The belated decision by the Australian Prudential Regulation Authority (APRA) to set up a public inquiry into the Commonwealth Bank (CBA) is aimed at heading off the growing calls for a royal commission into the entire scandal-ridden banking sector.
The August 27 announcement by APRA of an “independent” probe into the country's biggest bank followed a series of scandals that have rocked the financial world.
After a sustained public outcry over CBA rip-offs in the financial advice and insurance areas, the last straw for the financial services regulator was allegations by the financial intelligence agency AUSTRAC that CBA committed “serious and systemic non-compliance”, 54,000 times, with the laws covering money laundering.
CBA faces fines of about $300–500 million arising from the money-laundering charges. It could face even heavier penalties if international regulators investigating illegal transfers involving foreign currencies place charges.
Foreign regulators have traditionally been harder on their banks than their Australian counterparts with billions of dollars in fines being imposed in recent years.
APRA chairperson Wayne Byres said the aim of the inquiry into the CBA was “to identify any core organisational and cultural drivers at the heart of these issues and to provide the community with confidence that any shortcomings identified are promptly and adequately addressed”.
The APRA inquiry could start with the fact that the CBA’s recently announced 2016–17 profit of close to $10 billion represents one of the biggest swindles by a private corporation in history. The inquiry could reveal that the “organisational and cultural drivers at the heart of these issues” are the very existence of a set of private profit-based banking and financial institutions, which depend on ripping off the public as their basic mode of operation.
In practice, it probably won’t.
The inquiry smacks of desperation by a federal government that has nowhere to go after rejecting a royal commission into the banks.
Federal Treasurer Scott Morrison said the inquiry was “preferable” to a royal commission. This raises the question: preferable for whom? The banks? The government? Certainly not CBA customers.
Previous regulatory inquiries into the banks have been secret, lacked real transparency and delivered little more than a rap over the knuckles to the Big Four banks.
That both the government and CBA management have welcomed the APRA inquiry is a clear sign “Australia's leading bank” is not too worried about the outcome of this inquiry either. CBA has even agreed to pay for the inquiry into itself!
Federal Opposition Leader Bill Shorten described the move as yet another inquiry into the banks: “When will the Turnbull government finally do what it knows needs to be done ... which is to have a royal commission into our banks,” he said on August 28.
Even an editorial in the August 29 Age was headlined: “Australian government wrong to resist royal commission into the banks.” The editors wrote: “Australia's big banks are expecting to face a royal commission some time in this or the next term of government, if momentum is maintained.”
In light of the growing public pressure for a full royal commission into the crimes and rip-offs of the Big Four banks, it is important that the truth about their operations be revealed to the community. The establishment of a royal commission into the banks, with full powers to compel bank executives to testify, is essential.
With the CBA and the other members of the Big Four on the defensive, now is the time to start a widespread community campaign to take the major banks into public hands. Slightly tighter regulation of these corporate vampires is clearly not enough.
We need to demand the nationalisation (or re-nationalisation in the case of the CBA) of the major banks under community and workers’ control to utilise their massive resources for the public good — including investment in health, education, public transport and renewable energy.