Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697646614173.pdf (Australia)
Senators, I write to lend my support to the growing opposition to APRAS proposed Banking Crisis management Bill.

You will be aware it makes no mention of the words Bail In, which I find as astonishing as I find it deceptive.

The way the bill is written, is quite vague regarding the actual extra powers APRA are asking for in the case of another banking Crisis.
Clearly a Bail In option will not protect everyday depositors, but will allow the banks to continue to gamble with derivatives etc, knowing our savings will be available to bail them out.

Only Glass Steagall will separate general banking from commercial and speculative aspects of banking operations.
Before any decision is made the following questions must be asked and answers obtained, otherwise I fear the Bill will become a simple mechanism for the banks to continue to gamble speculatively secure in the knowledge our hard earned savings will bail them out.

Please find acceptable answers to the following questions, on the topics listed or vote down the Bill or alternatively ensure we the people are protected by Glass Steagall.. John D Marsh 1.
Hybrid securities APRA can order a conversion or write off “despite any impediment there may be … in any domestic or foreign law … other than a specified law”.

(Emphasis added.)

This particularly applies to hybrid securities, which can automatically convert into shares, based on triggers buried in the fine print of the contracts, or which APRA can order to be converted, i.e.

bailed in.
bailed in.

Because APRA has allowed the banks to sell $43 billion worth of these hybrid securities to hundreds of thousands of Australian retail investors who are unlikely to understand they can be bailed in, it should be possible, under the provisions in the Trade Practices Act that protect consumers from misleading conduct, for a court to set aside a conversion, including an APRA conversion order.
The changes to existing legislation contained in this bill mean that APRA does not need to consider those issues (or any other) in relation to conversion and write-off of hybrid instruments.

Question: Will APRA’s powers override the provisions in the Trade Practices Act that protect consumers from misleading conduct, and stop courts from blocking conversions of hybrid securities if the investors were demonstrably misled about the risks?

2.
2.

‘Other instruments’ The Banking Act provides that APRA can determine Prudential Standards that are binding on all Authorised Deposit-taking Institutions (ADIs i.e.

banks, building societies, credit Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 [Provisions]Submission 24 unions, etc.

), and when APRA issues a new Prudential Standard it does so under the authority of the Banking Act, i.e.

it does not require new legislation.


Section 11CAA of the new APRA bill defines that “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 [which categories include shares, cash, subordinated debt and hybrid securities]; or (b) any other instrument.

…” (Emphasis added.)


Question: What other “instruments” may APRA be empowered to include in its prudential standards for conversion or write-off?

3.
3.

Deposits Since 2003 APRA has had the power to order a bank not to repay deposits under certain conditions, including if: “there has been, or there might be, a material deterioration in the body corporate’s [bank’s] financial condition”; or “the body corporate is conducting its affairs in a way that may cause or promote instability in the Australian financial system”.

The APRA bill strengthens this section of the Banking Act.
Moreover, since 1 January 2013 APRA’s prudential standards have incorporated the provisions of the Bank for International Settlements’ (BIS) Basel III global regulatory framework on bank capital adequacy.

These include “that AT1 and T2 capital instruments must be written-off or converted to ordinary shares if relevant loss absorption or non- viability provisions are triggered”.
The Explanatory Memorandum of the APRA bill states that it allows for future changes to the prudential standards to expand the meaning of “capital” for conversion or write-off?

“5.14 Presently, the provisions in the prudential standards that set these requirements are referred to as the ‘loss absorption requirements’ and requirements for ‘loss absorption at the point of non-viability’.
The concept of ‘conversion and write-off provisions’ is intended to refer to these, while also leaving room for future changes to APRA’s prudential standards, including changes that might refer to instruments that are not currently considered capital under the prudential standards.” (Emphasis added.)

A legal expert noted to the CEC: “It is a relatively smaller step to then convert or write-off what the ADI has been prohibited from paying out [i.e.

deposits].
deposits].

… Unless there was a prohibition in the Bill against the making of any determination to declare deposits to be capital capable of conversion or write-off, the worry would be that APRA could make such a determination.” Question: Given that APRA can already order banks not to repay deposits, will APRA now have the power to declare deposits to be capital, and order they be converted or written off, i.e.

bailed in?
bailed in?

Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 [Provisions]Submission 24