Ep. 435 Adam Haman Asks Tough Questions About Richard Werner on Banking
In another crossover episode, Adam Haman asks Bob about his doubts/concerns on various parts of Richard Werner’s recent appearance on the Tucker Carlson show. This discussion is on the heels of Bob’s episode of the Human Action podcast with Jonathan Newman, where they responded to Werner’s interview from an Austrian economics perspective.
Mentioned in the Episode and Other Links of Interest:
- The YouTube version of this conversation.
- This episode’s sponsor, The Swan Brothers.
- The Richard Werner appearance on Tucker Carlson.
- Bob’s Human Action podcast episode with Jonathan Newman, discussing Werner.
- Bob’s infineo blog post going over the accounting; his latest HA episode walking through these examples.
- The HamanNature substack.
- Help support the Bob Murphy Show.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
Episode 435. Elvis was born at 4:35 am.
in the ghetto
It is misleading to say that Australia has no bank reserve requirements, although I believe there was a time (maybe back in the 90’s) when the authorities were fairly darn loose on the bank supervision. That was in the days of Treasurer Paul Keating, and his “Four Pillars” policy.
However, the regulators tightened up after recognizing that 2008 was a near miss of Australian banks … and these days I believe that most of Basel III applies to Australia. It’s a confusing system … but you have an international standard definition of Common Equity Tier 1 (CET1) capital, banks must maintain at least 4.5% CET1, and having reserve deposits at the central bank is one way to achieve this. Then they have Additional Tier 1 (AT1) and there’s a 6% requirement on that, and then all the Tier 2 stuff.
https://www.apra.gov.au/a-more-effective-capital-framework-for-a-crisis
There are multiple government entities involved: the RBA are the Reserve Bank (responsible for monetary policy and operating the payments system); APRA are the financial regulatory authority; but then you have the Australian Competition and Consumer Commission (ACCC) sticking an oar in now and then; plus various state-level “Fair Trading” departments.
The easier and more direct way to get a measure, is pull up Google Finance, and check the reported balance sheet position. These are all public listed companies. Here are the four pillars of Australian banking, based on the most recent quarterly figures:
CBA:ASX (Jun-2025): Assets=1.35T Liabilities=1.28T Ratio=94.8%
ANZ:ASX (Mar-2025): Assets=1.30T Liabilities=1.23T Ratio=94.6%
NAB:ASX (Mar-2025): Assets=1.10T Liabilities=1.03T Ratio=93.6%
WBC:ASX (Mar-2025): Assets=1.10T Liabilities=1.03T Ratio=93.6%
Comparison with some US banks:
C:NYSE (Jun-2025): Assets=2.62T Liabilities=2.41T Ratio=92.0%
WFC:NYSE (Jun-2025): Assets=1.98T Liabilities=1.80T Ratio=90.9%
So yes … the Australian banks are running higher leverage … based on simple Balance Sheet calculation. That of course ignores liquidity of the debt and risk from various shocks.
In terms of evaluating the US Federal Reserve’s new policy of allowing zero reserves … it’s far too soon to say whether it will work or not … we won’t know until we see how it survives a few boom/bust business cycles.
Thanks Tel. In fairness, the people who would tell me, “Australia doesn’t even have reserve requirements!” often overlapped with the people who would tell me, “It’s capital constraints, not reserve requirements, that guide bank behavior.”