so the mid-1990s, the model of banking in Australia changed from one in which… Don’t get me wrong. I don’t want to overstate it. The private banks were never perfect, but there was a general understanding that the private banks made their profits from the credit that helped their customers make their profits, right? They rightly got a cut from helping their customers get wealthy and preserving their deposits.

Robbie Barwick:

The model changed in the mid-90s to one in which the public, the customers became cows to be milked by the banks. Everything was about fleecing them, death by a thousand cuts. What can we sell these customers? What can we saddle them with so that through charges and interest rates, et cetera, we can just keep bleeding them for our profits? And that led to the abuses, that led to the Royal Commission.

Robbie Barwick:

And now, this became a standard model across the board from the mid-90s on, where the public absolutely served the banks, but a variation of that has always existed with private banks and banking. It’s always come up periodically in the rural debt crisis that erupt periodically around droughts and things, where it becomes a debt problem. And suddenly, instead of the banks being flexible, they’ll come in and mass foreclose. And you conducted an inquiry into that back in… Was it 2016, something like that?

Malcolm Roberts:

2017.

Robbie Barwick:

20 17. What’s happened in Australia with agriculture is we’ve gone from having something like 200,000 farmers in 1969, who between them had a billion dollars in debt to probably less than 30,000 farmers today who have $70 billion in debt. And now, the farmers do not get to accrue wealth. They’re so heavily indebted that all they’re waiting for is the next crop to be able to pay off or pay down their last lot of debt right before they incur more for the next crop. And they really have become debt slaves. And there’s a variation of that across the board in the way the economy where it’s unfortunately.

Malcolm Roberts:

So, I can recall reading a very short simple book. It was called End the Fed, the Federal Reserve Bank, End the Fed by former Senator Ron Paul in the United States, who was the only one really to hold the government accountable, held the Federal Reserve Bank accountable, wanted an audit of the gold reserves, et cetera.

Robbie Barwick:

Audit the fed. Yup.

Malcolm Roberts:

Yup. He said that every major recession since 1913 is directly attributable to the US Fed. Every major war since 1913 is directly attributable to the US Fed. Boom and bust cycles help the banks because they flood the joint with credit. Everyone goes hog, wild, and credit and overcommit themselves, and then they tighten it up. And next thing, people have to foreclose on their asset. The banks foreclose on their assets. So, private banking has failed repeatedly. Yet the banks continue to spread the bullshit that they make their money on the difference between what they charge for interest and for loans versus what they pay for deposits. Complete rubbish.

Malcolm Roberts:

The banks make their money by creating money, giving credit. And credit is essential, but they seem to have powers such that there’s no accountability. What I’m reading in Craig Isherwood’s article is something that I concluded as well, that if you have a public bank, it keeps the private banks honest. You’re not saying get rid of private banks. You’re saying let’s have both and then we’ll have accountability. Is that basically it?

Robbie Barwick:

Yeah, 100%, in any sector. I think this applies to insurance as well. Queensland for a hundred years had a state government insurance office, which was incredibly important at providing insurance that the private insurers wouldn’t provide, but also setting a standard that the private insurers had to meet if they wanted to have customers. That was called SGIO. But for banking, it’s absolutely essential. There’s this enormous power to do with money, right? Where you get to create credit and then charge interest on it and direct where that credit goes and have people come to you cap in hand begging for that credit, because it is, as Ellen pointed out, even if you had a gold currency, that there’s never enough of the actual currency for the economy to work, right?

Robbie Barwick:

The credit is the lifeblood of the economy. So, these private banks, they get to determine all that. If there’s no public alternative that says, “Okay, we are going to make decisions slightly differently for the private banks,” the private banks naturally are accountable to shareholders and they want them to maximise their profits. So, they’re going to pour their credit into things that maximise their profits. They’ll enjoy the boom. They’ll monopolise the boom. And when it goes bad, then they will cut off that credit, foreclose on everybody, call in all those loans. So, they never lose. It’s the poor mug customer that loses and that’s how the private banks work, because their solvency and their profits come first.

Robbie Barwick:

Let us use the power of this credit as a public entity to do the things that actually benefit the economy, benefit the people. Let’s make low interest loans to build infrastructure, to keep important industries solvent and productive, not just solvent but productive. So, agriculture, manufacturing, et cetera. Every loan that public bank makes, Malcolm, will also be profitable, but you don’t have to have quite as much profit. You don’t have to have charge quite as much interest, right? This makes a world of difference. And in fact, because I’d hoped you read Craig Isherwood’s article, I was just brushing up on it before. And they pointed out there that one of the first things that Commonwealth Bank did when it started was the Melbourne Board of Works wanted a loan.

Robbie Barwick:

And in those days, 1913, the only place a government entity like the Melbourne Board of Works could get a loan was from London, the private banks in London. In addition to stiff underwriting charges, the best they could do, the private banks in London, was 1 million pounds at 4.5% interest. So, instead, they turned to Denison Miller, the Governor of the Commonwealth Bank and he offered them 3 million pounds at 4% interest, a lower interest rate. And when asked where the very new bank got all this money from, Denison Miller replied, “On the credit of the nation, it is unlimited.” And under Denison Miller, you’ve read the article, the first decade under Dennison Miller, this bank was spectacular.

Robbie Barwick:

And all it did was use its power as a bank, but for the public benefit. Everything was profitable. It just didn’t have to make a massive profit and Australia benefited from that. And that’s why this is, well, as King O’Malley said, the key pin or the master key to the financial system. This should be the master key. This is what solves all those various problems in the financial system.

Malcolm Roberts:

Well, I’m glad you raised that, Robbie, because there were so many things in Craig’s article. The first publicly owned-

Robbie Barwick:

Shipping line.

Malcolm Roberts:

… shipping line in Australia was created through funding and support from the Commonwealth Bank. The Light Horse Brigade was funded by the Commonwealth Bank. There were so many other infrastructure at a local government level, state government level funded by the Commonwealth Bank. It got us on our feet. It basically built us, and it did that by enabling credit. And it took that control out of the hands of the private banks that screw us and keep us under their control, rather than making money out of making us wealthy as a country.

Robbie Barwick:

And importantly, in those examples you’ve given, the private banks, including most importantly, the foreign private banks, the London banks that controlled us, the way the Commonwealth Bank functioned under Denison Miller showed this claim that you would’ve heard in parliament a thousand times, Australia depends on foreign investment. No, we do not.

Malcolm Roberts:

Thank you.

Robbie Barwick:

We do not. There’s no excuse for $1 of foreign debt.

Malcolm Roberts:

Another example was the second World War and we were poor in terms of having ability to make machine tools. Next thing that grew out of nowhere, because Australians are very resourceful. We’re very clever, very capable, very innovative. We punch above our weight. We’ve been held back by privately owned banks. And when people were given the free rein, look what we did.

Robbie Barwick:

Yeah, exactly. So, the thing with wars, it’s interesting. People like to discount the way a war economy works because of those are special circumstances. That’s what the banks say, right? The only thing that’s special about a war is in the emergency of a war conditions, the governments turn to a public banking option like Australia did in both World Wars, because a war is on the private banks aren’t game to say anything, right? They have to be seen to be supporting the effort. After the war, they go back to attacking the government. No, no, no, you cannot do that. The power of credit has to be back in our hands. So, during the war, when you see what the banks was able to do in both wars, it was extraordinary and it’s also an example.

Malcolm Roberts:

Can you hold that thought and we’ll discuss that very issue after the ad break?

Robbie Barwick:

Sure.

Malcolm Roberts:

Stay tuned. We’ll be right back with Robbie to discuss some really fundamental stuff.

Malcolm Roberts:

Right. Robbie, over to you again, because you’re going to explain how the availability of credit during the war solved The Great Depression. Is that correct?

Robbie Barwick:

Well, no, no. The Great Depression impression was the exception. They didn’t do it in The Great Depression. They did it in the wars.

Malcolm Roberts:

That’s right.

Robbie Barwick:

So, the first one was World War I and you gave some of those examples there, but it was things like the Commonwealth Bank didn’t fund the war per se. It funded part of it that you gave the example of the Light Horseman. And the story of the shipping line was quite extraordinary because we were stranded as a country. All the ships were controlled from the British as well and the Prime Minister Billy Hughes said, “We need ships.” And he said to treasury, “Give me £2 million.” There’s 15 ships available here in London, but he wanted to keep it secret because if it became public, that the Prime Minister of Australia was in the market for 15 ships for Australia, the British privately controlled shipping lines would’ve blocked the sale.

Robbie Barwick:

They didn’t want that. They didn’t want a government shipping line in Australia, right? So, he called back to the treasury in Australia and said, “I need £2 million.” They called Denison Miller and the money was there. He just made the money available. They bought the ships. And that was the beginning of the shipping line that eventually became Australian National Line. So, there were some things they directly did, but what they otherwise did was look after the economy in those war years. And one of the more extraordinary things was the commodities pools that they set up, Malcolm, for things like wheat and other agricultural products that we were producing that in those days we produced… You had a small population.

Robbie Barwick:

We produced for the British market, et cetera, but that was all disrupted. So, they created a pool and the Commonwealth Bank funded that. So, the farmers, when they brought their wheat crop in, they got paid straight away anyway, even though the wheat hadn’t been sold yet, because they’re putting in a pool and then the Commonwealth Bank managed the sale of that wheat over time, but the important thing was to keep the farmers going. So, they all were still productive because there was a war and that’s the thing that it could do. It funded 60 local governments around Australia. And you would’ve noticed that a lot of that funding was in things like very early electricity infrastructure, basic electricity infrastructure, small hydropower plants, this thing.

Robbie Barwick:

This was the early industrialization of Australia. The private banks weren’t going to fund that. These councils could turn to the Commonwealth Bank and the Commonwealth Bank funded it for them, important investments. Malcolm, because in the old days, things were built better than they are today. If you go to some of these places in the list, a lot of this information comes from a great book that was written on the 10th anniversary of the Commonwealth Bank to document all these amazing things it did.

Robbie Barwick:

And if you go to those places that it lists what the Commonwealth Bank invested in this infrastructure, you’d probably find a lot of that infrastructure is still there and still working order to this day, essentially later. This was the early economic development of Australia. World War II, even more spectacular and it was because of the Commonwealth Bank. Until John Curtin and Ben Chifley took over the government in 1942, the Commonwealth Bank had sat there idle as it had done all through the ’30s.

Malcolm Roberts:

Would it be fair to say that the private banks from Wall Street, London, the City of London were actively working with the Labour Party and its so-called conservative opposition to destabilise and undermine the Commonwealth Bank? Rather than just sitting there and used, it was being undermined.

Robbie Barwick:

No, 100%, but this is where a specific understanding in history is important. I know why you say that because of what you know about the Labour Party today. The Labour Party back then was a very different animal. It was the Labour Party that was fighting for the bank to be used properly. It was the Menzies’ liberals who were completely in the pockets of the private banks in London who made sure it wasn’t. And in the early ’30s, when they needed it the most, we had 25% male unemployment in Australia, Malcolm.

Malcolm Roberts:

Geez.

Robbie Barwick:

We were being crushed in The Depression and there was a proposal to get The Commonwealth Bank to issue £18 million. Six million pounds was to go to farmers. Twelve million pounds was to go to public works. That was the proposal of the labour government then in 1931 and the former Queensland premier, who was a treasurer named Ted Theodore. The Head of the Commonwealth Bank, so Robert Gibson said, “You are asking me to inflate the money supply. I tell you, I bloody well won’t.” Now, forget what he said about inflation, because that’s a longer story. It was quite overstated. The issue there was a public servant defied the order of the government that owned his bank. He was just the manager of it, right?

