Pressure is continuing to ramp up for a Royal Commission into unethical banking behaviour.
The Opposition Leader Bill Shorten wants the government to consider the option while some Coalition and Labor backbenchers think it's the only way of getting to the truth.
Liberal MP Warren Entsch says Australians have lost faith in the integrity of the banking system, accusing banks of "bastardry and blackmail".
Mr Entsch's comments follow similar calls from Nationals senator John Williams and Labor senator Sam Dastyari.
Listen to my report from The World Today broadcast on the ABC.
Follow the ABC's Peter Ryan. Analysis of global and Australian business, finance and economics.
Friday, April 8, 2016
Thursday, April 7, 2016
Bank of Queensland surprises customers with rate hike
Bank of Queensland cites tougher regulatory requirements for announcing a rate increase on owner-occupied and investor home loans from 15 April.
Listen to my report from The World Today on the ABC.
Listen to my report from The World Today on the ABC.
Older and casual workers in Aust more vulnerable in mass layoffs, warns OECD
Older workers and casual and part-timers are
more likely to be laid off as Australia's manufacturing industry continues to
shrink, according to a global report out this morning.
The warning comes from the Paris-based Organisation for Economic Cooperation and Development (OECD) which says older
Australians struggle the most to find a new job which is usually much lower
paid.
The OECD's call to improve services for laid
off workers comes as the steel maker Arrium announced it was going into
voluntary administration, putting the future of its Whyalla steel operations in
further jeopardy.
The author of the OECD's study into
Australian layoffs, Christopher Prinz, told the ABC's AM program that
better employment services were needed for laid off workers, in particular
older ones.
"It's not only older people who are
affected but what we do still continuously find is if it is older people who
are laid off, they have a much harder time to find back into the labour
market," Mr Prinz said.
"These are people who have had good jobs
for a long time and all of a sudden, unprepared, they need to find a new job
and that is not straight forward."
The OECD's report comes as local
manufacturing remains under pressure, especially with the Australian dollar
remaining well above 70 US cents despite official interest rates at the
historic low of two percent.
The concerns also coincide with the demise of
Australia's car industry as Holden, Ford and Toyota prepare to close local
operations over the next two years.
"These are exactly the cases in which
some policies are in place to help people who lose their jobs because of bigger
restructurings and the big mass layoffs," Mr Prinz said.
"We are getting older and older the age
from which you are considered like an older worker hasn't really changed but
partly it is to do with the fact that there are people who have been out of the
education system nevertheless for 25 years and therefore, of course, given how
fast things develop, their skills might be outdated."
The OECD report says the current flashpoints
in Australia include manufacturing and the forestry industry in Tasmania.
Mr Prinz told AM that laid off workers
needed special services from government to unsure that are appropriately
skilled for new roles.
"I think it's really about anticipating
change, about preparing people for change, about up skilling people all the
time not only once they have lost their jobs".
Wednesday, April 6, 2016
Westpac to "vigorously defend" rate rigging allegations; trader says actions "completely wrong"
Westpac has become the latest of big four banks to become embroiled in a financial scandal.
The corporate watchdog ASIC is taking Westpac to court alleging it rigged a key market interest rate over a two year period - another dent in the credibility of the banking sector.
The scandal confronting Westpac follows similar rigging allegations recently levelled at the ANZ while the Commonwealth Bank is in damage control over unethical behaviour at its insurance arm, CommInsure.
It sounds like financial jargon but the bank bill swap rate, or the BBSW, is the rate set in a five minute window every day that determines what banks charge to lend to each other.
For banks it can mean hundreds of millions or billions of dollars in profit. For regular people it sets benchmark rates on corporate loans, business loans, mortgages and credit cards.
Listen to my report from this morning's edition of AM
The corporate regulator ASIC alleges Westpac manipulated the BBSW for two years between April 2010 and June 2012.
In a statement of claim filed with the Federal Court ASIC accused Westpac of a pattern of behaviour that amounts to unconscionable, misleading and deceptive conduct.
Source: ASIC statement of claim |
Westpac's trading had the effect or likely effect of causing the 30 day BBSW to set at a rate which did not reflect genuine forces of supply and demand and of creating an artificial price.
ASIC interviewed around 50 Westpac staff and cites recorded telephone conversations illustrating the high stakes pressure on traders who allegedly push the limits, including this one from Colin Roden, Westpac's managing director of group treasury who is quoted as saying he "knew it was completely wrong":
Source: ASIC statement of claim |
The Westpac allegations follow similar action ASIC is taking against the ANZ Bank over the alleged rigging of the bank bill swap rate.
The National Australia Bank and the Commonwealth Bank have been damaged in unrelated scandals involving unethical financial planning, while the CBA is reeling from claims of unethical behaviour at its insurance arm, CommInsure.
