Australian banks in secret U.S. Fed reserve bail-out..we didnt get told that!

http://ozhouse.org/2011/09/22/oz-banks-in-secret-u-s-fed-reserve-bail-out/

The Australian mainstream financial press persistently reassures us that Australia’s banks are amongst the strongest in the world.

The Australian Financial Review reassures us that Australia does not have the solvency issues crippling U.S. and European economies. Australia boasts excellent prudential regulation backed by a vibrant economy. Well that’s what the politicians and economists tell us. But in December 2010, Australia’s Money Morning, an Australian market news forum reported an economic scenario and outlook in stark contrast to the mainstream media’s spit and polish.

The report states after the global financial markets collapsed in 2008, a secret bailout of two of Australia’s biggest banks occurred. In order to avoid a collapse of the Australian banking, two of Australia’s biggest banks secured secret loans from the US Federal Reserve.

National Australia Bank [ASX: NAB] borrowed USD$4.5 billion from the US Federal Reserve and Westpac Banking Corp [ASX: WBC] borrowed USD$1.09 billion in January of 2008 and 2009. Westpac and NAB needed the loans because they were on the verge of bankruptcy. If they hadn’t gotten secret loans from the US Fed they would undoubtedly have needed secret loans from the Reserve Bank of Australia (RBA). However, the Fed opened the door and this allowed Aussie central bankers and bankers to claim that they hadn’t received a bailout.

Under the Wall Street Reform and Consumer Protection Act legislation mandates a requirement for the US Federal Reserve to reveal which institutions it loaned money to under the various bail out programmes. One of these programmes was titled the Term Auction Facility (TAF). “Under the program, the Federal Reserve auctioned 28-day loans, and, beginning in August 2008, 84-day loans, to depository institutions in generally sound financial condition…Of those institutions, primary credit, is available only to institutions that are financially sound.” A total of USD$4 trillion was loaned to “financially sound” institutions such as, the Royal Bank of Scotland and the Allied Irish Bank which have both since been nationalized, the National Australia Bank and Westpac were in on the action too. In fact, Westpac was one of the first in the queue!  On December 20th 2007 Westpac had gotten a USD$90 million loan from the Federal Reserve under the TAF programme as you can see from the screenshot link:

Check out more details at the US Federal Reserve link:

http://www.federalreserve.gov/newsevents/reform_taf.htm

This should be of great interest to shareholders and the public alike despite the RBA’s economic review in September 2008 – “The Australian financial system has coped better with the recent turmoil than many other financial systems. The banking system is soundly capitalised, it has only limited exposure to sub-prime related assets, and it continues to record strong profitability and has low levels or problem loans. The large Australian banks all have high credit ratings and they have been able to continue to tap both domestic and offshore capital markets on a regular basis.”

But it wasn’t just Westpac that kept quiet about it. NAB chairman Michael Chaney must surely have realised what he was saying when he made the following comment at the December 2008 annual general meeting:

Our traditional banking and wealth management operations are all profitable, strongly capitalised and conservatively funded. In addition, our banking businesses have sound asset quality and are well provisioned.”

Let’s face it, Australia’s banking system is no different to any other – inherently insolvent. Interestingly, the ANZUS treaty was recently re-negotiated. Connect the dots – what other covert back room deals is Australia involved in?

————-

awesome story by ozhouse..

we are constantly told here that our banks are the best and the strongest..but were they?

this report seems to throw much doubt on that claim..

401

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~ by seeker401 on September 26, 2011.

21 Responses to “Australian banks in secret U.S. Fed reserve bail-out..we didnt get told that!”

  1. 401: Don’t feel bad or betrayed, the Aussies are no different than the rest of the world’s financial crew…just seems they are on the lamb and have managed to survive a bit unscathed at least as far as we all know. But, in this report it comes home to roost, that is there anything that is trustworthy in this world we live in?

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  3. er Australian banks(the big 4) work with hundreds of billions of dollars to make their money.

    I hardly think securing 1-4 billion worth of US dollars is ‘big fry’. they make decisions all the time about borrowing and lending money to and from banks overseas. Thats what banks do.

    Australia is a net debtor and has been for 30 years, what that means is that we consistently borrow from other countries. (A LOT of the time with the US – same for many countries around the world).

    Absolutely nothing in this to suggest that borrowing money is a sign of a bail out or ‘bankruptcy’. The US Fed offered and 2 of our banks took up the offer. big deal!

    Banking is a system and that system needs to keep functioning. Thats all this provides evidence of. Individual banks go bust when they get risk wrong.(mostly on a small scale, so it doesn’t hurt the system – the GFC cause wasn’t on a small scale).

    There is nothing yet to suggest Aussie banks have gotten risk wrong, but I imagine they are all now diversifying(which lowers revenue) just in case.