Robbie Barwick:

And this led to the 1937 Royal Commission on Banking. And that Royal Commission ruled that that public servant was wrong. He should have followed the orders, but why did he defy it? Because in those years, the bank was run by a board that he was the chairman of and all those boards were representative of the private sector. And they were very much in the pockets of the private banks who didn’t want the Commonwealth Bank to function like it had function under Miller. As soon as Miller died in 1922, I think it was or 1923, Malcolm, there had been a single governor up to that point. They replaced him with the board.

Robbie Barwick:

So, you would never have someone of that noise again, because they had the right person in the right place at the right time, who could show what the bank would do. And they had a board which was a representative of private banks and private industry and they made sure in the next 28 years, it didn’t do anything. So, you’re right. They were actively suppressing it. And it was the Labour Party that fought very, very hard over this and people like John Curtin was at the centre of those fights. So, when he came to power in 1942, he knew he had a tool at his disposal, which was the Commonwealth Bank. And in those years from 1942 to 1949, when Labour lost office, those seven years are the high watermark of the Commonwealth Bank.

Robbie Barwick:

They showed what the Commonwealth Bank is capable of, even more extraordinary than World War I, because it also had the powers of a central bank by then. It got to tell the private banks directly what to do, not just compete with them. And the combination led to the greatest economic transformation in a short period of time probably the world had ever seen. We were an agrarian backwater economy and that’s why that machine tool example is such a good one. In three years, we went from an economy that relied on imports for everything. We mainly provided raw materials to the British, et cetera. We went from that to an economy that could literally produce anything. And machine tools are very complicated.

Robbie Barwick:

They are the machines that make the machines. They represent how really productive an economy is. We went from importing them all to making our own. There was nothing that was beyond the capabilities of Australians and it’s instructed the way the Labour Government did it because they weren’t ideological, Malcolm. They knew they had the Commonwealth Bank to fund it, but who did they turn to run the actual wartime mobilisation? They turned to a blue blood to them, someone that is socialist. The Labour Party was socialist, et cetera. They turned to a captain of industry Essington Lewis from BHP.

Malcolm Roberts:

Oh, yes.

Robbie Barwick:

And in those days, BHP was not a mining company, right? It was a mining company, but it was a steel maker. That’s what BHP was. And Lewis ran it and he had developed a really good relationship with Ben Chifley, but nothing would’ve happened without the funding and the Commonwealth Bank provided that. And it was extraordinary. We could produce ships, we could produce planes, we could produce machine tools. We could do anything. By the end of the war, we were approaching something like the high 20s as a percentage of our economy of manufacturing.

Robbie Barwick:

And by the late ’50s, it peaked at the mid-30s. About 33% or 35% of our economy was manufacturing. Today, it’s less than 5%. It’s tiny. It’s pathetic. It’s been smashed completely, right? But it was a transformation that was powered by the Commonwealth Bank because the long term investments that it required, the Commonwealth Bank was able to do that. And in this article, we show the charts of government spending and how the money issued by the Commonwealth Bank fueled that government spending.

Malcolm Roberts:

Let me just repeat the title of that article. It’s called, The Australian Precedents, E-N-T-S, for a Hamiltonian Credit System. The author’s name is Craig Isherwood, I-S-H-E-R-W-O-O-D. At the time, he was the Citizens Electoral Council National Secretary. Where can they get that article? Where can people get that article?

Robbie Barwick:

That’s on our website, www.citizensparty.org.au. If it’s hard to find, they can call out tollfree number 1800-636-432 and ask for a copy of it.

Malcolm Roberts:

Okay. Just a quick little snippet, I’ve just had this realisation that Menzies has given the credit for opening up Australia, but what I think had happened now is… Some lights dawned on the wood heap in my brain. … Labour as a result of the second World War built the capacity, our productive capacity for manufacturing. After the second World War, Europe was devastated. Japan and China were devastated.

Malcolm Roberts:

The only large manufacturing facility available was in America, which had not been attacked apart from Pearl Harbour, and good old Australia where we had the raw materials as well. So, we actually then put that productive capacity to work. And it wasn’t Menzies at all who deserves the credit. It was really the Labour Party under Curtin and Chifley. Is that right?

Robbie Barwick:

I’m firmly of that view. Now that said, I will give Menzies the credit for not stuffing it up as such, though I’ve got some specific criticism.

Malcolm Roberts:

Well, hang on, hang on. He bought in the double taxation legislation in 1953, which enabled foreign and Maldives nationals to completely avoid paying company tax in this country, which has really hurt us long term.

Robbie Barwick:

No, no, no. There’s a lot of those things that he does. Don’t worry, you got to hold me back not to blast Robert Menzies, but what I mean by not stuffing it up is by the time Curtin and Chifley, the government, left office in 1949, the zeitgeist had changed. The public expectations had changed. In fact, it’s known as the post-war settlement. This was universal around the world.

Robbie Barwick:

The kind of economic policy represented by what Roosevelt had done in America in the 1930s that Ellen Brown described with the reconstruction finance corporation using a public bank to invest in infrastructure and industry. We did it in World War II. You know the first thing the Labour Government in Britain did after World War II when they replaced Churchill was nationalise the Bank of England. Up until then, the Bank of England had been a privately owned bank for 150 years.

Malcolm Roberts:

From 1694 when it was formed, it had been a private bank.

Robbie Barwick:

Exactly. The first thing they did was nationalised it because they were copying Australia’s success, right? We set the tone and the expectations changed. So, when Menzies took office, he knew that he couldn’t buck that system now. People expected that there would be this public presence in the economy, but I’ll give you an example of why Menzies doesn’t deserve very much credit at all. The great Snowy Mountains Scheme, the defining infrastructure project of our history. Robert Menzies boycotted the opening of that in 1949. He opposed it. And only when it was immensely popular while he was prime minister, because it was Chifley who started it, he then went to the opening of the first stage, the second stage, et cetera, to capitalise.

Robbie Barwick:

But the fact he boycotted it was an ideological position he had and he even tried to sabotage it. He didn’t succeed, but that project was supposed to be funded by the Commonwealth Bank, Malcolm. And when he took office in 1949, he scrapped all that and he would only fund it out of revenue, the annual budget. And even then, he made the project, the Snowy Mountains Authority pay 5% interest to the government on the money that it gave them to fund the project, right? Whereas that could have all been done off the annual budget through the Commonwealth Bank, which is what the original plan had been.

Malcolm Roberts:

As I understand it, Robbie, Menzies tried to undermine the Snowy Mountains Scheme and McKell stood up to him and gave him hell and read the right act to him. Menzies pulled back his horns, but didn’t help it too much.

Robbie Barwick:

No. That would make sense, because I was going to say, the other man in the Menzies era who deserves credit for keeping him in line was Black Jack McEwen. Because Curtin and Chifley created the productive capacity of Australia. Black Jack McEwen did everything in his power to protect it, to make sure it survived, it lasted, right? In this era that we are in, the neoliberal era, all those policies that these guys stood for, they’re criticised for. I mean these liberals are so extreme now. These neoliberal liberals that you’ve been dealing with in parliament are so extreme now that by their standards, they would call Menzies a socialist. And of course, Menzies is the last thing. Menzies was a socialist.

Robbie Barwick:

It’s just that Menzies had to accept and everyone accepted in those days that you needed to have a public presence, including a public bank. The existence of the public bank, even when Menzies neutralised it a bit in 1959, he split the reserve bank function off from the Commonwealth Bank to weaken its power. Even when that happened, though, just the existence of the Commonwealth Bank and the Commonwealth Development Bank, as something the private banks had to compete with and the Commonwealth Development Bank was able to issue long term credit. It was able to provide flexible lending for farmers and all those things. It still performed a very useful function in the economy that helped stabilise the economy until Keating finally scrapped it in the mid-90s.

Malcolm Roberts:

Something for you to think about, we may or may not discuss it after, I’d like to continue with the priorities on the banking. But to me, the Labour Party is the party in the history. Even though I disagree with this ideology, the Labour Party in the era of Curtin and Chifley and some of the early Labour Party prime ministers were dinky-di. They were fair dinkum Australians. They were doing what they thought was the best for the country. Now whether you agree with them or not, that’s another thing.

Malcolm Roberts:

But what I’m saying is they were genuine. I do not see that in today’s Labour Party. They do not look after the worker. Their policies are selling out to the globalists. They’re completely enemy of the worker. Same with the liberal, the modern liberals are really socialists in many ways, because what I see, Robbie, is both Labour Party and the Liberal Nationals cow towering to the major banks and doing the bidding of the banks and the globalist predators through the UN, the World Economic Forum. That’s where we’ve gone. So, Menzies was far, far better than today’s liberals. Curtin and Chifley were immensely better than today’s Labour Party.

Robbie Barwick:

They were patriots.

Malcolm Roberts:

Thank you.

Robbie Barwick:

They fought for sovereignty. And yeah, in terms of modern labour, they’ll be outraged at me saying this, they hate our party for saying it, but they bear no resemblance at all to the old Labour Party. And even the last hurrah of old labour and it was slightly messier, even the Whitlam government, there was an economic component to the Whitlam government where they tried to do things that if they had to succeeded would’ve been incredibly useful now, but because it involved this issue of taking on the private sector and the private banks and the private resources companies was a big one, a really big one. They wanted to buy back the farm. What’s his name?

Malcolm Roberts:

Connor.

Robbie Barwick:

Rex Connor was the real soul of old labour in the old Labour Party and so was the treasurer, Jim Cairns who was quite a lefty, but a very, very decent person. I got to know Jim in his final years and he told me something. He had been the treasurer under Whitlam. And you know what he told me? He knew that Labour did not have to… Those loans that eventually brought them down, those foreign-

Malcolm Roberts:

King O’Malley loans.

Robbie Barwick:

… King O’Malley loans, the attempt to borrow those loans, that was not their first preference. He knew they didn’t have to borrow at all. They could have used the reserve bank as a national bank again, but unfortunately, the politics had changed and he and Connor could not persuade their colleagues to do so. And so, then they went to London and Wall Street, which is where they usually went. But those banks wouldn’t lend for the programme that Connor and Whitlam and Cairns wanted, which was to encourage Australian ownership of Australian resources. That’s what they wanted to do. Those banks wouldn’t lend that.

Malcolm Roberts:

We have to go to an ad break now, Robbie. So, everyone will be back straight after the ad break with Robbie Barwick. And let’s talk first of all about King O’Malley coming from a family of bankers and then maybe talk about whatever you want to talk about, Robbie. You take the show home for the last 10 minutes or so.

Robbie Barwick:

I’ll go with Wayne.

Malcolm Roberts:

Welcome back and people all over the world will be very interested in the figures I’m about to give before I ask Robbie to take the show home. This is from Craig Ishwood’s article, a paper presented to the federal cabinet calculated the value difference in exporting bauxite, which is raw material for aluminium versus processed aluminium in $19.70. One million tonnes of bauxite exported as the raw material, bauxite, earned 5 million back then. Processed one step into alumina, it earned $27 million, five times as much. Processed again into aluminium, it earned $125 million. That’s 25 times as much, but wait for it. When processed finally into aluminium products, it would earn $600 million.

Malcolm Roberts:

Robbie, we have become a quarry and we are letting people overseas get the value added. And it comes back to what King O’Malley did. King O’Malley was a banker, came from a banking family. He was a yank and he came out of here and he represented Australia and Federal Parliament and became a member of the Fisher government that enacted the Commonwealth Bank legislation. He knew how currency is issued and he knew that it should be in government hands.