Westpac has responded cautiously and says it will vigorously defend itself against ASIC's rate rigging allegations.
Source: Westpac statement |
Nationals Senator John Williams has been crusading against the big banks since his election in 2008 and he says a royal commission into banking bad behaviour is now critical.
"When I was a young fellow back in the 70s, when I first started work, the bank manager was probably the most trusted person in your town and community. I don't think that's the case today," Senator Williams told the ABC's AM program.
"As time goes by the case builds stronger and stronger in my opinion for a royal commission into the finance sector.
"My concern is the culture is simply profit, profit, profit and to hell with the customers".
Tuesday, April 5, 2016
APRA boss says no room for complacency about new GFC
The chairman of the Australian Prudential
Regulation Authority has warned Australia should not be complacent about its
ability to dodge another global financial crisis.
Wayne Byres told a conference in Sydney that
after the build-up to the Wall Street meltdown in 2008, the regulator is now
more active and prepared to intervene.
Mr Byers, who was not APRA chairman until
2014, had a sombre reality check about his mission to maintain a resilient
banking system in Australia as the fallout from the GFC continues to resonate
around the world.
"We shouldn't kid ourselves that the
worst of the problems elsewhere couldn't occur here or that there hasn't been a
healthy dose of luck involved," Mr Byres said.
"We can't be complacent. After 25 years
of economic expansion, it would be a surprise if the banking system wasn't in
good shape.
"But put simply, when adversity arrives
- and at some point it will - we want the banking system to help alleviate
rather than exacerbate problems. Ideally it’s a shock absorber not an
amplifier."
Mr Byres also responded to last night's 7.30
program which revealed secret APRA documents from 2007 show that lax lending
standards by banks could have could a serious question or a banking crisis.
In response to questions from the ABC, Mr
Byres signalled the regulator had ramped up its supervision of bank lending
standards between 2007 and now saying some of the issues were "eerily
similar".
"I don't think the issues were all that
different but broadly speaking the issues that were on the radar screen then -
buoyant housing lending, commercial property lending standards - are all things
that are on our agenda again.
"This time around we've been a bit more
active and interventionist maybe than we were last time but I don't think the
issues have particularly changed that much."
The former Treasury secretary, now chairman
of the National Australia Bank, Ken Henry agreed Australia remained exposed to
a new global shock.
And he revealed that in scenario planning in
the lead up to the Wall Street collapse, the potential meltdown of the global
financial system was not seen as a real possibility and that being locked out
of financial markets was the main concern.
"We asked ourselves the question -
in what circumstances could that worry cause a real problem for Australia. And
we came up with one and we thought it was so left field that there was no point
worrying about it," Mr Henry told the conference.
"And you know what it was? A meltdown of
the global financial system. This remains a risk for Australia and our
best protection is a strong public sector balance sheet, that's our best
protection."
Monday, April 4, 2016
Lifestyle expectations exceed economic reality, MLC survey shows
With the government likely to make tough decisions on superannuation in
next month's Budget, more Australians are worried they won't be able to pass on
today's lifestyles to their children.
A survey by the National Australia Bank's wealth arm MLC shows almost
two-thirds of Australian believe the next generation will never be able to buy
their own homes.
Around half of the two thousand people surveyed don't think they can
sustain their own standard of living in a decade's time and a fifth are relying
on a family inheritance to pay off their mortgage.
MLC chief executive Andrew Hagger says expectations that future
generations will do better than today's taxpayers is fast fading.
"We know that maintaining our lifestyle and financial security are
our top priorities for Australians. However, Australians are telling us they
are worried," Mr Hagger said.
"There has always been the expectation that future generations
will do better than us. Yet these findings paint a different picture. It's
concerning to see so many people worried about how their children will afford
their own homes and live a comfortable lifestyle."
The MLC survey shows:
* two-thirds of Australian parents don't believe their children won't
achieve the same lifestyles as them
* almost 1 in 5 Australians are relying on the family inheritance to
pay off their mortgage
* more than a third of Australians believe they will be relying on the
Australian government during retirement
MLC's general manager of corporate super Lara Bourguignon says the
research indicates the lifestyles of the baby boomer generation are no longer
sustainable.
"The cost of living and the mortgage absolutely rule our financial
lives," Ms Bouguignon told the ABC's AM program.
"Many worry that today's young people will struggle to build the
same kind of life that their parents generation has enjoyed."
Ms Bouguignon said that without structural change and lower
expectations, standards of living could slide over time.
"Twenty years of economic prosperity has been led by the mining
boom. Australians are aware the mining boom has tapered out and they're not yet
confident where that next wave of growth is coming from."
Ms Bouguignon says the federal government needs to confront hard
decisions in the May 3 budget and that the funding of retirement needs to be a
national priority.
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