Footnotes

Chapter 1 - Introduction

[1]        While they cover more than just banks and do not cover all external liabilities, the guarantees are commonly referred to as 'bank funding guarantees'.

[2]        Treasury, Submission 22, p 15.

[3]        Treasury, Submission 22, p 2.

[4]        RBA & APRA, Submission 7, p 1. A broadly similar account is given by Treasury, Submission 22, p 6.

[5]        Professor Milind Sathye, Submission 23, p 2.

[6]        Further information about measures taken by other countries is contained in Submission 9 from Challenger.

[7]        Australian Finance Conference, Submission 17, p 2.

[8]        The Hon Malcolm Turnbull MP, 'Responding to the international financial crisis', Media Release, 11 October 2008.

Chapter 2 - The deposit guarantees

[1]        Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, pp 10-11; Dr John Laker, Chair, Australian Prudential Regulation Authority, Estimates Hansard, 23 October 2008, p 7.

[2]        The Hon Malcolm Turnbull MP, 'Responding to the international financial crisis', Media Release, 11 October 2008.

[3]        RBA & APRA, Submission 7, p 1.

[4]        Professor Sathye notes 'Australia has the unique distinction of announcing an ‘unlimited guarantee’ from a ‘no guarantee’ situation'; Submission 23, p 2. Dr Ken Henry, Secretary, Treasury, gave evidence that, notwithstanding some media reports to the contrary, Treasury and the Reserve Bank were in agreement that the guarantee should be unlimited; Estimates Hansard, 22 October 2008, pp 16, 27 and 28.

[5]        Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, p 32.

[6]        RBA & APRA, Submission 7, p 10.

[7]        RBA & APRA, Submission 7, p 10.

[8]        Treasury, answer to question on notice sbt28, Supplementary estimates 2008-09. There are also further conditions; The amount guaranteed is limited to 110 per cent of the combined average value of short-term wholesale liabilities and deposits held by Australian residents in the 30 days up to and including 24 October 2008; branches cannot use guaranteed liabilities to directly support the parent bank or group (of which they are part) outside Australia; and the guarantee is only available if the liabilities are not guaranteed by the home authorities and the branch provides additional information about the parent bank’s prudential compliance. AFMA makes the case for allowing foreign banks to participate; Submission 20, p 4. See also Treasury, Submission 22, p 9.

[9]        Professor Ian Harper, Proof Committee Hansard, 14 August 2009, pp 43-4.

[10]      Professor Ian Harper, Proof Committee Hansard, 14 August 2009, pp 44.

[11]      RBA & APRA, Submission 7, p 2.

[12]      Finance Sector Union, Submission 11, p 2.

[13]      Herald-Sun, 17 June 2009, p 33.

Chapter 3 - The wholesale funding guarantee

[1]        Treasury, answer to question on notice sbt28, Supplementary estimates 2008-09.

[2]        Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, pp 23-24.

[3]        Dr John Laker, Chair, Australian Prudential Regulation Authority, Estimates Hansard, 23 October 2008, p 14.

[4]        Reserve Bank of Australia, Financial Stability Review, March 2009, p 9.

[5]        Professor Peter Swan, Proof Committee Hansard, 14 August 2009, p 2.

[6]        Mr David Martine, Treasury, Proof Estimates Hansard, 4 June 2009, p 25.

[7]        Treasury, answer to question on notice sbt28, Supplementary estimates 2008-09.

[8]        RBA & APRA, Submission 7, p 2.

[9]        Treasury, Submission 22, p 2.

[10]      RBA Financial Stability Review, March 2009, p 46.

[11]      RBA & APRA, Submission 7, p 4.

[12]      Treasury, Submission 22, p 13. See also table on p 14 of the submission.

[13]      BIS, 79th Annual Report, 2009, p 106.

[14]      Bank of Queensland, Submission 10, p 2. They elaborated at the hearing that the major banks exacerbated this impression by their advertising; Mr Ram Kangatharan, Chief Financial Officer, Bank of Queensland, Proof Committee Hansard, 14 August 2009, p 29.

[15]      Mr Degotardi, Abacus, Proof Committee Hansard, 14 August 2009, p 67.

[16]      Members Equity Bank, Submission 14, pp 1 and 4.

[17]      Mr David Bell, Chief Executive Officer, Australian Bankers' Association, Proof Committee Hansard, 14 August 2009, p 16.

[18]      FSU, Submission 11, p 1.

[19]      Professor Peter Swan, Proof Committee Hansard, 14 August 2009, p 2.

[20]      Mr Jim Murphy, Treasury, Proof Committee Hansard, 18 August 2009, p 4.

[21]      Professor Ian Harper, Proof Committee Hansard, 14 August 2009, p 44.

