Taxpayers 'subsidising Banks By £30Bn A Year'

[interestrateripoff]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8321945/Taxpayers-subsidising-banks-by-30bn-a-year.html

The New Economics Foundation (NEF) has calculated the value of the implicit Government guarantee, the fees charged on the emergency measures taken to stabilise the economy, and the excess profits taken on loans since competition in the market collapsed.

It says the figure is "at least" £32.5bn using "conservative" estimates. Publication of the report comes the day before Barclays kicks off the banking reporting season on Tuesday, when the high street lender will inflame public anger by unveiling around £2bn in investment banker bonuses.

Although the bonus pool will be lower than it was last year, the total compensation may be as much as £1bn higher at £5.5bn – analysts estimate – as salaries were doubled in many cases last year to offset bonus restrictions.

In a goodwill gesture intended to allay fury over excessive pay awards, Barclays is believed to be introducing a new performance yardstick for bonuses. For 1,000 of its top investment bankers, the deferred element of their package – around 60pc – will only come into effect if Barclays' core capital ratio remains above the new regulatory minimum of 7pc.

The bank is expected to unveil pre-tax profits of around £5.7bn for 2010, a rise of about 24pc. However, investment banking revenue is forecast to be £4.9bn lower at £13bn due to a slowdown in activity.

NEF's calculations showed that the bulk of the state's subsidy to banking came from its implicit guarantee to banks deemed too-big-to-fail. By handing banks "insurance against going bust", the Government gives them "a huge commercial advantage", the NEF said. "It means banks are able to borrow money much more cheaply than if they were not ultimately underwritten by the public."

Using Bank of England analysis, NEF calculated that the subsidy is worth £30bn annually to UK banks.

Banks are also making another £2.5bn "at least" from the higher charges on bank loans, such as mortgages, and fees on state-backed capital raisings and the Bank's £200bn money-printing programme.

Nice.

Still at least the bankers can all claim they've worked hard to justify their bonus which clearly wouldn't exist if normal market forces where left to apply.

The entire system is on life support.

[General Melchett]

Sigh.

Dont those commies at the Torygraph realise that the time has come to move on and stop criticising those poor, hard done by, sensitive and misunderstood bankers.

[Riedquat]

Why does it matter where the money coming into the banks comes from? The directors' jobs are there to get as much into the banks as they can, and that's what they're doing. Please stop all of this jealous whinging about their pay and bonuses. If they're bringing in more than they're costing then it isn't a problem.

[Democorruptcy]

In a goodwill gesture intended to allay fury over excessive pay awards, Barclays is believed to be introducing a new performance yardstick for bonuses. For 1,000 of its top investment bankers, the deferred element of their package – around 60pc – will only come into effect if Barclays' core capital ratio remains above the new regulatory minimum of 7pc.

If banks "restructure" and create a "bad bank" to put any underperforming "non-core" assets in - their "core" capital will not drop below the new capital requirements. All they have to do is keep hiding stuff under the carpet and base their core capital on the good bank - until the bad bank dwarfs the good bank and they need another bailout - meanwhile they will be off into the sunset with billions in bonuses based on fictitious profits because the losses were never offset against the gains.

The new capital requirements are a complete sham.

http://ftalphaville.ft.com/blog/2011/01/10/453391/next-up-for-barclays-a-bad-bank/

[Olebrum]

I am sure once the cost of the bailouts is factored in it amounts to close on £100 billion.

Per year.

Edited February 14, 2011 by Olebrum

[Guest sillybear2]

I see the debt clock people have helpfully included the cost of the bank looting spree bailout on the bomb :-

http://www.debtbombshell.com/

£2.3 trillion v. £1 trillion before, what's that between friends? Now ignore all this and "move on" you jealous oinks, I've got a new Bugatti to sort out.

Edited February 14, 2011 by sillybear2

[Scott Sando]

I'm thinking of having a whip round for the bankers, anyone got any blood, organs, children, that they don't need, to raise some extra cash for them.

[THE BALD MAN]

Why does it matter where the money coming into the banks comes from? The directors' jobs are there to get as much into the banks as they can, and that's what they're doing. Please stop all of this jealous whinging about their pay and bonuses. If they're bringing in more than they're costing then it isn't a problem.