Robbie Barwick:

This was the gospel he preached. He gave the speech in parliament in 1909 and it went for five hours, Malcolm, this speech. They didn’t have limits like you have to deal with in those days. And in that speech where he laid out exactly how the Commonwealth Bank should work, because it was legislated a few years later, he said, “I am the Alexander Hamilton of Australia.” He was the greatest financial genius to ever walk the earth and his ideas have never been improved upon. And that was a reflection of the fact that he was an American. He grew up in the American system.

Robbie Barwick:

In his lifetime, he’d seen the effects of what Abraham Lincoln did during the Civil War using greenbacks to help fund the transcontinental railway line, which opened up the United States. The boom of productivity in the United States from the Civil War onwards around that investment has only been matched by what we’ve seen in China in the last 30 years. This was incredible in the United States in those years. And it was done using these American Hamiltonian methods and that’s what he was saying. He knew Australia’s potential, right? This is what we need.

Robbie Barwick:

And from the time he landed here in the late 1880s until he got that bank, he just did nothing but preached the gospel of national banking from one end of the country to the other, until he got it, until he persuaded them to set it up. And then the rest was history. I got something to read to you. A few years ago, we did some archive work in the National Library up there in Canberra. And we stumbled across this letter that O’Malley in 1937 when he was very old wrote to Franklin Roosevelt then the president. In the letter, he was introducing to Roosevelt, an economics writer, Dr. LC Jauncey, who was a friend of his. Then he gave a little bit of this history and it’s worth reading.

Robbie Barwick:

He said, “I had the honour of forcing the Commonwealth Bank onto the Australian statute book after 10 years of fighting in parliament while I was Minister for Home Affairs. Nobody would second it. We gave the late Denison Miller $50,000 to start the bank. And at the end of six months, he returned it and that is all the capital we ever put into the bank. Since its foundation, it has made $200 million net profit for the Australian taxpayers and now has a capital of over $50 million in reserves.”

Robbie Barwick:

And then he said, “I do hope Mr. President that before you retire, you will transform all the reserve regional banks or the federal reserve into government banks so that the American people will have the profits for themselves as we have here.” So, he kept his American patriotism as well and he’d succeeded in doing it here. And he wanted the Americans to reign in the fed and turned the fed into a proper national bank, which of course, it’s not, because it’s privately controlled.

Malcolm Roberts:

Robbie, we have three minutes until we have to start winding up.

Robbie Barwick:

Here’s the solution. Here’s what I want people to think about in terms of a solution that is immediately available to Australians, Malcolm. We can bring back a national bank. We can bring back the Commonwealth Bank through a stepwise process. And the first step is to start a type of bank that’s actually quite common around the world, but quite effective. And it’s a postal bank and that’s how the Commonwealth Bank started anyway. When they set it up in 1912, there were no bank branches and they used the post officers as bank branches. And what we propose is let’s get a public bank again, a public bank that the public can use. Not just own, but use it, but you can put your deposits in there.

Robbie Barwick:

They’ll be safe from financial speculation. They’ll be safe from things like bail-in, because it’s 100% government guaranteed. Your branch won’t shut down because we have this network of post officers right around Australia, right? There’s 1,500 towns in Australia that don’t have any banks, but they have post officers, right? So, your branch won’t shut down. It will always be there for face-to-face banking services. It will lend loans into local communities, because that’s what a lot of private banks, most of them don’t care about that. They’ve got one obsession, which is mortgages in the big markets. You can do that. And most important, it’ll break their monopoly. The big four are effectively… They’re an oligopoly, but they’re effectively a cartel.

Robbie Barwick:

So, you might as well call them a monopoly. If they have to go back to competing with a public option like they did for 80 years in Australia, that breaks that monopoly, they will have to compete again. They’ll have to compete on services. They’ll have to compete on the way they provide credit, right? They will see that if they don’t lift their standards, they will lose their customers to this public bank. The public bank’s going to get a lot of customers anyway. And I’ve found in talking to a lot of people across the board in parliament, I talked to all the parties, Malcolm, as you know, there is broad support for this. Even in the major parties, there’s support for this idea. But see, what happens is that every party has specific agendas, et cetera.

Robbie Barwick:

The big two major parties, they don’t have institutional support at the top, but they have individual MPs who support it. That has to be galvanised, right? If the public realise how important this solution is to the number one control over our economy and how it works and get behind this campaign, this is something we can force through into the political agenda in Australia and actually get it passed. We need to use a policy like this to get the Labour Party to go back to its roots. We talked about Labour being different to the old Labour. That’s in terms of parliamentarians. What you find at the grassroots of the Labour Party, Malcolm, the union guy, who’s still the union guy and in the Labour Party, et cetera, they think their party’s a sellout.

Malcolm Roberts:

Yeah. Yeah.

Robbie Barwick:

Let’s get them rallying around these policies that used to be fine. We’ve got a Labour government now. Let’s force this Labour government to go back to its own tradition.

Malcolm Roberts:

Amen, amen to that. This is why a public bank is one-nation policy. The key area that we have to win though, is the narrative because the media has denigrated it, but it will bring back accountability. And I want to thank you so much, Robbie, for coming on, just being your normal frank, blunt self. Thank you so much and your informed self. You come with the facts and the data.

Robbie Barwick:

Thanks for the invitation.

Malcolm Roberts:

We’d like to have you back again, because we can also talk about-

Robbie Barwick:

No worries.

Malcolm Roberts:

… peace being a very, very formative time, not just war, for currency creation in government hands.

Robbie Barwick:

Yes. Yes. Hear, hear.

Malcolm Roberts:

Thank you, Robbie.

June 14, 2022/1 Comment/by Senator Malcolm Roberts

The Malcolm Roberts Show – Banking Activist Ellen Brown

Podcasts, United Nations

I talk to author and activist Ellen Brown on banking, debt and the need for a people’s bank.

Ellen Brown is an American author, attorney, public speaker, and advocate for financial reform, in particular public banking.

She is the founder and chairman of the Public Banking Institute, a nonpartisan think tank devoted to the creation of publicly-owned banks. She is the author of thirteen books and over 350 articles published globally.

Ellen began her career as an attorney practicing civil litigation in Los Angeles. Her interest in financial reform was sparked during 11 years spent in Africa and South America, where she began to explore solutions to the challenges of the developing world. She researched the private banking cartels, their hegemony over Wall Street and control of the Federal Reserve. She also looked at public banking, which she discovered is a very successful model. The only operating state-owned public bank in the United States today is the Bank of North Dakota and has been touted as outperforming the big Wall Street banks.

In 2007 Ellen published the first edition of her best-selling book Web of Debt (now in its 5th edition). The book details how the private banking cartels have usurped the power to create money from the people themselves and how the people can get it back. Her writings proved prescient, as the financial collapse of 2008 laid bare the systemic problems she had identified.

In her 2013 book The Public Bank Solution, she traces the evolution of two banking models that have historically competed—public and private—and explores contemporary public banking systems around the world. Her latest book is Banking on the People: Democratizing Finance in the Digital Age (2019).

The Web of Debt is one of the best books I’ve read. Ellen is a dynamic woman with considerable energy and extraordinary research skills. Amazingly, much of her research was done painstakingly before use of the internet became widespread.

Transcript

Speaker 1:

This is the Malcolm Roberts Show on Today’s News Talk radio, TNT.

Malcolm Roberts:

This is Senator Malcolm Roberts. This is Today’s News Talk radio tntradio.live. I want to thank you for having me as your guest, whether it’s in your car, your kitchen, your lounge, your shed, or wherever you are right now. As regular listeners understand there are two most important themes for my programme. Firstly, freedom and specifically the age old freedom versus control challenge. Secondly, personal responsibility and integrity. Both are fundamental for human progress and for people’s livelihoods.

Malcolm Roberts:

On this show, we’re going to talk about money, money, money. We’re going to cover the eighth and final key to human progress. So I’ll list those eight keys to human progress. The first is freedom, the second is rule of law, the third is stable constitutional succession. The fourth is secure private property rights. The fifth, sorry, I’m losing track of counting. The fifth is strong families, sixth affordable, efficient, reliable energy.

Malcolm Roberts:

Then we did the next one last time, which is taxation. And this one, the eighth key is honest money. Now I’ve just introduced the word there honest money. We’re going to learn today from international and Australian experts about something we all take for granted. That’s right money. Think about it. It’s intimately involved in almost every aspect of our lives yet we take it so much for granted that we don’t see where it is, where it comes from. And we are living in misery at times. So many people living in misery.

Malcolm Roberts:

I’m going to refer to a quote from my website on the CSIRO looking at what’s pushing the global climate scam, but I’m going to quote from Ellen Brown’s book, where she’s referring to Louis McFadden, who is a senior member of the American House of Representatives, quote, “In 1934, he filed a petition for articles of impeachment against the Federal Reserve Board charging the Federal Reserve Bank with fraud, conspiracy, unlawful conversion, and treason.

Malcolm Roberts:

Then I’m going to quote from his speech where he spoke of one instance of 60,000 home and farm owners losing their property to bankers at one stage of the great depression. Here’s what he said. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery. A document that I referred to called the Bankers Manifesto of 1934 added weight to these claims from these charges from McFadden, an update of the banker’s manifestation of 1892. It was reportedly published in the civil servant’s yearbook in January 1934 and in the New American in February, 1934 and was circulated privately among leading bankers.

Malcolm Roberts:

It said in part, ‘Capital must protect itself in every way through combination monopoly and through legislation,” that’s controlling governments. “Debts must be collected and loans and mortgages foreclosed as soon as possible.” Now listen to this bit. When through a process of law, the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of wealth under control of leading financiers.

Malcolm Roberts:

People without homes will not quarrel with their leaders. This is well known among principle men now engaged in forming an imperialism of capital to govern the world. Now, Australian speaker and researcher, John MacRae cites the same quote independently via another credible publication. Note that the bankers rely on what they falsely refer to as the law yet they are in their dominant and powerful position due to supposedly legalised legislation past deceitfully and in breach of the American constitution in breach of the American constitution.

Malcolm Roberts:

Their position is legal in that it’s legislated yet it’s fraudulent and thus unlawful that enables the people to remove it using the law. So what I wanted to discuss today with two very credentialed people is covering the basics of what is money? What do banks provide? Why are they so powerful? Who pays for the transfer of wealth from people and businesses to banks? So we will learn today how money is not honest. And we will learn today what is honest money?

Malcolm Roberts:

My first guest for this hour is Ellen Hodgson Brown. She’s an American author, attorney, public speaker and advocate for financial reform in particular in public banking. She’s the founder and chairman of the Public Banking Institute, a nonpartisan think tank devoted to the creation of publicly owned banks. She’s the author of 13 books and over 350 articles published globally. Much of a research was done before the access to the web, the worldwide web. An amazing woman.

Malcolm Roberts:

Ellen began her career as an attorney, practising civil litigation in Los Angeles. Her interest in financial reform was sparked during 11 years spent in Africa and South America, where she began to explore solutions to the challenges of the developing world.

Malcolm Roberts:

That’s why I love people who look around and see what’s going on. She researched the private banking cartels, the hegemony money over wall street and control of the federal reserve bank. She looked at public banking which she discovered as a very successful model, a very successful model, it’s successful in Australia in last century as well. The only operating state-owned public bank in the United States today is the Bank of North Dakota and has been touted as outperforming the big Wall Street banks. Every year it’s made a profit since it started.

Malcolm Roberts:

In 2007, Ellen published the first edition of her best selling book, The Web of Debt and it’s now in its fifth edition. And I can thoroughly recommend that. I’ve read it. The book details, how the private banking cartels have usurped the power to create money from the people themselves and how the people can get it back.

