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Bankers' Bonuses Paid For By Taxpayers,

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Banks shave billions off costs because creditors expect taxpayers to bail them out, ICB head tells Commons committee

Bankers' bonuses are partly subsidised by the taxpayer, says Sir John Vickers, pictured above at the launch of the ICB's interim report, on 11 April.

Bonuses paid to bankers have been partly financed by the UK taxpayers' subsidy for the industry, according to Sir John Vickers, head of the Independent Commission on Banking (ICB).

"Some of the bonuses have been financed that way," said Vickers when he appeared before the Commons Treasury select committeeon Tuesday.

He estimated that banks shave at least £10bn off their funding costs each year because of the expectation from bondholders and other creditors that the government would honour their obligations in times of stress.

Vickers said he hoped proposals unveiled by the ICB in April to boost financial stability would help to eliminate the subsidy.

The interim findings recommended that retail savings banks boost their capital ratio to 10% and ringfence their high street businesses from riskier "casino" investment banking activities. But the report stopped short of ordering a full break-up, sparking accusations that Vickers had "bottled it". He denied the accusation.

Vickers said: "Total abolition [of the taxpayer subsidy] is unlikely. There are always going to be some circumstances in which the government would feel compelled to come to the rescue of at least some parts of banks."

Vickers was testifying before the Treasury committee ahead of a final version of the ICB report, due in September.

The Treasury committee also heard from ICB member Bill Winters that British banks are unlikely to move overseas as a result of proposed reforms for the sector. "We concluded that, while possible, it's unlikely, based on the package of proposals we are recommending," Winters said.

Observers said Vickers' proposals represent a step towards convergence for global banking regulation by bringing the UK rules closer to those of the US and some parts of Europe. Banks' threat to move elsewhere should be interpreted as a "lobbying manoeuvre", they said.

In addition to the higher capital and ringfencing options, the ICB last month said customers should be able to switch their bank accounts more easily.

Lloyds branches could merge with Northern Rock

The ICB also suggested that 41% state-owned Lloyds Banking Group should sell hundreds of additional branches beyond the 600 it agreed with the EU to offload as a condition of UK state aid.

Lloyds said additional sales would be detrimental to shareholders and customers but Vickers is determined to break the bank's grip on the current account market, which rose to 30% after Lloyds was forced to buy HBOS at the height of the banking crisis in 2008.

Vickers noted that, even before the HBOS deal, competition on the high street was "never great". By 2010, the five biggest players had 87% of the current account market.

While solutions were suggested to make it easier for customers to move their accounts between providers, Vickers also floated a structural change. He suggested that the divested Lloyds branches could be merged with Northern Rock, creating a proper "new challenger bank". But even that would take time to have any impact on the market and for customers to notice.

So if the taxpayer is partly paying the bonus, why do they not have a voice on whom and how much?

I say no bonus to a ruined bank, especially one that pays nil on deposits.

How long will the confidence trick go on is the real question?

Edited by cashinmattress

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Lloyds now owns over 33% of the UK's residential mortgages. Acquired

from HBOS. A breach of monopolies commissions rules. [up to 80% were

liar loans. According to whistleblowers like Paul Moore. although we do

not know the LTV of those properties. Mortgage fraud was endemic at

HBOS, under king of the liar loans, Sir James Crosby.]

So the mark to market valuation of Lloyds mortgage book is a complete Fallacy.

So why are UK taxpayers who do not own property, having their money STOLEN to recapitalise banks like Lloyds via the bailouts?

And What happens when for whatever reason, those banks repossess properties?

In the USA the banks are withholding them from the market. Just Sitting on them. Or drip feeding them into the market. Over here, the same thing is happening. Or the banks are placing undisclosed reserves on those properties, ensuring they do not sell at auction.

[Once the banks have been sold off. Whats to stop the banks becoming the countries largest landlords, after they have been recapitalised, with our F@Ring money!?]

While the banks keep hold of properties at reserve prices which nobody will pay, the Banks themselves can keep generating fictitous bonuses on Falsified "profits" instead of writing down losses!!

Thereby continue paying themselves tens of million's in Bonuses!!

Based upon False Accounting. STOLEN from joe taxpayer.

ITS Fraud and THEFT. Plain and Simple.

It could not have worked out any better, if they had planned it this way.

Blatant False accounting and fraud, which is aided and abetted by our corrupt government.

Who are willing partners.

They are paying themselves vast bonuses, on fake mark to market valuations.

This is widespread in the States, bankers are simply holding on to property which have either been repossessed or where the debtor has walked away.

Rather than selling at the true market value the banks are reporting the original price that was paid, [say circa 2006 peak price] as the current value on the balance sheets, when clearly it is not.

And they are paid huge bonuses, on these imaginery fake portfolio's.

It shows our government and banking system for what it is. Completely corrupt. Downright evil in fact.

It's economic fascism.

[**Its also worth noting that the Land Registry refuse to include the 'sold prices' of Repossessed properties in their data.]

In the Planned economy. The government controls and regulates production, distribution, prices, etc. They Compel.

The Planned economy, is a direct contrast to the democratic model, of the 'Market Economy' In which the vested interests bought their houses.

Its unbelievable.

The only sane reaction is Anarchy.

Edited by Dan1

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To me and a growing number of people.. democracy = rule by bankers. Whether in Ireland, USA, UK, Spain, etc..

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  • 330 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
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      • up 5%

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