[22]      Professor Swan, Proof Committee Hansard, 14 August 2009, p 3.

[23]      Abacus (Australian Mutuals), Submission 19, p 4.

[24]      Professor Milind Sathye, Proof Committee Hansard, 14 August 2009, pp  9-10.

[25]      Proof Committee Hansard, 18 August 2009, pp 10-11.

[26]      Mr David Bell, Australian Bankers' Association, Proof Committee Hansard, 14 August 2009, p 22.

[27]      Australian Bankers' Association, Submission 24, p 7.

[28]      Abacus (Australian Mutuals), Submission 19, p 3.

[29]      Mr Ram Kangatharan, Chief Financial Officer, Bank of Queensland, Proof Committee Hansard, 14 August 2009, p 26. The Bank of Queensland argues that the regional banks have lower bad debts relative to loans than do the major banks; pp 26 and 29.

[30]      Mr David Bell, Australian Bankers' Association, Proof Committee Hansard, 14 August 2009, p 22.

[31]      Treasury, Submission 22, p 13.

[32]      Senator Barnaby Joyce, Proof Committee Hansard, 14 August 2009, pp 7, 11 and 32.

[33]      Mr Ram Kangatharan, Chief Financial Officer, Bank of Queensland, Proof Committee Hansard, 14 August 2009, p 33.

[34]      Professor Milind Sathye, Proof Committee Hansard, 14 August 2009, p 11.

[35]      Professor Warren Hogan, 'The bank deposit and wholesale guarantees of 12Ooctober 2008: an appraisal', Agenda, vol 16, no 2, 2009, pp 9-10.

[36]      Mr David Martine, Treasury, Proof Estimates Hansard, 4 June 2009, pp 24-25.

[37]      Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, p 75.

[38]      Dr Malcolm Edey, Assistant Governor, Reserve Bank of Australia, Proof Committee Hansard, 28 July 2009, p 26.

[39]      Treasury, Submission 22, p 30.

[40]      Australian Bankers' Association, Submission 24, pp 6-7.

Chapter 4 - The impact of the funding guarantees

[1]        Mr David Bell, Chief Executive Officer, Australian Bankers' Association, Proof Committee Hansard, 14 August 2009, p 16.

[2]        Westpac, Submission 6, p 2.

[3]        Bank of Queensland, Submission 10, p 2. They make almost identical comments about the wholesale funding guarantee.

[4]        Estimates Hansard, 23 October 2008, pp 20-21.

[5]        RBA Financial Stability Review, March 2009, p 27.

[6]        Mr Jim Murphy, Executive Director, (Markets Group), Treasury, Proof Committee Hansard, 18 August 2009, p 2

[7]        RBA Financial Stability Review, March 2009, p 29.

[8]        RBA & APRA, Submission 7, p 5.

[9]        Dr John Laker, Chair, Australian Prudential Regulation Authority, Estimates Hansard, 23 October 2008, p 5.

[10]      Dr John Laker, Chair, APRA, Estimates Hansard, 25 February 2009, p 158.

[11]      Dr John Laker, Chair, APRA, Estimates Hansard, 4 June 2009, p 58.

[12]      BIS, 79th Annual Report, 2009, p 120.

[13]      Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, p 66.

[14]      Dr John Laker, Chair, Australian Prudential Regulation Authority, Estimates Hansard, 23 October 2008, p 5.

[15]      Dr Sam Wylie, Submission 15, p 7.

[16]      Professor Peter Swan, Submission 21, p 5.

[17]      Professor Peter Swan, Proof Committee Hansard, 14 August 2009, pp 2 and 5.

[18]      The Hon Wayne Swan, Treasurer's media release, no 117, 24 October 2008.

[19]      Dr Malcolm Edey, Assistant Governor, Reserve Bank of Australia, Proof Committee Hansard, 28 July 2009. This emphasis on protecting the 'core' was echoed by Professor Ian Harper, Proof Committee Hansard, 14 August 2009, p 34.

[20]      Treasury, answer to question on notice, bet 166, Budget estimates June 2009.

[21]      Name withheld, Submission 1, p 1.

[22]      IFSA, Submission 8, p 2.

[23]      Challenger, Submission 9, p 5.

[24]      Australian Finance Conference, Submission 17, p 2.

[25]      Mr Richard Gilbert, Investment and Financial Services Association, Proof Committee Hansard, 28 July 2009, p 45.

[26]      Mr Richard Gilbert, Investment and Financial Services Association, Proof Committee Hansard, 28 July 2009, p 53.

[27]      Treasury, Submission 22, p 26.

[28]      Professor Milind Sathye, Submission 23, p 5.

[29]      Australian Bankers' Association, Submission 24, p 3.

