Do the crime, do the time? Not if you're a banker in Australia

According to Brailey, Australia has two major control frauds rapidly growing without restraint: a subprime mortgage scandal and debenture-funded pyramid business scams. The former is similar to the US subprime mortgage scandal. Brailey estimates these control frauds could each cause over A$100 billion in losses. Brailey has warned ASIC about these control frauds for over a decade.

Paradise untouched

It has never been a better time to be a criminal, as long as you’re a white-collar criminal in the FIRE sector. Bankers involved with the CBA financial planning scandal have still managed to advance their careers and win bonuses.

History enlightens us, which is why the history of control frauds isn’t taught anywhere. Political and economic elites want the public kept blind to the plague of theft they’ve been engaged in. In Australia, this history is left to individuals like Denise Brailey and Evan Jones to tell, whose work was used in my recently published book, co-authored with Paul D. Egan.

The disparity between white and blue-collar criminals has never been larger. If I defraud my neighbour of $10,000, I’ll be charged, prosecuted and sent to jail for years. In contrast, a banking executive who robs borrowers and loots or destroys untold billions of dollars is praised by politicians, business groups, the mass media and the economics profession for “wealth creation”.

Australia’s credit-based banking system, liberated from responsibility by deregulation, self-regulation, de-supervision and de facto decriminalisation, has and will inevitably continue to generate toxic and recurring control frauds. The FIRE sector cannot be allowed to profit from control fraud. Government has a civic obligation to prosecute those who perform criminal acts on innocent parties. We know this as the rule of law.

Academia could offer an independent voice against these control frauds, but the legal and economics professions are mute before the FIRE sector, which employs many directly and indirectly. As Black documented, mainstream economists have intentionally ignored the dangers of control frauds, proclaiming that “private market discipline” and “rational agents” can prevent frauds from even occurring: “the market knows best” line of fallacious reasoning.

The full extent of these control frauds is yet to be revealed as the government, regulators and external dispute resolution organisations (RBA, ASIC, APRA, ATO, AFP, Treasury, FOS and COSL) resolutely refuse to investigate. Meantime, control frauds are free to weave a trail of forced bankruptcies, homelessness, poverty, desperation, depression and suicide.

History shows government only acts when the predations of control frauds break in the mass media. The two largest control frauds, the debenture-funded pyramid business scams and subprime mortgage scandal, are running rampant. Unfortunately, government will only grudgingly do something when the number of victims climbs far enough that they become too visible to openly ignore – but, by then, it will be too late.

Nevertheless, a Royal Commission is necessary to shine a light on the transgressions of the FIRE sector.