Real Wealth Opinion
Posted on June 8th, 2016 at 11:02 AM by David Orth
It must be really confortable at the top. Making billions from the tears of customers, manipulating markets and issuing sub-standard financial advice – these are just some of the perks of being one of the big 4.
You see with the big 4 it doesn’t really matter what you do as you can afford the slap on the wrist. They’re not going to close you down at the risk of ruining the country’s economy. The better course of action it would seem is to see what you can get away with. Then – IF - you’re caught doing the wrong thing, it doesn’t matter, you pay for the watchdog that polices you anyway.
We’re of course referring to ASIC’s 120 million dollar boost paid for directly by the banks – that’s “definitely not going to be passed onto the customers”. That must have been really hard for the banks PR agents to say with a straight face.
This time it’s NAB for unconscionable conduct and market manipulation in relation to setting the bank bill swap reference rate (BBSW). ASIC’s announcement read:
“It is alleged that NAB traded in a manner that was unconscionable and intended to create an artificial price for bank bills on 50 occasions during the period of 8 June 2010 and 24 December 2012.”
“ASIC alleges that on these days NAB had a large number of products which were priced or valued off BBSW and that it traded in the bank bill market with the intention of moving the BBSW higher or lower. ASIC alleges that NAB was seeking to maximise its profit or minimise its loss to the detriment of those holding opposite positions to NAB's.”
Don’t be naive enough to think that NAB was the only offender. ANZ and Westpac face similar action from manipulating the BBSW rate.
There are even excerpts of recorded phone calls of Westpac traders openly discussing how “f---ing with the rate set” could hurt some customers and ultimately the banks reputation should an inquiry ever be conducted.
That last paragraph is very important - read it again. What this suggests to us is they were fully aware that it could hurt the banks reputation should there be an inquiry – which implies that they knew it was unconscionable. Worse still, they knew it could hurt their own customers – but did it anyway.
Just to rub salt into the wounds Westpac is defending the action and the traders responsible are still employed at the bank.
The suggested fine for such manipulation is around 1 million for each transgression, meaning a suggested 16 million for Westpace and 44 million for ANZ. Chump change. If you’re a customer of these banks and they’re found guilty – you’ll be the chump.
Our earlier statement of being very comfortable at the top doesn’t seem so outrageous anymore does it?
Like an un-disciplined child this merry-go-round of seeing what they can get away with, getting caught, and a slap on the wrist continues. As it’s always a few years after the fact, we look forward to seeing what they’re up to now in 2020.