Not the point. They are bringing in money because of taxpayer subsidy...not because they are brilliant and clever...any fool can bring in money if subsidised.. nothing to do with jealousy but I do not want to pay from my money bonuses to the greedy incompetents who created this financial mess. Most are lucky to have a job let alone a bonus. Ask another question why is every other business cutting wage costs when the subsidised bankers are increasing their costs?

[Laughing Gnome]

Why does it matter where the money coming into the banks comes from? The directors' jobs are there to get as much into the banks as they can, and that's what they're doing. Please stop all of this jealous whinging about their pay and bonuses. If they're bringing in more than they're costing then it isn't a problem.

Are you serious?

[Laughing Gnome]

Why does it matter where the money coming into the banks comes from? The directors' jobs are there to get as much into the banks as they can, and that's what they're doing. Please stop all of this jealous whinging about their pay and bonuses. If they're bringing in more than they're costing then it isn't a problem.

You see jealousy. I see stockholm syndrome.

[Laughing Gnome]

If banks "restructure" and create a "bad bank" to put any underperforming "non-core" assets in - their "core" capital will not drop below the new capital requirements. All they have to do is keep hiding stuff under the carpet and base their core capital on the good bank - until the bad bank dwarfs the good bank and they need another bailout - meanwhile they will be off into the sunset with billions in bonuses based on fictitious profits because the losses were never offset against the gains.

The new capital requirements are a complete sham.

http://ftalphaville.ft.com/blog/2011/01/10/453391/next-up-for-barclays-a-bad-bank/

Do they even need to set up an SPV when they have the Bank of England, the mother of all bad banks?

[Dorkins]

No point in getting mad at the banksters really, they are only taking taxpayer money because the government is giving it to them. It's the government we ought to be mad at.

[Rachman]

The NEF is a bunch of socialist jokers.

http://en.wikipedia.org/wiki/New_Economics_Foundation

Funny how they aren't mentioning how this government, and the last one, are blowing that every 8 weeks in extra debt and paying out more than that in debt service every 6 months.

And the subsidy is also blollocks - the bank 'bailout' was structured for socialist reasons - but the government got outmanoeuvred and it was inevitable that how QE has been abused by the last government that the profits would be made...... - the real reason for last years and this year's bank bonuses is government policy.

I don't expect the donkey jacket wearing pseudo economists to point that out though.

[Laughing Gnome]

No point in getting mad at the banksters really, they are only taking taxpayer money because the government is giving it to them. It's the government we ought to be mad at.

Fair point.

The bankster hatred thing is a top diversion. Last week the bankers had to pretend to be incandescent with the government whilst they were quietly handed a massively destructive off-shoring tax break. We need to wake up and fast.

[erranta]

If banks "restructure" and create a "bad bank" to put any underperforming "non-core" assets in - their "core" capital will not drop below the new capital requirements. All they have to do is keep hiding stuff under the carpet and base their core capital on the good bank - until the bad bank dwarfs the good bank and they need another bailout - meanwhile they will be off into the sunset with billions in bonuses based on fictitious profits because the losses were never offset against the gains.

The new capital requirements are a complete sham.

http://ftalphaville....ays-a-bad-bank/

Nowt to do with jealousy - but trading whilst insolvent, fraud on a massive scale and parasitic abuse of the UK taxpayer to keep the frauds/bonuses going!

Pissing off many other countries and ruining UK reputation by selling on toxic 'loaded' crap for short term fraudulant gain!

And as we keep being reminded the biggest banks between them - are a virtual monopoly!

Mayfair, 44 Grosvenor Square, Mayfair, London - peanuts to monopolist City frauds bankers!

The "City of London 'fraudulant' collective Madness"

Edited February 14, 2011 by erranta

[Guest sillybear2]

No point in getting mad at the banksters really, they are only taking taxpayer money because the government is giving it to them. It's the government we ought to be mad at.

Exactly, the problem is with the government and BoE, politicians like to look all incompetent and powerless when it comes to their bankster friends (political donors), ignoring the fact they have the executive power in the land. They could use the royal prerogative to dismiss the MPC and Mervyn King, elect new members and end all their "free money for banksters" schemes. They also have the power to impose windfall taxes or nationalise the entire sector.

People who expect self-constraint from the bankers or the central bank puppets are mad, if they had any self-awareness they wouldn't have got themselves into this mess to begin with. As for the inaction of the BoE, what do you expect from an institution that sits on Nazi gold?