[30]      Abacus (Australian Mutuals), Submission 19, pp 2-3.

[31]      Dr Malcolm Edey, Assistant Governor, Reserve Bank of Australia, Proof Committee Hansard, 28 July 2009, p 21.

[32]      Treasury, Submission 22, pp 4 and 26.

[33]      Dr Sam Wylie, Submission 15, p 8.

[34]      Members Equity Bank, Submission 14, p 2.

[35]      Mr Nicholas Hossack, Proof Committee Hansard, 14 August 2009, p 20.

[36]      Professor Ian Harper, Proof Committee Hansard, 14 August 2009, pp 39-40.

[37]      The Hon Malcolm Turnbull MP, 'Responding to the international financial crisis', Media Release, 11 October 2008.

[38]      Mr Chris Dalton, Chief Executive, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 47.

[39]      Mr Patrick Tuttle, Deputy Chairman, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 51.

[40]      Mr Neil Hyden, Chief Executive Officer, Australian Office of Financial Management, Proof Committee Hansard, 18 August 2009, p 8.

[41]      Aussie, Submission 12, p 2; Australian Finance Conference, Submission 17, p 4; Mr Ram Kangatharan, Chief Financial Officer, Bank of Queensland, Proof Committee Hansard, 14 August 2009, p 27; Mr Chris Dalton, Chief Executive, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 47.

[42]      Australian Finance Conference, Submission 17, p 4.

[43]      Mr Hossack, Australian Bankers' Association, Proof Committee Hansard, 14 August 2009, p 19. The ABA are not keen on such a guarantee if it extends to securities issued by non-ADIs.

[44]      Australian Securitisation Forum, Submission 26, p 2. See also Challenger Finance, Submission 9, p 30;  Mr Ram Kangatharan, Chief Financial Officer, Bank of Queensland, Proof Committee Hansard, 14 August 2009, p 27.

[45]      Professor Ian Harper, Proof Committee Hansard, 14 August 2009, pp 41-2.

[46]      Mr Chris Dalton, Chief Executive, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 55.

[47]      Professor Peter Swan, Proof Committee Hansard, 14 August 2009, p 7.

[48]      For example, Australian Securitisation Forum, Submission 26, p 2 and Submission 26a.

[49]      Mr Chris Dalton, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 51. Often the bonds are over‑collateralised; the security is over a larger amount of mortgages than the face value of the bonds.

[50]      Mr Chris Dalton, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 51.

[51]      Mr Tuttle, Australian Securitisation Forum, Proof Committee Hansard, 14 August 2009, p 57.

[52]      Tasmanian Department of Treasury and Finance, Submission 16, p 1. See also AFMA, Submission 20, p 4.

[53]      Senate Economics Legislation Committee, Guarantee of State and Territory Borrowing Appropriation Bill 2009 [Provisions], June 2009.

[54]      Mr Christopher Joye, Proof Committee Hansard, 28 July 2009, pp 7-8.

[55]      Dr Michael Peters, Submission 27, p 1.

[56]      Mr Jim Murphy, Treasury, Proof Committee Hansard, 18 August 2009, p 3.

[57]      Treasury, answer to question on notice sbt28, Supplementary estimates 2008-09.

[58]      Treasury, Submission 22, p 2.

[59]      Westpac, Submission 6, p 3.

[60]      See discussion in Proof Committee Hansard, 28 July 2009, pp 32-3.

[61]      Treasury, Submission 22, pp 2-3.

[62]      Westpac, Submission 6, p 2.

[63]      Suncorp, Submission 4, pp 1-2.

[64]      Dr Ken Henry, Secretary, Treasury, Estimates Hansard, 22 October 2008, p 67.

[65]      Australian Bankers' Association, Submission 24, p 4.

[66]      M Davies, C Naughtin and A Wong, 'The impact of the capital market turbulence on banks' funding costs', Reserve Bank Bulletin, June 2009.

Chapter 5 - The transition to a permanent scheme

[1]        Professor Ian Harper, Senior Consultant, Access Economics, Proof Committee Hansard, 4 August 2009, p 34.

[2]        Mr Glenn Stevens, Governor, Reserve Bank of Australia, Address to The Anika Foundation Luncheon,  28 July 2009.

[3]        Mr Jim Murphy, Treasury, Proof Estimates Hansard, 4 June 2009, p 26.

[4]        Professor Ian Harper, Senior Consultant, Access Economics, Proof Committee Hansard, 14 August 2009, p 35.

[5]        The poll was conducted for IFSA. Australian Financial Review, 7 August 2009, p 56.

[6]        Treasury, answer to question on notice sbt28, Supplementary estimates 2008-09.

[7]        RBA & APRA, Submission 7, p 2.

