by Dr. Andrew D. Schmulow
The Conversation, (2016), published electronically.
While ASIC has failed spectacularly to enforce the law to prosecute corrupt banks, regulators in the UK and the U.S. have brought guilty bankers to trial and collected massive fines. The University of WA’s Andrew Schmulow reports.
THE TURNBULL GOVERNMENT’S new laws to tackle manipulation of the bank bill swap rate may seem like a crackdown on badly behaving bank employees, but in reality the Australian Securities and Investments Commission (ASIC) hasn’t used the full force of the law in the past to prosecute.
So perhaps it’s time Australia followed the lead of the U.S. and the UK who are really using law to hold banks to account.
The bank bill swap rate (BBSW) is used to set rates on hundreds of trillions of dollars worth of transactions, including interest rates on credit cards, student loans and mortgages.
Banks also use the swap rate to determine the cost of borrowing from one another.
Three of Australia’s big four banks – ANZ, Westpac and NAB – were accused of manipulating this rate. These latest measures, which include civil and criminal liability for bankers found guilty, come six years after the scandal first broke.
This article first appeared in The Conversation. Also published in Independent Australia (Title: ‘New laws on bank malpractice useless in light of ASIC’s spectacular inaction‘).