Why do we outsource the issuing of Government bonds to private banks? - Estimates 6.11.24 (Gerard Rennick)

Another day, another rort in Government exposed.

“On Thursday, The Australian Financial Reviewrevealed ANZ had engaged Herbert Smith Freehills and Allens to conduct separate investigations into the alleged inappropriate trading and broader workplace issues within the bank’s markets division.

The Australian Securities and Investments Commission is also investigating whether the bank forced an increase in the interest rate on a $14 billion government bond sale in April 2023. ANZ traders allegedly deliberately forced down the price of bond futures contracts, which increased the cost of borrowing money by the government.

The bank has also been forced to admit that it may have inflated the volume of its trading in government bonds, figures that had been submitted to the Australian Office of Financial Management.

Instead of the $137.6 billion in trades for clients it had initially submitted for the 12 months to the end of June 2023, the bank had actually worked on $83.2 billion in transactions, ANZ told the agency. The AOFM oversees government debts, and selects the largest traders to work on issuances.”

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How pathetic are Treasury? They are being played by the private banks who make them look like fools.

The sad thing is it’s the taxpayer and mortgage holders who suffer as a result of poor behaviour in financial markets.

Treasury employees are the highest paid staff in the bureaucracy.

They should have the skill set to issue Government bonds and not have to outsource it. Furthermore they should be sharp enough to know when they are being played by the banks.



[Posted at the SpookyWeather2 blog, February 5, 2025.]