[8]        Westpac, Submission 6, p 2.

[9]        Mr Glenn Stevens, Governor, RBA, Proof House of Representatives Economics Committee Hansard, 14 August 2009, p 34.

[10]      Professor Peter Swan, Proof Committee Hansard, 14 August 2009, p 4.

[11]      Investec, Submission 5, p 3.

[12]      Investec, Submission 5, p 4.

[13]      AFMA, Submission 20, p 7.

[14]      Professor Milind Sathye, Submission 23, p 4.

[15]      IFSA, Submission 8, p 5.

[16]      Professor Milind Sathye, Submission 23, p 1.

[17]      Tasmanian Department of Treasury and Finance, Submission 16.

[18]      Mr Christopher Joye, Proof Committee Hansard, 28 July 2009, p 15.

[19]      Mr Mark Degotardi, Abacus, Proof Committee Hansard, 14 August 2009, p 60.

[20]      Mr Nicholas Hossack, Australian Bankers' Association,  Proof Committee Hansard, 14 August 2009, p 23.

[21]      Mr Chapman, APRA, Proof Committee Hansard, 28 July 2009, p 34.

[22]      Investec, Submission 5, p 4.

[23]      Bank of Queensland, Submission 10, p 3.

[24]      Mr Porges, Chief Executive Officer, Aussie, Proof Committee Hansard, 28 July 2009, p 65.

[25]      ANZ, Submission 18, p 4.

[26]      Australian Financial Markets Association, Submission 20, p 1.

[27]      Professor Fariborz Moshirian, Submission 25, p 5.

[28]      Mr Jim Murphy, Treasury, Proof Committee Hansard, 18 August 2009, p 17.

[29]      Dr Malcolm Edey, Assistant Governor, Reserve Bank of Australia, Proof Committee Hansard, 28 July 2009, p 20.

[30]      Hong Kong Monetary Authority, Press release, 22 July 2009.

[31]      Australian Financial Review, 7 August 2009, p 56.

[32]      Mr Jim Murphy, Executive Director, Treasury, Estimates Hansard, 22 October 2008, p 188.

[33]      Dr Sam Wylie, Submission 16, p 1.

[34]      Professor Quiggin comments: 'the Committee's 1996 discussion paper did suggest looking at deposit insurance, but the idea was howled down so effectively that it made no appearance in the final recommendations'; Submission 3, pp 6-7.

[35]      RBA Financial Stability Review, September 2008, p 59.

[36]      RBA Financial Stability Review, March 2008, p 65.

[37]      RBA Financial Stability Review, September 2008, p 59. The scheme was to work as follows; 'the Scheme would be administered by APRA, with the necessary payments initially being funded by the Government. APRA, on behalf of the Commonwealth, would also be able to borrow from the Reserve Bank for the purpose of the Scheme. APRA would then have first claim over the assets of the failed entity. Only in the highly unlikely situation that APRA was unable to recover the full cost of the Scheme through the sale of the failed ADI’s assets, would an industry levy be required.'

[38]      RBA Financial Stability Review, March 2009, p 43.

[39]      AFMA, Submission 20, p 6.

[40]      Reserve Bank of Australia, Financial Stability Review, March 2008, p 65.

[41]      Hoelscher, Taylor and Klueh, The Design and Implementation of Deposit insurance Systems, IMF Occasional Paper 251, 2006.

Labor Senators' Dissenting Report

[1]        Submission 22, p5

[2]        Submission 22, p6

[3]        Ibid, p7

4           RBA & APRA, Submission 7, p 4.

[5]

Minority Report by Senator Xenophon

[1]        Joint submission from the RBA and APRA, Submission 7, pg 1

[2]        Joint submission from the RBA and APRA, Submission 7, pg 1

[3]        Joint submission from the RBA and APRA, Submission 7, pg 1

[4]        Professor Milind Sathye, Submission23, pg 2

[5]        Abacus-Australian Mutuals, Submission 19, pg 4

[6]        Financial Sector Union of Australia, Submission11, pg 3

[7]        Financial Sector Union of Australia, Submission11, pg 2

[8]        Dr Sam Wylie, Submission 15, pg 7

[9]        Professor Milind Sathye, Submission23, pg 2

[10]      Professor Peter Swan, Submission21, pg 2

[11]      Professor Peter Swan, Submission21, pg 5

[12]      Professor Milind Sathye, Submission23, pg 1

[13]      Hong Kong Monetary Authority, Press Release, 22 July 2009

[14]      Bank of Queensland, Submission 10, pg 3

[15]      Investec, Submission 5, pg 4

[16]      Financial Sector Union of Australia, Submission11, pg 3

[17]      Financial Sector Union of Australia, Submission11, pg 2