Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646270614.pdf (Australia)
My Name: Anthony B Cole Principal Qualifications: I have had twelve years of successful study (i.e.

no failures or repeats) at Australian universities.

My studies have included a major in sociology in which I specialised in criminology, at which time I was introduced to the study of white collar crime.

My main discipline of study has been psychology.

I am a registered psychologist and am both an accredited clinical psychologist and an accredited organisational psychologist.
My interest in the dysfunction, malfeasance and criminality of governments, international financial institutions and large international banks and domestic banks has increased considerably over the last two decades.

Since the passage of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2018 my concern about these matters has been further heightened.
Below is my submission to the Australian Senate's Economics Legislation Committee concerning the Banking Amendment (Deposits) Bill 2020.

This submission is in support of the Banking Amendment (Deposits) Bill 2020.

I ask that this committee hold public hearings concerning this bill at which expert testimony from persons such as John Adams (economist), Wilson Sy (former principal researcher at APRA) and Martin North (banking analyst) can be publicly heard by this committee.
It is claimed this bill is unnecessary because, it is said by the government, legislation currently enacted does not permit the "bail-in" of ordinary bank deposits, such as savings account deposits, trading account balances, cash management account balances, term deposits, cheques account balances, etc.
If that claim by the government is correct the aforesaid bill is at worst redundant and will not alter or adversely affect what the government claims is the current legal situation, and thus there is no strong reason for the government to oppose it.
On the contrary, if the government's aforesaid claims are correct one would Banking Amendment (Deposits) Bill 2020Submission 162 expect the government to support the bill with at least mild enthusiasm for the bill will help restore waning confidence among the Australian people in Australian Authorised Deposit-taking Institutions (AADIs) in general and in banks in particular.
It might be noted in passing that the recent banking royal commission has given bank customers strong grounds for doubting that banks can be trusted to act in the interests of their customers.

HOWEVER, there is legal and other well informed opinion and very strong circumstantial evidence that currently enacted legislation does permit "bail- in".

(See Appendix 1: "Reasons for believing current Australian legislation permits bail-in".)
ALSO, close examination makes clear that even if an AADI's customer's "terms & conditions" do not currently allow "bail-in", at the direction of the Australian Prudential Regulation Authority (APRA) an AADI can change those "terms & conditions" at VERY short notice, such as for example after 5pm on a Friday, with the consequence that altered "terms & conditions" permitting "bail-in" are in effect before 9am on the following Monday.
It is claimed by the government and various AADIs that currently deposits of $250,000 per person per AADI are protected by the Financial Claims Scheme (FCS).

HOWEVER, as senators know, that is NOT the case.

Whilst there is a PLAN for such protection, the very rules of the FCS state that it must first be "activated" before that protection applies.

The FCS is not currently "activated"; thus there is currently no protection.

Currently there is only a PLAN for protection.


Currently it is entirely at the government's discretion as to whether it ever puts the plan into effect!

--- The FCS (to protect deposits) is designed to be implemented AFTER an AADI has failed.

"Bail-in" is a procedure designed to be applied BEFORE an AADI has failed; the express purpose of "bail-in" is to ensure an AADI does not fail.
Thus if "bail- in" has succeeded in its goal of preventing a tottering AADI failing the FCS (to protect deposits) will not be triggered (because the AADI has not failed)!

Thus a FCS which has not been triggered cannot possibly protect deposits which have already been "bailed-in".
Banking Amendment (Deposits) Bill 2020Submission 162 Consequences of not passing the bill * Public confidence in AADIs will be further undermined, at a time when confidence in the financial soundness of AADIs is reducing, with the consequence that more money will be moving out of bank deposits.

Some depositors have already begun moving some of their money out of banks due to an increasing erosion of confidence in the financial resilience of banks.
Consequences of passing the bill * Passage of this bill can reasonably be expected to reduce the rate and extent to which people withdraw money from the banking system.

It might even lead to a reversal of the aforementioned out-flow.

As such it can be expected to have a stabilising influence on the Australian banking system.
* Passage of this bill can reasonably be expected to conduce to a greater level of business and consumer confidence than its non passage -- something especially desirable as Australia enters its greatest economic down turn since the Great Depression.

Reducing the amount of decline in consumer confidence will contribute to reducing the severity of this depression.

Worth Noting * "Bail-in" has already happened in Australia, in Victoria in 1892; at that time "bail-in" was termed "reconstruction".
* "Bail-in" has been applied recently, in Cypress in 2013.

* "Bail-in" is clearly permitted in many other countries with which Australia might be compared, such as NZ, Canada, UK, USA & the EU.

* Not only is "bail-in" permitted in NZ, but NZ has publicly displayed legislated "bail-in" provisions.
(vide inter alia https://www.rbnz.govt.nz/regulation-and- supervision/banks/open-bank-resolution and many additional links on that page giving further detail and clarity) which provide an exemplary model of clarity & transparency, totally lacking in ambiguity.

A minimally thinking person might wonder why the Australian government elects not to engage with its public with similar candour and clarity.
Appendix 1: Reasons for believing current Australian legislation permits bail-in * At law, bank depositors are merely "unsecured creditors".

* In 2009 Australia (as a member of the G20) directed the Financial Stability Stability Board (FSB), of which Australia is member, to develop a mechanism to "resolve" future banking crises, via a Banking Amendment (Deposits) Bill 2020Submission 162 mechanism which would not involve the bailing-out of financially tottering banks by governments or central banks.
In response the FSB came up with the "bail-in" mechanism, which this bill seeks to thwart.

(Vide https://www.fsb.org/work-of-the-fsb/policy-development/effective-resolution- regimes-and-policies/key-attributes-of-effective-resolution-regimes-for-financial-institutions/) * The FSB states "An effective resolution regime ..... should" ... "allocate losses to firm owners (shareholders) and unsecured and uninsured creditors...".
* The Australian government, as a member of the G20 Heads of States and Government, subsequently endorsed the "Key Attributes of Effective Resolution Regimes for Financial Institutions" at the Cannes Summit in November 2011 as “new international standards for resolution regimes”.
* The Australian government gave effect to this "resolution" mechanism, which in 2011 it had endorsed, by means of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018, which was passed unexpectedly (some say by ambush) with not more than eight senators in the chamber.

* The FSB's prescribed "resolution" mechanism -- a mechanism Australia had already endorsed -- was used to "bail-in" bank deposits in Cypress in 2013.
* Under the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018, under "Subdivision B—Conversion and write-off provisions" it clearly states: "conversion and write-off provisions means the provisions of the prudential standards that relate to the conversion or writing off of: (a) Additional Tier 1 and Tier 2 capital; or (b) any other instrument."

* Legal opinion says "any other instrument" can include unsecured loans to a bank, which is precisely what deposits are!
* The government says deposits cannot legally be "bailed-in" in Australia, yet that is precisely what it endorsed at the Cannes Summit in November 2011!

* Note that a "key attribute" of the FSB's bank crisis "resolution" scheme, endorsed by the Australian government, is that it "should" "allocate losses to firm owners (shareholders) and unsecured and uninsured creditors".

Bank depositors are unsecured creditors!


* The essential raison d'être of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2018 was to give effect to FSB's bank crisis "resolution" scheme which permits "bail-in" -- a scheme endorsed by the Australian government in 2011!

End of Submission Banking Amendment (Deposits) Bill 2020Submission 162