NAB and Westpac’s Secret Bailout Revealed

It’s time for an apology. No, not from me. We’re always right, so there’s no need to apologise [wink].

Instead the apology needs to come from the Australian mainstream financial press. The same financial press that told you Australia’s banks were strong.

That Australia had the best prudential regulation in the world. That Australian banks were different to all those dirty foreign banks.

But an apology also needs to come from the banks who themselves claimed things were different here. And that Australia’s banks didn’t have the same solvency problems as US and European banks.

Why do they need to apologise? Well, two years after the global financial markets collapsed, a secret bailout of two of Australia’s biggest banks has been revealed.

This is pretty big news. Or rather, you’d think it would be pretty big news. But as you can imagine there’s almost uniform silence from the banks and the mainstream press.

Shortly after we published yesterday’s Money Morning we decided to do a bit of fishing around on the US Federal Reserve website. You see, earlier that morning the Fed had released some pretty hot material, and we wanted to see what it contained.

What we found shocked us. Although it really shouldn’t have, because we knew the claims about the Australian banking system being strong and robust were complete lies anyway.

In fact, so shocking is this revelation that we considered sending a Money Morning special edition yesterday afternoon. But we didn’t. We’re fed up of giving the mainstream scoops which they then claim as their own.

Instead we thought we’d wait to see if the Australian mainstream press picked up the story first.

Surprisingly they have. But not with any enthusiasm. And hardly with what you’d call any effort. Probably because they’re a bit sheepish about the fact the banks and regulators have made fools of them.

So excited were we to see how the mainstream had handled this story we did something we normally never do – enthusiastically open the Australian Financial Review (AFR).