Malcolm Roberts:

Her writings prove prescient as the financial collapse of 2008, laid bare the systemic problems that she had identified. In her 2013 book, The Public Bank Solution, she traces the evolution of two banking models that have historically competed, public and private, and explores contemporary public banking systems around the world. The latest book is Banking On the People Democratising Finance in the Digital age and it was published in 2019. The Web of Debt is one of the best books I’ve ever read. Ellen is a dynamic intelligent woman with considerable energy and extraordinary research skills. Welcome Ellen.

Ellen Hodgson Brown:

Well, thanks Malcolm. It’s great to be talking to you. I’ve seen you on some little video clips lately, and you’re doing great work there.

Malcolm Roberts:

Thank you very much. And I’d like to talk about your work today. We always start Ellen with something you appreciate. What’s something you appreciate anything at all?

Ellen Hodgson Brown:

Well, I appreciate all the ordinary things that everybody appreciates, family and friends and health, and I used to appreciate travel, but I haven’t travelled since COVID. I think one advantage or one good thing about these lockdowns and about crises in general is that makes you appreciate things that you used to take for granted, like being out in public and able to breathe without having a mask on your face, simple things, or being able to travel without jumping through a lot of hoops that I’m not willing to jump through.

Ellen Hodgson Brown:

But one thing I really appreciate is the computer. Because when I first started writing books, we didn’t have access like we have now. And I had two small children and I dragged these two kids up and down the elevators in the UCLA library with these great heavy books, xeroxing studies and you’d get them home and they wouldn’t be what you really needed or it would refer to something else that you didn’t have access to. And now everything’s just at your fingertips, which is quite amazing, a whole world of knowledge, plus the ability to see into other countries and what people are doing around the world and get a sense of you can travel without actually travelling.

Malcolm Roberts:

So I was filled with admiration for you. We’ve talked before you took part in the Senate hearings rather on lending to rural and primary production customers. And you did a marvellous job there. We’ve talked before on the phone, I’ve read your books. I was stunned that you’d done most of your research before the internet and now I’m even more stunned because you were carting two girls around with you wherever you went. How did you do that?

Ellen Hodgson Brown:

One girl one boy.

Malcolm Roberts:

One girl one boy. Okay, well I’ve got to be fair 50:50. How did you do that?

Ellen Hodgson Brown:

That’s the thing. It took a lot of legwork. So I never go into libraries anymore. It’s all just right there. I did see that there was somebody at the World Economic Forum said that the Metaverse is going to be more real to us than our real lives. Well, I hope not but that is sort of the computer is a whole world in itself with great depth. It’s censor, of course you can’t always be sure you’re getting real information, but it’s incredibly interesting.

Malcolm Roberts:

Well, I know you’re a very strong woman, a very determined woman. I’d like to explore that a little bit later on, a very strong human in fact. I don’t distinguish between men and women in that sense, women are incredibly strong. I asked you before we were putting this together a couple of weeks ago, your idea of what you’d like to talk about. And you said you only see one substantive pro question for you and that’s proposed questions about solutions.

Malcolm Roberts:

You suggested some. What can we do about our unsustainable unrepayable sovereign debts? The US federal debt is now $30 trillion, not counting unfunded future liabilities. Second question, what to do about inflation. Third question, how to make banks and banking work for the people. Fourth question, how to make national currencies honest? So they’re the questions I’d like to ask. But first of all, I think we have to define the problem. So let’s define the problem. Let’s understand the issue, which is the problem. So what’s money Ellen?

Ellen Hodgson Brown:

Well, economists say there are three critical factors in money, which is, it has to be a medium of exchange, a unit of account and a store of value. So virtually everything we call money today, doesn’t really qualify on all those points are not very well. Store value, that value keeps fluctuating. Well, even gold. I have some gold and I have some gold stocks and I totally think it’s a good idea but it does fluctuate a lot. And so it can go up $50 in a day. I think just from reading your email, I suspect you favour a gold backed currency, but it didn’t work in the 19th century. That’s why we went to Fiat money anyway. So there’s that. That’s one definition.

Ellen Hodgson Brown:

There’s M1, M2, M3, the way the Federal Reserve defines it or M0 to start with. So those are all different levels of how liquid the money is or how accessible. So M0, they get kind of confused together, but say M1 is cash, which is obviously very fungible and your bank reserve or your bank deposits. And then bank reserves are created by the Federal Reserve and you can’t actually spend those, but those are I think they’re called M0. Anyway, M2 is the larger circulating money supply. M3 they no longer even count it anymore, but it included all the shadow banking, which is unregulated forms of money. I just read that estimates are that there are $50 trillion in Euro dollars traded every single day. And these are totally unregulated. The Federal Reserve has no control over them, they’re called dollars but they’re not even really dollars. They’re Euro dollars means any dollars created outside of the United States. So it could be Japan or anywhere.

Ellen Hodgson Brown:

And they’re really just banking accounting. It’s an accounting thing where they’re basically creating credit and credits and debits that there’s no physical paper involved. Anyway, it’s a huge amount of money it’s in the shadow banking system, nobody knows for sure even how much it is. It’s certainly not transparent. It’s not trackable at all but it’s between banks. It’s legitimate. Apparently banks can’t operate without it. And I remember reading that on the gold system, the only reason it really worked was that you had a lot of credit that ways of expanding credit besides the gold, because there’s just not enough gold to do all the trades that need to be done.

Ellen Hodgson Brown:

Even if you take one single product, I think there’s [inaudible 00:14:31] was talking about this and he, he has a gold bug, but he said that to do like a hundred dollars product, you have to do many hundred dollars worth of credits because every producer in the chain of production operates on credit. So they have to pay their workers and materials before they get paid. And then the next step up also needs. So they would also need gold if we were only operating in gold. So you can’t do it in just one metal. The Euro Asian Economic Union that’s headed by Sergei Glazyev. I just wrote an article on that. They’re proposing a new monetary system where it wouldn’t be backed by gold in the sense of that you could take your dollars and cash them in for gold at the bank, which is what you actually could do in the 19th century.

Ellen Hodgson Brown:

And that’s what happened. That’s what went wrong in the 1930s to ’33 collapsed where people were rushing to the bank and trading in their dollars for gold. The banks didn’t have that much gold and they were on a fractional reserve system. So they only had a certain percentage of actual gold. So they ran out of gold so the banks then went bankrupt. So you’ve got to have credit on top of your gold in some way. But anyway, so the Russian system that is being proposed and that maybe our new banking system is, it’s not exactly backed in the sense of you can cash in your dollars for gold, but it’s measured against.

Ellen Hodgson Brown:

So it becomes a stable unit of value because it’s measured against a basket of commodities and currencies when I wrote Web of Debt, I was proposing that you could use the cost of living index. In other words, a basket of things that everybody uses. And then you could figure out what the value or how much it would cost in dollars, how much it would cost and pay us, et cetera. And that would be your exchange rate rather than what we have now, where exchange rates are easily manipulated by speculators that short sell the currencies. And we’ve had several crises over that. Anyway, so what money is, is very fluid.

Malcolm Roberts:

Wow. What an answer controversial, sorry your last word

Ellen Hodgson Brown:

And controversial.

Malcolm Roberts:

Controversial. I was just about to summarise it. I asked you a simple question, simple question. Money, what is it? No, no, you’ve done a brilliant job. It’s a medium of exchange, which enables people to exchange my work for someone else’s goods and someone else makes a different product. So he makes butter and he exchanges it with someone who makes clothes and she makes clothes. So it enables an exchange of… It’s a medium of exchange. So we have to have that. Otherwise, it’s back to barter system. And a medium of exchange enables us to specialise, which gives us efficiency.

Malcolm Roberts:

The butter maker will be far better at making butter than I will be. And I don’t have to have the dairy cattle to make the butter. Then you also said, it’s a unit of accounting. It’s a measure of an account. And then you also said, it’s a store of value. So wonderfully, clearly they’re the three things. And then you went on with how liquid the money is, the bank reserves, unstable, shadow banking, credit, fractional reserve, a stable unit of value, manipulated, speculators. It’s a real mess. It’s a real nightmare. No wonder people don’t take much interest in this because it’s so damn complex yet let’s try and simplify it before we get onto your-

Ellen Hodgson Brown:

Yeah, well, I should have… The most important thing and the most what you might consider fraudulent thing is that it’s not created by the government. Virtually all of our money is created by banks when they make loans, which I actually think is a good thing. We need a credit system and that’s a way to do a credit system. But the problem is who controls the banks? Who owns the banks? Who has first access to the money, which is called the can Cantillon effect. Whoever gets their hands on the money. First is most able to profit from it. So obviously the private banks, Wall Street, City of London, et cetera, they can create money on their books for their cl their favourite clients who may be one big cartel.

Ellen Hodgson Brown:

And so they have easy access to cheap money and they can raise the rates to whatever they want on the rest of us. So, anyway, there’s the problem is that money is created by banks. They do it by double entry bookkeeping. So if you go to the bank to take out a loan, let’s say you want to buy a house and you take out a loan for $500,000, the bank will write $500,000 on one side of its books just into your deposit account, your checking account. And you can now write checks on that. And on the other side of their books, they’ll write the same $500,000 as an asset because you have agreed to pay that back. You’ve signed a mortgage, et cetera. You’ll pay that back plus interest.

Ellen Hodgson Brown:

Whereas, on the deposit that they wrote on the other side of the books is a liability to them because when you pay your seller, if the seller is in another bank, then the bank will have to come up with that 500,000, which they probably don’t have. What they do is they borrow it somewhere. So they borrow it. It used to be, they borrowed it in the Fed funds market from each other, but they don’t do that much anymore although that’s the interest rate that the Fed is allegedly raising and that’s supposed to cure inflation, which it absolutely won’t right now under these circumstances. We know it’s not that kind of inflation. But anyway, so now I lost my train of thought.

Malcolm Roberts:

So what, what you’ve talked about now is there’s the way the banks create money. I’m not bragging here, but I went to the University of Chicago, which is in the city of Chicago, as you know and it’s won more Nobel prizes for economics and finance than any other university in the world anywhere. So it’s got a very good name for finance, and they never told us that. They never told us how they create money, who controls the money creation and what you’ve just said, I’m going to give you an example to back you up in a minute but what you’ve just said is that banks create money in the first place by ledger entries, journal entries. And I can confirm that because I asked the Deputy Governor of Reserve Bank of Australia, Guy Debelle, he was the deputy governor at the time.

Malcolm Roberts:

And I said, so what you’re saying is that money is created using journal entries. And he looked at me hesitated, and then he said, “Electronic journal entries.” So it’s created as some people would say, it’s not quite right, but it’s created out of thin air. And as you just said, the person who creates the money has the greatest control, but then these same people, privately owned banks, the same people control the Federal Reserve Bank, the same people determine interest rates. The same people determine the money supply, how easy it is to get money. So they really control the government. They really control the economy, don’t they?

Ellen Hodgson Brown:

Right. And also to confirm that in 2014, that the Bank of England came out in their first quarterly report and said contrary to popular belief, banks do not act simply as intermediaries taking in deposits and lending them out again. In fact, banks create money when they make loans. And in fact, they said that 97% of the money supply is created in that way. So that was confirming what used to be conspiracy theory before that. When I wrote about it, in Web of Debt, it was considered quite controversial but now everybody agrees. That’s how it’s done.

