Zero, 5,041, 50,050 or 261,987. This means how many times Westpac could breach responsible credit laws from December 2011 to March 2015.
The inaccurability that is evident in this range of numbers is the main reason why Federal Court Judge Nye Perramova rejected the proposed deal with ASIC Banking Regulator.
In essence, at the time the lawsuit was launched, Westpac finally withdrew and offered $ 35 million in damages of $ 35 million to cancel the case of the responsible credit court.
As in recent years, ASIC has insisted on accepting responsibility as part of the agreement.
But here is the catch – ASIC and Westpac can not agree on which loans have broken the law, or even agree exactly what the law really required.
While Comrade Perram reluctantly recognized the "admirable inventiveness" of ASIC and Westpac's lawyers to "shine over the very real differences that exist between them", he was eventually disappointed.
His sinister love was the lack of agreement on which loans violated the law – while ASIC and Westpac agreed that at least 5,041 had done, even those who were convinced by Perram's judges.
"I simply do not accept that the conduct stated in the statement is an act that could be a violation of s128," he wrote in the judgment.
"I will not declare an offense that is not unlawful."
This means that Westpac can be clear. It could be perfectly right to use the Household Expenditure Measure (HEM), the criterion of low cost of living, to assess whether housing loans are appropriate.
Hayne has a very different view and banks are worried
So why would Westpac be angry with the crime that he would potentially commit?
At the Royal Banking Commission, former Supreme Court Judge Kenneth Hayne looks very different in his hearing.
He seems to believe that HEM is completely inadequate, even as a floor in costing, let alone become a replacement for what customers have said. Instead, it wants banks to actually check the bank statements of people to find out how much they actually spend.
If Hayin's opinion prevailed, all 261,987 Westpac loans could violate the law.
At a maximum of $ 2.1 million a piece, a theoretical maximum of $ 550 billion – more than five and a half times the current market value of $ 96 billion.
Obviously, this is an unrealistic sanction, but it shows that Westpac's liability might be in the $ 700 million Commonwealth Bank money laundering fine before an agreed $ 35 million deal.
The calculations actually show that Westpac would still have come up against these housing loans if it paid a $ 35 million fine.
In the end, Westpac was simply a prudent business to eliminate the risk of a massive fine by paying a much smaller fine, even if there was a great chance she would not do anything wrong.
Wider implications for other banks … and tenant
The real danger now for all banks, large and small, is that a revised agreement in which Westpac recognizes responsibility for a particular infringement or a litigation that it loses could create a precedent not only for the regulator who goes to the other creditors but also for customers whose credit is bad for their losses.
This is because most other creditors also use household spending measures as a benchmark for testing whether customers can afford to meet their loan repayments.
Many use them as flooring to provide customers with unrealistically low cost estimates to earn the right to a larger loan they often try to repay.
In fact, as Judge Perram pointed out in his judgment, 80% of Westpac HEM loan applicants were in fact higher than their declared expenditure, meaning that they limited what they could borrow.
This is statistically impossible because the HEM is based on the essential expenditures of the middle (middle) household in the area and the discretionary spending of the household at the top of the lower quarter. This means that the overwhelming majority of households spend more than HEM.
Since it is very unlikely that the HEM Melbourne Institute calculations are so far, it seems likely that many loan applicants will underestimate their expenses either innocently or deliberately.
These were called "liars loans" by UBS analysts, who conducted several surveys to show how widespread mortgage fraud was in Australia.
Kenneth Hayne's case-law investigation of bank statements of loan applicants to verify their spending appears to be widely accepted by banks to avoid the risk of litigation for violating responsible credit laws.
This has already led to a moderate "credit crunch" because institutions have taken a more realistic assessment of what borrowers really can afford to repay.
The fear among many analysts is that the Royal Commission's recommendation, coupled with a possible fall from the Westpac case, could lose the credit effect of a "credit crunch."
Because the amount of money people can borrow to buy home decreases, so they make the price they are able to pay.
In a critical scenario, some analysts warn that 10 to 20 percent of home prices could be 20-30 percent, probably with a recession that would match.
So what happens now? Westpac and ASIC sit on the table and try to strike a new deal that suits the court.
The next hearing is scheduled for November 27th. If it has not yet reached the agreement, it may be at the hearing, in which case we will have to wait for years and through many appeals, it is likely that the High Court, considering what is at stake, will find out how banks have to assess credit applications to were lawful.
The end result of ASIC in Westpac is a lot.
fraudulent and corporal crimes,