Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646141062.pdf (Australia)
Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra ACT 2600 Submission regarding “Banking Amendment (Deposits) Bill 2020” 1.

My Concern: I am a 79-year old Australian citizen and I am not an active member of any political party.

My wife and I have a mortgage-free home, a superannuation that produces a good income from rental of an industrial property and we own a small engineering business with about 25 employees.
The business has been operating for 26-years and has adequate working capital, without any dependence on bank loans, to cover all creditors including all employee entitlements.

This capital is held as bank deposits.


Under these circumstances our financial future should be secure but I am deeply concerned that a bail-in of ordinary bank deposits can occur through a loop-hole in the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 when combined with a change to the Bank’s Terms and Conditions concerning bank deposits and we could become quite poor.
The bank Terms and Conditions can be changed at any time, as stated in the CBA document at clause 17B, and this change could include Bail-in.

Should Bail-in be executed, the businesses still standing after the ‘virus’ shutdown would lose all or part of their working capital and many would collapse resulting in an even higher level of unemployment.
Personally, we could lose the business and the income via dividends from that business, the income from superannuation through factory rental and interest on bank deposits and we could also lose our personal cash reserves.

Many of my political representatives have suggested the ‘Financial Claims Scheme (FCS) will provide some protection.
However, for reasons outlined in clause 4 below, the FCS will not provide any security for bank deposits against Bail-in and is most unlikely to be effective under any situation, particularly given our National debt after the virus.

From my viewpoint, Bail-in should not be an option for the Banks and thus it is essential that the Banking Amendment (Deposits) Bill 2020 be approved to ensure that there are no loop holes in any existing legislation.
If the banks hit a liquidity problem, a bail-out by the Australian taxpayer would produce a fairer and less damaging effect than a bail-in but I suspect that the re-formation of a National Bank would produce the best end result by far.

2.

The key Justification for the bill: The parliament, following assurances by Treasury and by APRA that Bail-in would not apply to ordinary deposits, passed the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 in February 2018.
Thus there is no downside to this bill since it simply removes all confusion and doubt about this matter and ensures that the bail-in law would then represent the parliament’s intention when it passed the earlier bill.
Banking Amendment (Deposits) Bill 2020Submission 33 The assurances by Treasury and APRA were sought by the Senate Committee at the time because the overwhelming majority of public submissions believed that Bail-in was facilitated via the ‘Crisis bill’ but many of these were not comforted by the assurances and the numbers of concerned citizens has grown since that time.
Should there be doubt about the validity of these concerns, I propose you hold a public meeting and call-on expert witnesses such as Dr Wilson Sy (Former senior research analysist APRA), Robert H Butler (Solicitor) and John Adams (Economist).

Senator Amanda Stoker, a barrister who has been a prosecutor as well as a judge’s associate in both the Queensland Supreme Court and High Court of Australia has also stated that Bail-in was facilitated by the ‘Crisis Bill’.
I have provided hyperlinks to several formal reports by APRA, FSB and Treasury that also show a need for this bill to be passed.

3.

Official Documents concerning Bail-in: Given that Bail-in has been legislated in most countries in the world and given that Australia made repeated commitments to Bail-in through the G20, as shown below, there could be little doubt that Bail-in is now legal in Australia.
 The FSB, formed in April 2009, developed a plan “Key Attributes of Effective Resolution Regimes for Financial Institutions” that proposed Bail-in at Clause 3.2(ix) Page 8 and Clause 3.5 Page 9 and this was subsequently approved in November 2011 by all members of G20, including Australia.

 At pages 4 &5 in a 2011 in an Executive Summary G20 Survey on Bank Bail-in’s and NVCC it was stated that Australia already has many of the laws necessary to facilitate Bail-in.
 Bail-in was a key a point at page 5 in a 2012 Treasury paper “Strengthening APRA’S Crisis Management Powers”.

 At page 5 clause 3.1(1) in FSB paper April 15, 2013 “Implementing the FSB Key Attributes of Effective Resolution Regimes – how far have we come?” it is stated that Bail-in legislation is in train in Australia.
 A progress report is shown on page 25 in a November 12, 2014 report by the FSB “Towards full implementation of the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions” 4.

The Financial Claims Scheme (FSC): The FSC would apply after a bank becomes insolvent whereas the Bail-in would be executed before this point is reached with the purpose of re-capitalising the bank to prevent insolvency.

Thus there is no guarantee over deposits that are bailed-in.
I am concerned that there is no guarantee in any case since it has never been activated, as admitted on the ‘FCS’ web site.

The Government or APRA clearly have the discretion to decide whether or not to activate the guarantee and thus must decide whether to protect depositors or to promote financial stability.
A 2012 Reserve Bank of Australia paper states that the priority of Regulators, mandated under Commonwealth legislation is to pursue financial stability and this suggests that the FSC will not be activated.

Even if activated, there would be little comfort because the Government are unlikely to be able to provide adequate funds, particularly after the ‘virus’ spend.
The shortfall was known from the outset Banking Amendment (Deposits) Bill 2020Submission 33 and in a June 19, 2009 meeting of Australia’s Council of Financial Regulators, it was noted in the minutes (page 2) that a failure of one of the big four banks would “exceed the schemes resources”.
In an FSB paper entitled “Peer Review of Australia”i September 21, 2011 it was noted (page 23, 3rd paragraph) that the Government’s $20 billion provision per bank “would not be sufficient to cover protected deposits of any of the major banks’, which each have more than $200 billion deposits.

Yours Faithfully William Ifield Banking Amendment (Deposits) Bill 2020Submission 33