Malcolm Roberts:

So what we’ve got here is a money creation system that’s privately owned and privately controlled in large measure. And you wrote very glowingly of the Commonwealth Bank, Australia’s Commonwealth bank early last century. And rightly so, you did a very good job on that. However, it was a rarity. And so the Commonwealth Bank had to be killed because it provided competition for the private banks, Wall Street and the City of London banks did not like it at all. It held them accountable, it controlled the money and it had to go and both Labour and Liberal party governments over the last a hundred years have well until 1995, ’96, when Keating sold off the last of the Commonwealth Bank.

Malcolm Roberts:

It was destroyed over a period of about 70 years. And my next guest will explore that further. So money is important in an economy. It’s important to economic health. You’ve already talked about how we measure it. M1, M2, M3, M0, volume of money. You’ve talked about the fact that money is not honest. Money is controlled, so let’s go on banks. What’s their role in relation to money Ellen?

Ellen Hodgson Brown:

Well, as the Bank of England is confirmed they’re not merely intermediaries taking in money and lending it out again. They’re actually creating the money, which sounds shocking but actually we do need that sort of system. We need a credit system. The question is just who owns the bank and who controls the bank. As you’ve said, the Commonwealth Bank of Australia originally was an excellent model. We’ve had several quite good models too. Historically Alexander Hamilton’s original plan was to have that sort of infrastructure and development bank in the end, it wound up privatised over his objection. He didn’t think that stocks should be… Well, it was sold to foreigners over his objection. But anyway, that was the intention was sovereign money and sovereign credit. And of course the American colonists started out with sovereign money, which was original to them at the time, not counting the fact that the Chinese did it like about a thousand years ago.

Ellen Hodgson Brown:

But for Western civilization, anyway, that was unique that we didn’t have money. The colonies didn’t have money. And so it was the Governor of Massachusetts in 1691 I think who got the bright idea of paying his soldiers, but just by issuing these little receipts, which were considered an advance against taxes, which was the same system as the tally system which was done by the British from like 1100 to 1700, something like that where they would split a… Well, I hope I’m not getting too far out.

Malcolm Roberts:

No, no, keep going.

Ellen Hodgson Brown:

Okay. So in the tally system, they took a stick and notched it. So it was an accounting system and then they split the stick. And since no two sticks split the same way, it was foolproof against forgeries. So you could put the sticks together. So the government kept one half the stick, and then the payee kept the other, other half of the stick. And then those sticks circulated in the economy as money. And that’s basically the same thing that the American colonist paper money was, which was, and you’d pay it to somebody who had delivered goods or services to the government. So the collective body of the people acknowledged that this was a debt owed to this person or whatever. And then that paper would circulate in the economy and when tax time rolled around, you could use it to pay taxes.

Ellen Hodgson Brown:

We actually did that in California in 2008, but the problem was that the government, the local government wouldn’t take the money back in taxes. So it did work. It would work, it works as an advance, but you have to agree to use this to take it back. And that’s what does give it its value and stability and so forth. But anyway, it worked well for the colonists, except for the fact that it was a lot easier to issue the money than to pull it back in taxes. Because these are frontiers when they didn’t like the idea of taxes in the first place, they were kind of hard to nail down.

Ellen Hodgson Brown:

We didn’t have a computer system at that time. But anyway, it worked pretty well except that they wound up hyper inflating or over printing and devaluing the currency until the Pennsylvanians, the Quakers in Pennsylvania got the idea of forming their own bank. So instead of just printing money and spending it, they printed money and lent it to the farmers. So that’s the ideal. That was the first US public bank was this the Pennsylvania state or colonial bank where they printed money, lent it to the farmers at 5% interest, which at that time was a quite good interest rate. And then the farmers would pay it back. So it went out and it came back. So it was stabilised. It was sustainable. It wasn’t just money going out and going out and going out.

Malcolm Roberts:

Okay. So we’re going to go for an ad break now, but before we do, I’ll just make a statement that we can ponder over the ad break. Ron Paul who’s very, very highly regarded. Former Senator says that the Federal Reserve Bank in America is neither federal, it’s not a government body, nor has it got any reserves. It’s a privately owned entity. Beyond the reach of the president, beyond the reach of Congress. And that leads to complete absence of restraints on bank’s power.

Malcolm Roberts:

Now we have bailouts and we have bail ins, which have been enabled to protect the banks at the cost of the everyday Australian. We’ve seen you’ve documented the international role and power of banking associations, like the bank for international settlements, the world bank, the international monetary foundation, their role in ruining nations and making nations dependent. The IMF international monetary I’ve forgotten what’s the F for? Foundation. I’ve forgotten.

Ellen Hodgson Brown:

Fund. International Monetary Fund.

Malcolm Roberts:

Thank you. I just had a complete blank will crippling, Mexico, crippling Russia, the Malaysian Prime Minister at the time McCarty he’s one of the feud have called out the globalist banks their power is enormous. So when we come back, let’s talk about the fact that Henry Ford said, “If the American people knew what was going on with banking, there’d be a revolution by morning.” So rather than have that revolution on the streets, could you talk about your main questions and I’ll remind them of remind you of them. What can we do about our unsustainable unrepayable, sovereign debts? What can we do about inflation? How do we make banks and banking work for the people? How to make national currencies honest? We’ll go for the ad break. And then we be right back with Ellen Hodgson brown to give us the solutions.

Speaker 1:

The midterms and America votes on November 8th, with his expert analysis and opinion. This is TNT radio with Jeremy Beck.

Jeremy Beck:

An important recall vote in San Francisco took place on the 7th of June alongside the many primary elections on the same day. Voters decided to oust the radical District Attorney Chesa Boudin whose soft on prime approach has overseen a horror show of lawlessness for the many victims of crime. Boudin is one of several dozen rogue prosecutors elected to public office largely thanks to funds from billionaire George Soros.

Malcolm Roberts:

So we’re back with Ellen Hodgson Brown discussing money and banking. So Ellen, what can we do about our unsustainable unrepayable sovereign debts? You’ve mentioned that the United States federal debt is now about $30 trillion, not counting unfunded future liabilities. What can we do about it?

Ellen Hodgson Brown:

Well, sovereign debt of course is the debt of the government. Dealing with personal debt is a lot harder. Actually the first money system I probably should have mentioned this was that the first money system in recorded history was the Sumerian money system, which Michael Hudson’s written a lot about. And it was just an accounting system, but they did charge interest. And when the debts got too high, they would have a debt Jubilee periodically. So they would wipe out all the debts and start all over. And that’s obviously the ideal, if you can do it. But the reason they could do it was that the king was considered the representative of the gods and the gods owned the land. And so the king could just order that the debts would be wiped off the clean slate. But today the debts are owed to private banks and we just wouldn’t be able to do it legally.

Ellen Hodgson Brown:

So doing a debt Jubilee for the people would be a lot harder, although it certainly would be, it seems like it’s needed because one problem with the way we create money is that banks create the principle, but they don’t create the interest. So debt always grows faster than the money supply, and there’s not enough money to pay it all back without borrowing more which means the debt just goes up and up and up. It’s a pyramid scheme. So how do we bring about a debt Jubilee under today’s circumstances? Alexander Hamilton actually had a very good plan, which I think we could do. Although you know obviously it’s probably not going to happen, but what Hamilton did with the state’s deaths, the colonies debts that became the states was to roll them to accept them in exchange for stock in the first US banks.

Ellen Hodgson Brown:

So you could pay partly in gold and partly in these debts. And we could actually take that $30 trillion in debt and turn it into stock in a big bank and pay some dividend on it. And actually, there is a bill that we have here in the US right now, a National Infrastructure Bank Bill, where they’re modelling it on the first US banker, the Hamiltonian model, where they would take federal securities and in exchange for stock in the bank. And that’s how they would capitalise it. So that’s one possibility. Another possibility, as long as you don’t pay interest on it, really the debt doesn’t hurt. If you just keep rolling it over and over and over. So you could just have the Federal Reserve buy all the debt. The central bank returns its profits to the treasury.

Ellen Hodgson Brown:

So it doesn’t keep the interest. It’s really the interest that’s the problem. That’s the thing that we have to pay year after year and projections are that in a few years, it’s going to be up to something like a trillion dollars a year just for the interest. So that’s getting right up there with the military and are really expensive things in the budget. But that’s another possibility. In other words, you can just keep rolling it over and hold it by your own central bank assuming your central bank were actually publicly owned and controlled and serving the people. So it could be dealt with. Now foreign sovereign debts, it does look like half the world is likely to join this new [inaudible 00:37:10] system and just walk away from their debts. That’s what Sergei Glazyev said that they don’t need to pay their debts.

Ellen Hodgson Brown:

They just walk away from the debts in dollars and start their own system. And that could happen. Would it destroy the dollar? I don’t think so. Because of the amount of dollars that are out there in the Euro dollar system, I mean the dollar is basically our unit of account. It’s just how people measure value. And it’s so entrenched that I’ve read other experts who say that it probably can’t be shaken loose even if half the world does abandon the dollar and take up some other currency, but I’m getting far a field again. Sorry.

Malcolm Roberts:

So Ellen, before we move on to the solving inflation your ideas on comments on that, there are many different ways of do doing this, but what seems to be coming out of it is that we need to talk about it. We need to have an open Frank discussion about it. We need to have the truth on the table. We need to understand who owns what in this, who controls what so that we can then establish a system that is good for the people rather than just for a few globalist predators.

Ellen Hodgson Brown:

Right. Transparency and accountability. Totally.

Malcolm Roberts:

And they’re the enemies at the moment and so there’s no transparency. A lot of this is hidden. Okay. So the solution is not an easy one, but it must be achieved. If we don’t achieve a solution by open honest frank discussion, then it’ll come through some form of control and that’ll be devastating for everyone ultimately for the global predators themselves. So what to do about inflation Ellen?

Ellen Hodgson Brown:

Well, the argument is that this is a monetary inflation, and they’re trying to tighten the money supply and not supposed to fix it, but it’s not a monetary inflation. It’s a supply problem. There’s two sides to inflation that you often hear that inflation is always and everywhere, monetary phenomenon. But that’s not true. It’s half a monetary phenomenon, it’s a half a supply phenomenon. In other words, if money goes up and supply goes down, you’re going to have too much money competing for too few goods.

Ellen Hodgson Brown:

But if you can keep the supply and the money in balance, then you don’t have inflation, then prices remain stable. So what we need to do is up the supply, which a good infrastructure bank would do it, we’ve got the amazing model of China that in a couple of decades, they came up from absolute poverty for most of their people up into well, anyway, how did they do it?

Ellen Hodgson Brown:

But they have these infrastructure banks where they just basically create the money as credit build the thing like the high speed rail, and then the fees from the trains pay back the loan. And that’s the way it should be. You extend the credit, you use the credit to build something productive, don’t keep pumping it into existing houses, which will just drive the price of houses up. But you put it into new productivity, new infrastructure, which we desperately need in the US and probably, I don’t know how Australia is, but here we got a serious infrastructure problem, build new infrastructure, put money into all sorts of productive things. That’s what Roosevelt did in the 1930s with the Reconstruction Finance Corporation, he funded anything that was productive that would pay back, not speculative, but actual producing assets. So that’s what we need to do.

Malcolm Roberts:

Okay. That makes sense, because if you generate something in terms of productive infrastructure, and then you use that to generate wealth, then you don’t have inflation and you do have prosperity wealth.

Ellen Hodgson Brown:

The interest rates is going to just make it worse because all the producers have credit lines and they’re not going to be able to afford their credit lines. We’re already seeing that business is falling off.

Malcolm Roberts:

And what you just said worked in the Commonwealth Bank when it was a true public bank in the early part of last century generated infrastructure and we… We’ll come to that more later. I won’t go on any more of that now. How do we make banks, coming to your fourth question, how do we make banks and banking work for the people Ellen?

