I'm unfortunately very short on time this morning so this will not be as comprehensive a post as I would have liked. It's still important however for me to write it.
Something very important and fundamental to the safety of cash deposits in Australia happened this month yet you wouldn't have known it unless you really had your ear to the ground.
I only spotted it on two outlets; The Citizens' Electoral Council's YouTube channel (available below) and on Ainslie Bullion's daily news found here. I'll be referencing the latter resource heavily.
It may surprise the individual to learn how flippantly laws are passed under our parliamentary model. The assumption is that bills are researched and debated. The reality is a small number of old and disinterested men who often haven't read the bill being voted on murmur quasi-audibly which constitutes a vote that can have broad ramifications. I encourage you to watch the full video below for a more articulate description from Robert Barwick who actually attended the passing of this bill.
The reality is that the Australian government has gone to great lengths to word the Financial Sector Legislation Amendment (Crisis Resolution Powers And Other Measures) Bill 2017 in such a way so as to not exclude consumer bank deposits from bail-in. The bill was passed a week ago in the presence of only seven senators.
From the article linked above:
The legislation allows our banking regulator APRA ‘crisis powers’ to secretly step in and run distressed banks. It allows APRA to then confiscate and write off certain types of bonds and hybrid securities and allows them to confiscate cash savings of SMSF’s. Whereas elsewhere around the world, including our neighbours New Zealand, they specifically include the confiscation of depositors’ funds (savings), the Aussie version just cleverly doesn’t specifically exclude that….
The financial guarantee provided by the government for up to $250,000 per ADI (Authorise Deposit-taking Institution) worth of deposits in this country is something that many I know personally rely on for a degree of complacency. I've heard enough about the particulars of this "guarantee" to be concerned. One of the most glaring problems is the fact that the scheme is not designed to function under a systemic event (more than one institution failing at once). In our connected world and with the examples we've seen only one decade ago, it's likely that any event will not happen in isolation.
I'm no fan of the banks but my level of confidence in deposits now is at a personal record low. I strongly encourage anyone with any sort of savings in the form of bank deposits to read this article and watch the video below. It may be the best investment of time you make. Then ask yourself...