[Dorkins]

Fair point.

The bankster hatred thing is a top diversion. Last week the bankers had to pretend to be incandescent with the government whilst they were quietly handed a massively destructive off-shoring tax break. We need to wake up and fast.

Yeah, there's a lot of distraction going on. First we get mad at the bankers, then we get mad at Chinese exporters and Indian call centres, then economic migrants, then public sector workers, then the BoE. Pretty soon it will be the turn of estate agents. The story changes all the time, and the vast majority of people are not able to put it into any sort of context.

Also, certain key words almost never enter the mainstream public discourse, especially "fraud" and "corruption". It's Orwellian in the sense that people who lack vocabulary find it hard to think meaningfully.

I don't know how much of this is being consciously coordinated, but if any of it is then hats off to the coordinator. He is doing a brilliant job.

[Slumpmonkey Returns]

It's time to lay off Cameron's and Osbourne's banker friends now. Don't you realise that if we continue with this banker bashing then the most talented and sought after bankers in the City will have no choice other than to abandon these shores for good. Then what would we do? Furthermore, what is wrong with subsidising the bankers? Personally, I think the government has not made nearly enough cut backs in the public sector to pay for the trillion pound bail out. As we are "all in this together", surely we can take away more services from vulnerable people, as it's only fair that children with severe handicaps take more of their share of the burden.

In general I also prefer a tax on unborn children so we can preserve the value of our homes. I mean after all I have worked very hard in the past ten years (sitting on my bottom) to ensure that my house price has trebled in value.

[tomandlu]

You see jealousy. I see stockholm syndrome.

I see someone who probably benefits from bank bonuses. Or a madman.

[Dorkins]

If a former prime minister of a developing country went to work for a large firm that had benefited significantly from his policies (e.g. a lumber firm in Indonesia or an oil company in Nigeria), we wouldn't hesitate to call that corruption. And yet Tony Blair did exactly that, and we think of Britain as a low-corruption country.

[PopGun]

You see jealousy. I see stockholm syndrome.

[Guest sillybear2]

It's time to lay off Cameron's and Osbourne's banker friends now. Don't you realise that if we continue with this banker bashing then the most talented and sought after bankers in the City will have no choice other than to abandon these shores for good. Then what would we do? Furthermore, what is wrong with subsidising the bankers? Personally, I think the government has not made nearly enough cut backs in the public sector to pay for the trillion pound bail out. As we are "all in this together", surely we can take away more services from vulnerable people, as it's only fair that children with severe handicaps take more of their share of the burden.

In general I also prefer a tax on unborn children so we can preserve the value of our homes. I mean after all I have worked very hard in the past ten years (sitting on my bottom) to ensure that my house price has trebled in value.

Applauds like a seal on Question Time.

[Riedquat]

Not the point. They are bringing in money because of taxpayer subsidy...not because they are brilliant and clever...any fool can bring in money if subsidised.. nothing to do with jealousy but I do not want to pay from my money bonuses to the greedy incompetents who created this financial mess. Most are lucky to have a job let alone a bonus. Ask another question why is every other business cutting wage costs when the subsidised bankers are increasing their costs?

They're brilliant and clever at playing the sytem to their own ends, which is arguably what their job is (not what it should be). They're not lucky - they've been supremely good at wriggling their way into this position. It rewards all the most negative things, it's counter-productive to absolutely everyone else, and it stinks.

My previous post was devil's advocate / sarcasm (so Laughing Gnome, I wasn't serious, thank god).

[Guest sillybear2]

They're brilliant and clever at playing the sytem to their own ends, which is arguably what their job is (not what it should be). They're not lucky - they've been supremely good at wriggling their way into this position. It rewards all the most negative things, it's counter-productive to absolutely everyone else, and it stinks.

My previous post was devil's advocate / sarcasm (so Laughing Gnome, I wasn't serious, thank god).

Use money to bribe & steal > use that influence to obtain more money, power and favourable rules > results in more money > use that to make your fraud legal > rinse and repeat.

It's no different from the power dynamics with Mubarak and the Egyptian Army, except in our case Bob Diamond doesn't wear fatigues. Look how that ended? Yup, with the army running the country, get my drift?

[_w_]

No point in getting mad at the banksters really, they are only taking taxpayer money because the government is giving it to them. It's the government we ought to be mad at.

Are they two distinct groups? I think not.