Ellen Hodgson Brown:

Well, they need to be public institutions, publicly owned and controlled, the sustainable, transparent and accountable that they need to be. When we have this, the public banking institute, our mission is to try to get public banks established in the US like the Bank of North Dakota. And you often hear people say, you want to give the government a bake, because people don’t trust the government anymore than they trust bakers, but you need to design the system so that it is responsive to the people, accountable, transparent and so that we actually have control over it.

Malcolm Roberts:

So that again mimics what happened with the Commonwealth Bank. The Commonwealth Bank, when it was formed. The first governor was a man named Dennison Miller who was very energetic man who really aspired to do something really well. And he was working for the Bank of New south Wales. What is now known as Westpac. He was taken from Westpac of Bank of New South Wales and made in charge of the Commonwealth Bank. And he had a wonderful objective then to do the best for the country.

Malcolm Roberts:

And he basically ran the Commonwealth Bank very, very well and worked for the country despite Labour Party and Liberal Party or the precursor Liberal Party, trying to undo it all because one of the things that the Commonwealth Bank did when it was a true people’s bank in the early part of last century, was it provided competition for the private banks. The private banks were then held accountable, which is what you just said. The accountability is so important, but that accountability has to be to the people you’d agree with that.

Ellen Hodgson Brown:

Right. Totally.

Malcolm Roberts:

Okay. Thank you for mentioning the Commonwealth Bank in your book, the Web of Debt. The fourth question, your last question.

Ellen Hodgson Brown:

[inaudible 00:43:57] very inspiring.

Malcolm Roberts:

Yes. The fourth question you suggested was how to make national currencies honest? How do we make them honest? Because as you pointed out at the moment, whether it’s seashells or paper or trinkets or tally sticks or whatever medium is that it can be corrupted. It’s not necessarily backed by anything. There’s no real reserve there. There’s no real value there other than what it’s deemed to be valued. It’s Fiat. It’s an announcement, a pronouncement. So how do you make national currencies honest?

Ellen Hodgson Brown:

Well, I’m not actually opposed to national currencies. I’m not sure I know the answer to that. There are a lot of people attempting to establish an alternative currency system, like a cryptocurrency system, a crypto currency would be honest if it’s backed by something like food back currencies, I think would be a great idea where it’s basically an advance against the future productivity of the farmers. They could issue their own cryptocurrency. But anyway, I think our Fiat system is not that bad. It’s who creates it and who controls its creation. In other words, if you had public banks that were actually accountable and sustainable and what was the other word I forgot now, anyway, it’s getting late here. So if you had public banks that were there to serve the people and the people in control of it actually had that sort of sense of mission that you could have an honest fiat currency.

Ellen Hodgson Brown:

Fiat currency is not really unbacked. It’s backed by the full faith and credit of the people, which means the people agree that to accept it. It so if I went to the grocery with a gold coin and tried to pay for my groceries and said this is worth 1800, whatever it’s at right now at 1850 or something, the grocer wouldn’t know what to do with it because they wouldn’t know for sure that it was valid. He’d say, “No, give me paper money or give me your credit card.” Because things are valued in the Fiat currency and that’s one of the properties of a good currency. I don’t know what, how do you answer it?

Malcolm Roberts:

It’s very difficult, but it seems to me that what you’ve said in answer to each of the four major questions is that it has to go back to being publicly owned bank, a government led bank, not, not necessarily led because governments can then do political things but an independent bank that’s independent from privately owned banks because privately owned banks are the root of the problem. These privately owned banks, these globalist predators, when things are going well, they love capitalism. When things are going badly, they want socialism.

Malcolm Roberts:

And that seems to be a major problem for these people because they make so many… Without any accountability, they make horrendous decisions which ultimately the people pay for in a loss of their house, the loss of their cars, the loss of productive capacity of the country, the decimation of a whole economy. And then you extend that power, that national power internationally through the Bank of International Settlements, the International Monetary Fund, the world bank, et cetera. You’ve got a huge problem and they’re basically controlled by the same globalist predators. So that seems to be the core to take it back and give it to the people. But either way you’ve done a marvellous job in painting the fact that there are no simple solutions and yet there is a basic simple solution and that is people’s banking. Ellen, can I ask you some personal questions?

Ellen Hodgson Brown:

Sure.

Malcolm Roberts:

Because I’ve got just two minutes to go and I like to finish on the hour rather than early. First of all, I want to thank you so much for joining us. And I look forward to staying in touch, but I read that you were born in 1945, that makes you almost 77, 76. How do you do it?

Ellen Hodgson Brown:

Almost 77. Well, how do I do it?

Malcolm Roberts:

Yeah. You look at the research, you’ve done the clarity, your ability to say that it’s not all bad. Some things that need to be considered, but you’re juggling all these complex concepts in your head.

Ellen Hodgson Brown:

Well, it’s incredibly interesting. Don’t you think?

Malcolm Roberts:

Oh yes.

Ellen Hodgson Brown:

You’re doing marvellous work and just the idea of cracking this nut. Like how do we figure this out? And, well, actually I got divorced if you want to get really personal 20 years ago. And I was quite depressed. And so at some point I said, “I don’t want this body anymore, but if somebody up there has a good idea for [inaudible 00:49:03].”

Malcolm Roberts:

So you took it on as a challenge. I’d want to give you the last say we’ve got 20 seconds left. How do they learn more about you? What’s your website?

Ellen Hodgson Brown:

Oh, ellenbrown.com or publicbankinginstitute.org.

Malcolm Roberts:

ellenbrown.com or publicbankinginstitute.org. Thank you so much Ellen. What a wonderful person you are. Thank you for being so open and honest.

June 14, 2022/by Senator Malcolm Roberts

Reserve Bank wants a Central Bank Digital Currency in Australia

Digital Identity Bill, February 2022, Senate Estimates, United Nations

A Central Bank Digital Currency goes hand in hand with the idea of a Digital Identity. With all of your information and money stored online, central banks or governments could turn off your access to money and society in the blink of an eye.

The last time I asked the Reserve Bank about a Central Bank Digital Currency, there seemed to be no real plans. Conveniently they are now considering it, just as the feared Digital Identity Bill proposal is being pushed by Government.

Transcript

[Chair] Senator Roberts.

Thank you. Thank you for appearing again. I’m gonna start with a sincere compliment, Mr Debelle. I’ve been impressed with your frankness and your directness and your succinctness. You convey a lot of confidence and I would also like to start by complimenting the Reserve Bank for the answers I received in the last estimates, which after examination were complete and factual. So question one, Chair: the Reserve Bank has now signed on to the International Central Bank Digital Currency Platform, Project Dunbar, and I quote, “aims to develop prototype shared platforms for cross border transactions which will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks.” Now, as I understand it, Mr Debelle, Australia will be testing this platform, along with Malaysia, Singapore, and South Africa, which suggests we have a digital currency to use, to test the platform. Where is the Reserve Bank on the development process for the Reserve Bank Digital Currency and what’s the timeframe here for testing and implementation?

Hello, pass that one to Ms Bullock, please, Senator, she’s the expert in this space. Well, has carriage of this, at least.

Thank you, Senator. So, the first thing to note is that Project Dunbar is a proof of concept, so I’d distinguish it from a pilot. Pilot is where you actually have actual real money. This isn’t a pilot, it’s actually a proof of concept. So really, what it’s about is going through the technical infrastructure you might need, the legal arrangements you might need, to patent requirements you might need to set this sort of multicurrency approach up. So there is no Central Bank Digital Currency, we don’t have one, the other central banks don’t have one, it’s purely a proof of concept, if you like, It’s a little bit of a desktop exercise with a little bit of experimentation with technical approaches to do it, so there’s no actual Central Bank Digital Currencies involved.

Okay. Thank you. Oh, sorry.

I was just gonna go on to your second question, if that’s all right.

Okay.

So, your second question was about where we are at with Central Bank Digital Currency. So, we’ve had a multiyear process in this. We’ve done some small experiments. We’ve experimented internally with the concept of a wholesale Central Bank Digital Currency. Again, it’s not real, it’s just sort of a mock-up if you like, and we’ve done that internally to see whether or not individual banks could perhaps use it for settlement between them. We’ve also expanded that fairly recently. There was a report in December, Project Atom, which was an experiment again with Commonwealth Bank, National Australia Bank, Perpetual and Consensus and ourselves. And the concept here was, again, a proof of concept. It wasn’t a pilot; a proof of concept to see whether or not a Central Bank Digital Currency, paired with tokenized syndicated loans, would actually make a more efficient way of having syndicated loans transacted through the economy. We released the report on that in December and I think it proved that there were some efficiencies in this area, but –

Excuse me, did you say there were inefficiencies?

Efficiencies.

[Roberts] Efficiencies.

Efficiencies. So, syndicated loans is a very manual process, and quite lengthy, and what the project proved was if you tokenized the syndicated loans, you had a Central Bank Digital Currency to transact amongst the various players in the syndicated loan, that actually that made that a much more efficient process. Whether or not you can do it with normal payment systems as well is another question, but we didn’t test that, so there’s that. We’re also participating, as you mentioned, in Project Dunbar with the Bank for International Settlements Innovation Hub and those three other countries, and we’ve recently formed ourselves a Central Bank Digital Currency Group in the Payments Policy Department, and we’re going to be engaging with the Digital Finance Cooperative Research Centre, which is looking at all sorts of things digital. We’re going to be engaging with them on looking at Central Bank Digital Currencies as well, so that’s a little bit of a potted history of where we’re at with our work on this.

Okay. Thank you. If a new digital currency is to be created out of electronic ledger entries, will existing amounts of cash be converted into digital dollars? The public may be confused about how this is going to work. Can the Reserve Bank please provide a simple overview of what happens after the project gets the green light? Where’s the value coming from? So when we have a cash?

What we’re assessing, Senator, really, is exactly that: their value, given we have a pretty decent payment system as it is, which includes cash, clearly, but also electronic settlement, and you sort of nailed the question, really, which is: is there value in this? Is it worth the investment at this stage or not? Michelle, I don’t know if you wanna add anything to that.

The only thing I’d add, Senator, is that there is no suggestion in which we are getting rid of cash. This concept is not to replace cash and it hasn’t even been decided that we would do it. This would be a decision not for the Reserve Bank, but for, in fact, the Government, and it wouldn’t be replacing cash, so that’s very clear.

When I was talking about the value, I wasn’t talking about the value of the process. Is it gonna be more efficient? Is it worth doing, so I appreciate your answer and that quite clearly, that’s one valid interpretation of my question, but what I was getting at was, if someone’s got so much value in Australian dollars, how will that be converted into digital currency dollars or whatever the currency is? Will they still have that purchasing value?

Sure. So the way that most central banks are looking at this around the world is that the central bank itself won’t be providing people with digital money. It will work like cash does. So at the moment, if you want cash, you go to your ATM or your bank and you withdraw some cash from your bank account. A digital currency, if we had one, would work in a very similar way. You would go into your bank and your bank would have presumably a digital wallet, or you’d have a digital wallet, and you would take some money out of your bank account and you would put it into Central Bank Digital Currency, just like cash. So you can think about it in a very parallel way.

Yes, but if someone’s got $2,000 in cash today in their bank account, will that give them the equivalent purchasing power if there’s a conversion into digital currency?

Yes. Correct. It would be exactly the same as if it was a $100 bill or $100 on your mobile wallet.

Okay. Thank you. Now the BIS is involved. So, one specific case: our foreign exchange reserves are used to settle international transactions. These will now be replaced with the Reserve Bank Digital Dollars, if it goes ahead. Is the process to simply replace the US dollars we have in reserve with US Government-issued crypto dollars or a similar value-basis digital currency?

