Australian Senator Moves for Breaking Up the Banks
Feb. 15, 2019—The issue of Glass-Steagall-style separation of the too-big-to-fail (TBTF) banks is once again before the Australian Parliament.
On February 12, One Nation leader Senator Pauline Hanson introduced the Banking System Reform (Separation of Banks) Bill 2019 into the Australian Senate. Her motion was as follows: “That the following bill be introduced: A Bill for an Act to re-establish confidence in the banking system, to separate retail commercial banking activities involving the holding of deposits from wholesale and investment banking involving risky activities, and for other purposes.”
Senator Hanson’s action comes in the wake of the failure of the Hayne Royal Commission to recommend banking separation. MP Bob Katter, one of the instigators of that Commission, had introduced a personal bill last June, in which he called explicitly for Glass-Steagall-style reforms of the banking system.
MP Katter’s bill failed to get sufficient support to be heard, and expired with the end of the 2018 parliamentary session.
According to a press release from the Citizens’ Electoral Council of Australia, the Hanson bill “fully breaks up the vertical integration structure, giving the banks two years to divest from their non-core financial businesses.
“It also ends the so-called horizontal integration of commercial banking with investment banking, the trading in risky securities and derivatives, which exposes deposits to dangerous speculation. The banks not only use deposits as collateral for their gambling, but when their bets blow up and they face collapse, as happened in the 2008 crash, they use their deposits to extort the government to bail them out, under the threat that if they crash they will take their innocent customers’ savings with them. This is what it means to be `too big to fail.’ More recently, governments, including Australia’s, have enacted “bail-in” laws to pre-empt the collapse of TBTF banks by seizing deposits to absorb the banks’ gambling losses. Hanson’s Separation of Banks bill ends TBTF, and protects deposits by not letting them be exposed to risky activities.”
The Senate Economics Legislation Committee is now conducting a three month inquiry into the bill, which is expected to receive submissions and testimony from prominent experts.
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