BAN BANKS’ DERIVATIVE PLAY, URGES EXPERT James Eyers Coverage Of Daisuke Kotegawas Trip To Australia In The Australian Financial Review, 6 March. A former deputy director of Japan’s Ministry of Finance told federal parliamentary backbenchers in Canberra on Wednesday that Australia’s banks should be stopped from trading in derivatives and conducting other investment b-m King-style activity, and the implementation of the G20s agenda to bail-In failed financial institutions should be halted. DAISUKE KOTEGAWA, who is also a former director of the Canon Institute for Global Studies in Japan, said he had been quite shocked about the decision of the G20 countries to introduce the so-called ‘bail in’ policy, which will surely damage depositors confidence in the financial system.” At the recent G20 meeting in Sydney, finance ministers and central bank governors decided to pursue rules to force the costs of bank failures onto bank bondholders and, potentially, depositors. In Australia, the government’s financial claims scheme protects deposits in authorised deposit-taking institutions, but only up to $20 billion per ADI (unless Parliament approves an increase). Banks hold deposits far in excess of this cap. Mr Kotegawa said it was anathema for depositors to potentially pay for losses from derivatives trading. The discontinuation of the Glass Steagail law in the US, which separated commercial and investment banking, in 1999 had allowed investment bankers to gamble on deposits collected through commercial banking arms” and presaged the financial crisis. Investment bankers can gamble all they want but without using deposits from the commercial banking system.” Mr Kotegawa was brought to Canberra by the Citizens Electoral Council, a far right political party affiliated with the LaRouche Movement in the United States, which has been advocating the re-introduction of Glass-Steagall since the financial crisis. Robert Barwick, an executive member of the CEC, which also advocates recreating a national banks, said white the government was proceeding with implementing the G20 agenda on bank bail-ins “we are trying to get people to focus on the global movement for an alternative that is simpler and doesnt risk people’s livelihood, like the bail-in did when it was applied in Cyprus.” Mr Kotegawa said when he ran the liquidation of Japan’s fourth largest investment bank, Yamaichi Securities, in 1997, the government decided to unwind the banks cross-border derivatives transactions over a weekend, and this had prevented contagion spreading through the global markets. This would have been a preferable approach for sorting out the collapse of Lehman Brothers in 2008. Two bills before the US legislature are seeking to reinstate Glass-Steagall in its entirely. In the UK, former chancellor of the exchequer under Margaret Thatcher, Nigel Lawson, is also campaigning for a Glass-Steagall-style separation of banks there; a provision to this effect was narrowly defeated in a House of Lords vote in November, Mr Barwick said the CEC had been engaging with backbenchers in Parliament’s economic committee processes, and some had been receptive. “People don’t need us to convince them this Is a serious issue,” he said.
Posted on: Thu, 13 Mar 2014 05:55:06 +0000
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