[Debelle And Bullock] No.

[Bullock] Do you wanna take this?

Straight to the chase: no, Senator, we would still continue to hold $USD reserves in the instruments we currently hold them at, which is primarily US Treasuries.

Okay. That’s pleasing to hear. What are the risks in doing this, for example, if this was handled badly, not necessarily from the Reserve Bank, but for the people you’re dealing with overseas, if the system wasn’t tight? What are the various risks that you can foresee that need to be managed?

This is why I think there’s a lot of water to flow under the bridge before any advanced economies really have launched into this. There are obviously cyber issues. You need to make sure that the system is secure. Overseas consultations demonstrate that people are very concerned about privacy, which is a very valid concern, but by the same token you’re also concerned about a use of digital currency for criminal purposes, so there’s a balance there. Another concern, that is one that most central banks identify, is concerns about the banking system and whether or not there might be a flight of deposits, if you like, to the Central Bank Digital Currency, which would have implications for banks’ balance sheets, potentially make it easy to run on banks, if people were concerned about banks, so there’s a whole lot of financial stability risks and issues associated with it. That’s just a sample of some of the issues that need to be considered if we were going to go in this direction and have some sort of what I would call “retail” Central Bank Digital Currency.

Thank you. Two more questions, Chair. Digital or cryptocurrency is not backed by any asset. It’s literally an exercise in trust that the government can protect the value of someone’s currency. Is this the time now to start talking about getting an asset backing behind this new currency, such as gold?

Senator, just like cash at the moment, it would be a feat currency, which is to say it isn’t backed by anything. And you’re right. It’s all about trust in the institutions of the country, in the government, in the Reserve Bank, so in that sense, it would be just like cash, if we were going down this route, it would be an unbacked currency.

But it’s backed by the government’s capacity to raise revenue from its citizens, basically.

Backed by the government’s capacity to raise revenue, did you say?

Yep.

Thank you. Last question. During COVID, there’s been a hell of a lot of money spent on non-productive outcomes. As much as food and rent can be considered non-productive, they’re essential, but they’re non-productive, the outcome of long-term borrowing for short-term gain is inflation. Is spending on productive capacity: roads, railways, bridges, dams and irrigation in this recovery phase, likely to produce a lower inflation outcome across forward estimates than continuing to spend on what can only be described as economic sherbet?

I don’t know, I mean, that’s an an interesting question, Senator. I mean, I’m not sure I would draw that distinction, I think food I would regard as a pretty productive and essential service, an essential thing for people to consume, so, I mean, we build roads for a purpose, not just because, which is to satisfy people wanting to use them, and the same with food and same with shelter, so not quite sure how we can draw such a clean line between what’s productive and unproductive.

Well, perhaps, well food is essential, as I said, perhaps spending on non-productive assets: entertainment, instead of travelling overseas, people are buying new cars, that kind of thing. What I’m talking about is spending on such items that may be essential, but not producing increased wealth, could lead to inflation. That’s the risk. On the other hand, spending on something that increases productive capacity, like a dam with irrigation systems to supply increased food productivity and lower the cost of food, leaves people better off and wealthier overall. That’s what I was getting at: a productive capacity, rather than just consumption.

There is a reasonable amount of dollars investment in infrastructure at the moment, that’s increased quite a bit, both from the Commonwealth and the State Governments, so that sort of spending is absolutely happening. Again, I’m still not quite sure I would draw such a clean distinction. In the end, people consume what they want to consume and I’m not sure it’s up to us too much to tell them what’s good and bad about that, within reason.

Well, that’s a wonderful statement to hear coming into my ears now. I love that, but yeah, sorry?

I said, “I thought you’d like that.”

So what we’ve got, though, is an acknowledgement that there is money being spent on infrastructure. You’ve answered my question. I just personally believe, Chair, that we need to spend more on improving our productive capacity. Thank you very much. Again, Chair, I’d like to put on record that the Reserve Bank always answers quickly, succinctly and factually. So thank you. It’s really appreciated.

[Chair] Dr Debelle, you’ve got a fan there.

[Roberts] Yep. He has.

[Debelle] Thank you.

February 25, 2022/by Harriet Black

APRA dangerously quiet on house prices

Foreign Ownership, October 2021, Senate Estimates

House prices are skyrocketing out of the average battler’s budget. Despite warnings of a possible housing bubble, APRA is banking on the banks only losing 2% from their mortgage books in their “stress testing”. This threshold sounds very favourable to the banks and allows them to get greedy at the possible expense of Australian homeowners.

Transcript

Stress testing banks during COVID-19 dated 15th of December, 2020. I have a question about one of the criteria APRA uses to stress test a bank, and that is a fall in real estate prices or to use a simple explanation, the ability of a bank to maintain liquidity during a real estate meltdown. Can I say it like that?

Well, I think Senator, it’s more a question of whether they can sustain their solvency, which for us it’s more of an issue of a capital, but liquidity is an important consideration as well.

Thank you. From the report, the figure APRA used as a proxy for a real estate meltdown was the loss of $49 billion in residential mortgages over three years. Is that correct?

That sounds about right, I think Senator. I don’t have the document in front of me, but-

That’s what I’m reading. Thank you. And with that loss being 30% of the total bank loss in the period of the stress test, as a loss rate, this would translate into 2% of Australian banks residential mortgage loan book. Is this correct? And please confirm your figure for the value of residential mortgages held by Australian banks. What is it?

Oh, well I think the, now I think the, if we’ve published that number, Senator, I’m quite comfortable to correct, total mortgages the banking system would be-

In the term of residential mortgages.

Yeah. Sorry. Total residential mortgages. Housing loams We’re talking about here. Owner-occupiers and investors would be, it’s in the order of a trillion dollars, I think Senator that’s something that we can come back to you on.

Thank you for that.

Very happy to take it on notice.

Okay. Thank you. Final question on this topic before moving onto a simple topic, can I confirm that APRA is projecting a real estate meltdown would only cost our banks $49 billion in losses on mortgages, and that loss would accrue over three years? That seems to be a very favourable assumption for the banks.

Well, that’s the, that’s the impact that we expect to have on the bank given they have collateral against their loans. Many loans have very low loan-to-value ratios. So in many cases of banks we have loans that even with a substantial fall in real estate values the banks would incur no loss, that’s not to say the borrowers would be unaffected by any means.

Well, I think that’s the concern. Sorry, go ahead.

Senator, I was going to add, I mean, it’s just to your question of projection or forecast, this is stress test. So, it is a set of assumptions that we use to look at the resilience of the sector and the entities involved. So, it’s not forecast or projection.

Okay. Thank you. It’s just that our constituents are concerned that we’ve had 20 years of the banks putting a lot of money into real estate, and taking it away from small businesses and funnelling it into real estate. And we’ve seen real estate prices increase a lot recently. Some people are calling it a bubble. So basically the question amounts to, are you letting the banks do as they please, and then sweetening the impact for the banks?

Well, Senator we don’t allow the banks to do what they please. We’ve got a raft of prudential standards that ask the banks as they’re making commercial decisions to take risk into account, and where we see risks, and I think an example of that would be the recent increase in the buffer, APRA acts and takes action.

Okay. Thank you.

I can just note for the record that, Mr. John Lonsdale was the one who provided that answer. Just leading into your next question.

Does APRA embed staff in financial institutions, like say the Big Four banks?

[Byres] No.

Okay. Thank you. Thank you.

October 28, 2021/by Senator Malcolm Roberts

ACCC aligns with One Nation calls for Murray Darling water register

May/June 2021, Murray Darling Basin, Senate Estimates, Water

I have been calling for a transparent public water register for several years now. There are too many dodgy dealings happening in the Murray Darling Basin including water possibly held by politicians.

Our view on this aligns with the ACCC who have also backed a public water register. It is simply common sense.

Transcript

[Malcolm Roberts] Thank you Chair and thank you for attending tonight. In reference to your report of the Murray-Darling basin water markets inquiry, is it a fair representation of your findings to say, “There is a lack of quality, timely and accessible information for water market participants. The ACCC’s analysis has highlighted the need for significant improvements in the consistency and completeness of Murray-Darling basin water market trading?”

Sounds like what we’ve found Senator, that rings a lot of bells. It’s obviously a very complex market and it’s grown up. I guess it just sort of evolved and water administrators have been much concerned with the allocation of water rather than the trading of water, so, I think, general judgement is, there’s a range of things that need to be done to get the market working really properly and addressing the problems you’ve just correctly summarised ’cause it is such a fundamental market for farmers.

[Malcolm Roberts] I haven’t read your report, but one of my staff who is intimately involved with the Murray-Darling basin says gives you A plus.

Oh, very good Senator, I appreciate that. I should pass it on to the team.

[Malcolm Roberts] We’ve been all over the basin and we’ve listened to a lot of people and it makes total sense.

Thank you.

[Malcolm Roberts] The Water Act 2007, schedule three specifies that all trades should be recorded in a register for water trades, register of water trades. Your report notes the failed attempt by the Murray-Darling basin authority to introduce a national water market following which they just gave up trying. Is implementing this 14 year old law compatible with the findings in your report about the need for improvements in water trading data transparency?

I’m gonna pass to Mr. Betsy, who’s the person most familiar with this, so.

If I understand your question, Senator, you’re asking me whether the recommendations in our report will improve transparency in the water market? And yes, our answer to your question is that’s what they’re intended to do, that’s the big problem that, or one of the big problems that we think need to be addressed. There are some other issues as well, integrity of some of the mechanisms to ensure that people have confidence in the integrity of market and the conduct of the players in the market, making data available more generally in a more consistent way across the whole market so that people can use it for their purposes. There’re whole range of different recommendations that we think will be carefully considered by the implementation panel over the next year or so.

[Malcolm Roberts] I didn’t wanna interrupt because it was music to my ears but specifically what I was after was, is a register of water trades consistent with your report?

Yes, absolutely, well, and either a single register or registers that are compatible and that record data in a consistent way.

But that’s a classic example of what’s missing so there’s no doubt about that. And that again, reflects the way it’s evolved and why it needs very much to improve.

[Malcolm Roberts] From page 182 of the report, “89% of the volume of all large investors spot allocation purchases and 67% of the volume of all large investors bought allocation sales in the Southern connected basin in the 2018 and 19 water year, were attributed to one investor, can you indicate who that investor was?

I don’t think it would be appropriate to do so.

[Malcolm Roberts] Okay, and that’s why we need a register.

Yeah.

[Malcolm Roberts] But we would know the answer if we had a transparent water register, correct?

Yes.

[Malcolm Roberts] And so without, this is just a statement, without a water trading register shady or crooked operators can hide. And I’m not saying that they’re shady or, but someone could.

The difficulty is that we don’t know whether they are shady or crooked operators.

Exactly, but that’s the problem, that’s the problem, we don’t know and if the market was working with all the normal regimes then, that would make bad behaviour much, much, much harder. So we don’t know about the system, opens itself to that.

[Malcolm Roberts] I’ll bring the cupboard, the cockroaches scatter when the light hits them. Page 185 of your report indicates that in 2018 and 19, 63 gigalitres of water was traded from above the Barmah choke to below the choke, is this correct?

There’s only 700.

[Malcolm Roberts] Okay, it is, so.

If it’s in the report, if it’s in the report it’s very likely to be correct is correct.

It’s correct, right, thank you.

[Malcolm Roberts] It’s correct, yeah, okay. Is this figure net or gross? In other words, we know that 63 was traded from above and moved to below the Barma choke. Was there a corresponding trade moving water from below the choke to above the choke?

