Macquarie Group held its second straight virtual AGM yesterday and it turned into a three hour marathon — with the board peppered by more than 50 shareholder and proxy questions.
While GetUp activists dominated the live questions, asked via teleconference and focusing on climate, fracking and Indigenous issues, I lobbed 19 written questions during the meeting, all of which were read out in full by Macquarie personnel hand-picked for their strong voices.
Based on the following exchange, we now know that federal taxpayers have lent the “millionaire factory” $11.3 billion in cheap loans to help get it through the COVID pandemic? After further inquiries, we also know the interest rate: $9.5 billion loan for 3 years at 0.1%; the rest at 0.25%.
My first question: “When COVID first hit, the [Reserve Bank of Australia] slashed interest rates to zero, started lending cheaply to banks and committed to unprecedented money printing by buying $5 billion of federal and state government bonds a week, which has led to purchases exceeding $200 billion. Please summarise the impact and involvement of Macquarie in all of this. How much have we effectively borrowed from the RBA and have we been active participants in buying up the record amounts of federal bonds being issued to fund programs such as JobKeeper?
Chairman Peter Warne turned the microphone over to chief financial officer Alex Harvey.
“Like all ADIs [authorised deposit-taking institutions] in the market, obviously, when COVID-19 first hit last year we moved very quickly to provide significant support to our retail and our business customers” he said. “We saw the outcome of that through the growth in our portfolio last year with our mortgage business up 29%, and our small and medium enterprise lending business up 13% for the year, so we saw the support that the group had provided to customers over the course of the last 12 months.
“Using the formula offered by the RBA, the RBA obviously did extend the term financing facility [TFF] as a way to make sure the financial market was liquid to provide that credit and Macquarie, as one of the ADIs in the market … As we said at our full year results in March, our initial allocation of the TFF was $1.7 billion. We’ve now drawn down an additional $9.5 billion…”
In total, Harvey said, Macquarie had drawn “$11.3 billion of TFF, and we have been able to put that money to work into the economy to support our retail and our business clients”.
“Obviously we do have, as part of our cash and liquid management, we do invest some of that cash and liquids into high quality securities like government bonds.”
Is this how Australian-style money printing works? The RBA creates money out of thin air, lends it to our banks and they use this money to both keep the economy solvent and buy up the avalanche of government bonds that are being issued as federal debt hurtles towards $1 trillion?
Given that the COVID crisis has largely passed for Macquarie’s mortgage customers — repayment holidays have crashed from 13% to less than 1% of its rapidly growing $71 billion portfolio — the main reason now for the RBA loans appear to be to on-lend the money to fund the budget deficit, through the purchase of state and federal government bonds.
Macquarie is capitalised at $58 billion and was gloating yesterday that it had $8.4 billion of surplus capital. So why does it need an $11.3 billion loan from the RBA?
There were some other interesting exchanges at the AGM, giving some further insight into the financial relations between Macquarie and Canberra
On the JobKeeper question, CEO Shemara Wikramanayake seemed very proud of the fact that neither Macquarie, nor any of the companies it controls in Australia, got into the widely rorted scheme. And when asked about how much the Turnbull government’s much-hated bank levy — targeting the big four banks plus Macquarie — was costing the millionaire factory, Walker fessed up that it was now $80 million a year.
Another highlight included Wikramanayake explaining why she had lunch with old university pal and ex-AMP chief Boe Pahari last August — an exchange which generated an item in today’s AFR Rear Window column.
It also gave us a chance to see other directors drawn into the debate, with risk committee chair and former RBA governor Glenn Stevens forced to explain what the board was doing after the Australian Prudential Regulation Authority imposed a $500 million capital penalty on the bank for shoddy practices. The Australian latched onto that element of yesterday’s debate.
It’s the MMT that dare not speak its name.
Indeed, and the RBA that controls the banking sector and the Coalition that appointed a Panama Paper Liberal giant to the board despite his tax evasion issues with the ATO, and up he pops yets again in the Panama Papers. Robert Gerard continued tax evasion after [Howard’s] RBA appointment:
PETER COSTELLO, TREASURER: Mr Speaker, I have no problem with Mr Gerard as a member of the Reserve Bank board…
… the Australian Financial Review revealed Mr Gerard had been in dispute with the Tax Office at the time of his appointment over an insurance scheme the ATO labelled “an international tax sham”.
Understandable after all the RBA is the place where Liberal bankers and wankers mark time between board membership, bribes and raiding parties on PAYG Australians.
Seven years and millions of dollars later, Australia’s biggest bribery prosecution finally revealed
By Richard Baker & Nick McKenzie
28 November 2018
Not that this is the biggest briberry prosecution, the Howard, Downer and Vail bribery of Saddam Hussein was worth $300 million.
It can now be revealed that two companies owned by the Reserve Bank of Australia, Securency and Note Printing Australia, were fined a record $21.6 million in 2012 for their criminal conduct.
However, the cases against four accused individuals have collapsed after bungling by law enforcement agencies.
The lifting of long-standing suppression orders which for seven years cloaked the Securency case in secrecy
https://www.smh.com.au/business/companies/seven-years-and-millions-of-dollars-later-australia-s-biggest-bribery-prosecution-finally-revealed-20181108-p50eut.html
Remember RBA governor Ian Macfarlane and his partner in crime then treasurer of the rubbery figures lies and incompetence, Peter Costello, who secretly sold off 70% of our gold reserves; doing the US bidding and conspiring with officials from the G-10 governments and their central banks to synchronise their policies to affect the gold market. U.S. policymakers were determined to preserve the US dollar’s role as the world’s main currency reserve and were worried about the effects higher gold prices could have on the nation’s debt burden;…. asserts Peter Krauth former portfolio adviser and a 20-year veteran of the resource market, with special expertise in precious metals, mining and energy stocks.
So the above article should be of no surprise to those who aren’t Murdoch/Stokes minions. RBA and Macquarie Group, time to fess up and admit it, the RBA is the bankers wanker. The RBA Board are and have always been the batcave for the vampire bats. It’s also a resting home for the Big Four architects of tax evasion; who since Abbott have ‘advised’ Treasury and the ATO.
Allan Moss
Member since 2 December 2015
Term ended 1 December 2020
Appointed by Scummo when Treasurer in 2015 to the Board.
Moss has his own private investment company as you would expect.
Moss was with Macquarie Group from 1977 until his retirement in 2008. He led the team responsible for preparing the submission to the Australian Government to form Macquarie Bank in 1983.
Moss held various positions within Macquarie Bank before becoming Managing Director/CEO in 1993. Moss had been a director of the company since June 1989. Enormous networking and contacts.
Principal – Allan Moss Investments Pty Ltd
Advisory Board Member – Eight Investment Partners Pty Ltd
Advisory Board Member – Evans & Partners