    They would be doing this because prior to the GFC they were operating on the same rules as everyone else.(See the BASEL accords). Or should of been.(this is another problem all together…its a system reliant on accurate reporting – bank reporting isn’t always as reliable as it seems).

    • Were they offered or did they ask? The point is we have always been told they never got any bailout, so why did the US decide to offer? And if they didn’t offer why did the banks ask? It’s the lie/myth that is my question here, not how banks operate.

    • “bailout” isn’t really the correct word here. there was noise over the fact that the bank of libya received a “bailout” of 3+ billion USD. considering that libya’s debt was 3.3% of the GDP (the lowest in the world) it is clear that they didn’t need a bailout.

      everything in banker land is the opposite of how most people think of things. these funds were not a bailout, but rather a response to a liquidity crisis brought on by a freeze in lending among US banks, which were experiencing massive outflows.

      in banker land, the entity making the loan considers that loan to be an asset of theirs. how exactly is the borrower getting “bailed out” by putting an asset on the books of the lender (the fed)?

  4. These two banks, collectively with over $1 trillion in assets, were not “close to bankruptcy”. The simple fact is they saw cheap available funding and took it to increase liquidity in an uncertain market. These payments were not bailouts, just sourcing of funds, a very different and much more common practice (it happens every day).

    • so they took free money even though they didnt need to? sounds a bit far fetched..like a conspiracy..and it doesnt happen every day..dont lie..

      • Where does anyone say it was free money? Every day banks do go out into international markets to source funding. These were loans, with interest, therefore not free. The sensationalist claim that these two banks were near bankruptcy is just totally unfounded

      • I never said bankruptcy. The fact is these banks received bailout money. Now you tell me why they are included in a list like that from the fed, the privately held fed nonetheless, and why they took it and what was it spent on because we always got told the banks were rock solid in Australia but the other 2 big banks weren’t included in the bailout splurge?? Obviously these two took hits and we, the public didn’t hear about it. Bye bye

      • oh look bobby..they arent rock solid!

        http://www.bloomberg.com/news/2011-12-01/australia-s-biggest-banks-are-downgraded-by-s-p-after-revision-of-criteria.html

      • Err…moving the goal posts means nothing. The lack of understanding baffles me. Yes the banks will have slightly hight cost of funds out of this, but none the less, its not going to bother them one bit.

      • err..how about answering the questions i gave you instead of shilling for big banks..

        “Now you tell me why they are included in a list like that from the fed, the privately held fed nonetheless, and why they took it and what was it spent on because we always got told the banks were rock solid in Australia but the other 2 big banks weren’t included in the bailout splurge??”

        of course it affects them..do you have any knoweldge of how a CDS or re-insurance contract works?..and they dont care they are downgraded!!..you fool..run along..”bobmarley” lol

    • At this point in time i have seen CDS and fin re contracts are being done with BBB counterparties and above, so it really is not affecting these banks atm. The list from the fed was a total lending list not a bailout list. Stop creating conspiracy when you clearly have no concept of international finance.

      • you just googled that last bit of bullshit..and confirms you know nothing..BBB counterparties yeah right lol, so the banks dont make their own bets outright? please..do you understand what happens when a bank, company or country is downgraded??..go get educated..start with yields..its a ripple effect and every time a country or bank is downgraded all the bets change..

        tell me why those 2 banks were on the bail out list from the fed?..tell me where the money went? and what it was spent on?..show me your right..if you can..a “total lending list” nice try..but FAIL..

        you will be the guy who cries out its time to buy stocks when another fakeout is created by europe..the game is all over..its only comatose shills like yourself who will get the shock..and i pray you dont advise others with your crap..get the fuck out of the markets..all the banks will go down..its domninos and we are NOT insulated..

      • Hahaha, get educated….. Love the fact you have no idea what you are talking about and who you sre arguing with. Go get a life douchebag. You may not believe me but i dont care. Its scaremonger fuckwits like you that cause this shit. Have a fun trailerpark life

      • i am arguing with “bobmarley” lol..you cant answer the questions can you?..you cant provide a link can you?..you got OWNED

        “its scaremonger fuckwits like you that cause this shit”..now..do you really want to keep that prophetic and profound statement?..fuckwits like me caused the banking meltdown did I?..and i caused lehmans to fall over and the euro debt crisis..cracksmoker

      • oh look bobby..its a debt clock..in the red..

        http://www.debtclock.com.au/#.TtxYlYLiNCo.twitter

  5. [...] this is what i posted in september: http://seeker401.wordpress.com/2011/09/26/australian-banks-in-secret-u-s-fed-reserve-bail-out-we-did… [...]

  6. http://seeker401.wordpress.com/2011/12/26/westpac-nab-survive-on-us-federal-reserve-life-support-we-told-you-that-in-september/

    owned bobby..

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