That’d be taking the water upstream.

[Malcolm Roberts] Yes.

And that’s a very difficult thing to do.

[Malcolm Roberts] it is, but…

I mean, conceptually, there are ways in which trades can occur where that happens.

[Malcolm Roberts] But that figure would be…

Yeah, I expected it’s a gross figure but it would be pretty close to being a net figure but we can take that on notice.

[Malcolm Roberts] Thank you. In senate estimates last Friday, Andrew Reynolds, the chief executive director of the Murray-Darling basin authority testified that there was no transfer of water from above to below the choke since any trade below was matched by a trade back the other way. This is not what your thorough and detailed investigation has found according to my staff, is that correct?

Look, I think it’s best we take it on notice.

[Malcolm Roberts] Yes, okay.

We’ve got the question that we’ll certainly get back to you and we should have the information.

[Malcolm Roberts] Your data came from voluntary information disclosures. So put simply the trades you examined were the trade people wanted you to see. Is there a chance that trades were hidden from the ACCC inquires?

That’s not correct senator, we use compulsory powers to compel the production of a large amount of the data and the information we received. Some of it we did receive voluntarily from state government agencies, but a very large proportion of it we obtained using compulsory powers.

Paint a picture that others couldn’t because we had the information gathering powers. That’s why we were able to put all the data together in the way we did. Without the powers, the study wouldn’t have had the same thoroughness.

[Malcolm Roberts] Thank you. Moving onto a separate topic now, this is to do with market power. The Commonwealth bank has announced that they are investing $30 million in e-commerce startup little birdie, so far so good. Now the bit that concerns, the Commonwealth will add the little birdie e-commerce portal directly into their banking app. Is the Commonwealth bank using its market power to grow a business that it has an interest in?

Look, I think Senator, I don’t know if any of my colleagues have comment, but, I mean the Commonwealth bank is, don’t know, its probably got 25% of the home loan market. It’s obviously the biggest bank but in terms of what they’re doing, there’s a lot of other players in the market. So certainly happy to keep an eye on it. But I think with all else going on in the market it would be a bit early to call that market power. It’s, you know, it’s an interesting development. They’re trying to match a range of other digital players, fintechs offering various services. So I think, we almost see it as an encouraging sign to improve the mix of economic activity But I accept they’re a big player and when big players do things like that we have to monitor it carefully.

Senator, if you don’t mind, it seems we have a dedicated unit within our agency that focuses on financial services, competition issues and actively monitors this sorts of developments and reports to a financial services competition board. And that, I think it’s a very good mechanism for really tracking what’s going on in competition in financial services.

[Malcolm Roberts] Okay, it’s just that the banks, as Mr. Sims pointed out have got enormous power, the four of them have got enormous power. And if they get behind something.

They’ll do the same thing, senator, that’s a different matter, as I understand, it’s the Commonwealth bank on its own, making that move. If they all did it collectively that would a very different matter and that could well bridge competition laws.

[Malcolm Roberts] Okay, so, next question Wespact are now, Westpac is now offering private label banking services after pay, as their first customer. Does Essec have a point at which the banks could be considered to be misusing their market power? You just mentioned one example.

You mentioned Essec, I think you meant ACCC, again, I think fairly early days, I don’t know whether my colleagues have. I think it’s part of all the rich developments that are going on that we’re monitoring very closely.

And there are a number of white label services provided by various banks. Citibank, for example provides white label credit card facilities. And in a sense, what Westpac is doing is a pro-competitive thing entering into an activity that enables after paid provide a full range of services than it currently does. And we see that as a way for them to become a more viable competitor within the financial services market.

[Malcolm Roberts] Okay, how about the last question on ACCC, how about Westpac shutting down banking facilities for cash handling companies so that it can direct their retail customers to use one specific cash handling company that they have a financial arrangement with essentially De banking, where does this slippery slope end if we let banks do this and they will eventually own everything and force companies that don’t own out of business?

I’m not aware of that particular issue, Senator, happy to take that on notice and have a look at that. We certainly are interested in De banking. And we made recommendations about that when we did an inquiry into foreign exchange because we think there’s got to be rules that people can meet so that they can’t be Di banked in an ad hoc way. So we’re very concerned about Di banking but I’m not aware of, I don’t think we’re aware of that particular

Yeah, no, we are, sorry Mr. Sims, we are aware of certain commercial arrangements that have been made that have been having an impact in the cash delivery market. There’s a couple of firms that dominate that market and we’ve had a close look at some of the arrangements there. It’ll be interesting to understand whether your referring to one of the things that we’ve looked at or whether it’s a new issue. And that might be based on by taking on others of you questions.

[Malcolm Roberts]Would you like one of my staff to contact you?

Yes, yes, that would be helpful.

[Malcolm Roberts] Thank you, thank you very much, Chair.

June 4, 2021/by Senator Malcolm Roberts

ASIC keeping banks in line – Government trying to soften them up

May/June 2021, National, Senate Estimates

The government is set to try and ram through destructive changes to responsible lending rules. This axing will mean banks can go back to the bad days of over-lending to people who will never pay their loans back. We cannot go back to the bad days of equity theft where banks lent to people who couldn’t afford it just so the bank could later sell their house for a profit.

ASIC and AUSTRAC have been doing a good job in slapping fines on banks after the Royal Commission, racking up just over $2.2 billion in enforcement. Its proof that we need heavy fines for bank wrongdoing and that ASIC can do a very good job keeping banks in line.

The government’s proposed changes take away power from ASIC to do the job they have been doing very well. This can’t be allowed, and I won’t allow this government to use the cover of the pandemic to ram through cushy rule changes for their banking mates.

Transcript

Senator Roberts

[Senator Malcolm Roberts] Thank you. And thank you for attending today. Firstly, to ASIC, congratulations on your recent enforcement action against AMP for fees for no service, and charging fees to dead people. I hope that goes well. I know that’s a comment without a question, but I appreciate that. In your most recent ASIC Enforcement Actions Bulletin to December 2020, you list 11 actions still pending from the Hayne Royal Commission. With AMP now underway, is that now reduced to 10, and can we expect further enforcement actions for bad banking behaviour?

I haven’t got the statistics in front of me. Perhaps, Commissioner Armour, the…

I think, yeah Commissioner Hughes might be the best able to answer that.

Yeah, thanks. Thanks Cathie. Senator, good afternoon. We can take that one on notice. I think your assumption is probably correct because we have been netting down. If I can put it that way the number of matters as we’ve gone through. So if I’m going to make this point we had 13 matters referred to us by the Hayne Royal Commission. And we are, as I say, going through all of those matters, as well as 32 case studies that were examined by the Royal Commission, which we took on. But we will give you a specific answer on your question about it. I think you’re correct but I just want to be crystal clear on that.

[Senator Malcolm Roberts] Thank you. Do you have a dollar figure for the total cost to Australian ADI’s, that’s banks, for bad banking behaviour in the last five years as a result of asset enforcement action?

We don’t have a total cost of the behaviour Senator, what we would be able to provide to you on notice is the total amount of civil penalties and other regulatory outcomes that we’ve achieved over the period since the Royal commission.

[Senator Malcolm Roberts] That, that in fact Mr. Hughes, is what I’m asking for. So thank you. So

So Senator I might just add one other aspect to the cost measurement would be the remediation payments as well which we know collectively now are well above $10 billion.

[Senator Malcolm Roberts] Okay. Thank you. To confirm, you currently have 11 enforcement actions before the courts for credit misconduct. Is that correct?

That’s my understanding Senator.

[Senator Malcolm Roberts] And that’s for breaches of responsible lending laws?

Oh no. Sorry. I thought you meant, Senator, in relation to the matters arising from the Royal Commission. I didn’t hear you correctly.

[Senator Malcolm Roberts] No

Not it’s not physically in relation to credit.

[Senator Malcolm Roberts] It just happens to be the same number, 11 in both cases. This is for credit misconduct. I think you have a total of 11, and that’s before the courts?

I’m going to have to check those numbers. I’m sorry, Senator. I don’t have whatever it is whatever it is you’re referring to in front of me.

[Senator Malcolm Roberts] Okay, I have ASIC enforcement update July to December 2020, page seven. There’s a table there.

Can I take that on notice, Senator?

[Senator Malcolm Roberts] Sure. Thank you. I appreciate you valuing accuracy. Have you changed your enforcement since the Hayne Royal Commission?

I don’t believe that we would say we have changed our enforcement. What we have done is prioritised matters that give rise to significant consumer detriment or hardship or which relates to egregious misconduct including matters that might undermine confidence in the market. So there has been a refocus or a swinging of our prioritisation of matters, specifically to address those strategic enforcement priorities. We obviously receive a vast number of reports of misconduct, which my colleague Mr. Day could talk to you about, but Senator, we couldn’t possibly resource every single matter. So we, we put them through a process by which we identify those matters which meet our strategic priorities. And it would also prioritise enforcement matters that might relate to other priorities or thematic priorities such as misbehaviour in the OCC derivatives market those matters, or matters that involve predatory lending or misconduct involving indigenous or remote communities. So we have a number of filters, which we apply in deciding which matters to take to enforcement.

[Senator Malcolm Roberts] So it sounds like ASIC is doing its job and you’re policing responsible lending provisions, correct?

We’re enforcing the laws as they exist today, Senator. We’re very mindful, of course, as Senator McKim was asking me earlier that there are reforms before this chamber in relation to responsible lending. And we will be interested to see the passage of those reforms, if that is indeed what takes place. But where the law is settled then we will pursue those matters where we identify misconduct and there is an actionable bridge that we can pursue.

[Senator Malcolm Roberts] So in a briefing with Treasury, which didn’t involve me but my staff were involved. As were Senator Hanson’s staff, Treasury advised my staff that the reason for the decision to move Responsible Lending Regulation from ASIC to APRA was based in large part, apparently, on the actions of ASIC in tightening lending regulations. Have you tightened the legislation or regulation in respect of Responsible Lending since the Hayne Royal Commission? If so, how? I got the impression,

[Senator Malcolm Roberts] No, you haven’t?

No, Senator, ASIC does not have the power, the legislative basis or any legislative basis to change the law or regulations. Prior to the completion of the Royal Commission, ASIC updated its guidance response, its guidance number two zero nine, regulatory guide two zero nine, in December 2019, which provided further examples of the sorts of conduct and considerations that responsible lenders should take into account when making lending decisions. But as I said to Senator McKim, that guidance does not have the force of law, and we have not changed the rules or imposed any new obligations since the Hayne Royal Commission.

Thank you The only thing that has happened since the Hayne Royal commission Senator – sorry to cut you off is that the full federal court handed down its decision in the Westpac matter.

[Senator Malcolm Roberts] Thank you. Is it true to say that any tightening in bank lending practises is the decision of the banks, not of ASIC?

Well, we don’t make decisions on individual loan applications, Senator. Those are entirely matters for the banks. They will have regard obviously to Prudential Standards, administered by APRA. They will have regard to their obligations under the Consumer Credit Act administered by ASIC. And they’ll also have regard to the decisions of courts and of APRA. But the decision to advance a line to any particular borrower, consumer or business is entirely that of the bank, not its regulators.

[Senator Malcolm Roberts] Minister, could you agree that it would be possible for some people to categorise the stripping of Responsible Lending Regulation from ASIC to be a penalty for your enforcement act, for its enforcement action against the banks?

No, I think that’s an unfair characterisation, Senator Roberts.

[Senator Malcolm Roberts] I just want to go on record saying I appreciate the directness and the quality of the responses from ASIC. So thank you very much.

Thank you, Senator Roberts.

June 4, 2021/by Senator Malcolm Roberts

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