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Fsa Warns It Cannot Police Consumer Credit

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Well the FSA seem to be "disappointed" and will be unable enforce consumer credit controls. Oh my, what a pathetic, weak, organisation this is. It really is quite simple you set out the rules (or the govt. does) and the companies follow them. If financial companies are unable or unwilling to follow some simplae regulatory guidelines THEN THEY HAVE NO BUSINESS TO BE OPERATING, shut them down or fine them immediately if they are found to be contravening the rules. What do we get - more time and rap on the knuckles.

One rule for financial companies, another for the general public, try wriggling your way out of a parking ticket or speeding offence.

http://business.timesonline.co.uk/article/...1863766,00.html

FSA warns it cannot police consumer credit

By Caroline Merrell, Banking Correspondent

THE Financial Services Authority gave warning yesterday that giving it responsibility for policing consumer credit could overwhelm its resources.

Consumers bodies have been calling for the FSA to regulate consumer credit as British households wrestle with a debt mountain that has soared through the £1 trillion mark.

......

The FSA told the committee that lenders were still not distributing documents outlining key information on financial products to consumers, despite a large promotional programme. It said that the results of a “mystery shopping” exercise among lenders to see if they were providing this information as required under its rules were “disappointing”.

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I think it's very telling that credit is so unregulated and easy to get, yet opening a bank account is dealt with suspicion and having to prove who you are, which many people have genuine difficulty in doing.

We are told that this is all required to prevent the laundering of money, which can "then be used to fund organised crime and [shock horror] terrorism".

Surely then, in a similar vein it should not be easy to easy to get a credit card, since all you would need to do is go to a cash machine and withdraw lots of lovely bomb-buying money. Bombs are cheap, after all, we are constantly told.

It's almost as if the government don't want people to save money but spend not only all their money today, but tomorrow's money too.

Am I being cynical?

Is there any good reason why getting credit should not be subject to the same ridiculous levels of bureaucracy (assuming you believe they are actually beneficial, which I don't believe at all) as opening a simple savings account?

Funny how the FSA can't police credit, yet have ridiculous rules to harrass savers by putting their private data at risk from having to post documents to nosey banks wanting to find out who your direct debits are to and how much you earn.

Edited by aclwalker

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I think it's very telling that credit is so unregulated and easy to get, yet opening a bank account is dealt with suspicion and having to prove who you are, which many people have genuine difficulty in doing.

We are told that this is all required to prevent the laundering of money, which can "then be used to fund organised crime and [shock horror] terrorism".

Surely then, in a similar vein it should not be easy to easy to get a credit card, since all you would need to do is go to a cash machine and withdraw lots of lovely bomb-buying money. Bombs are cheap, after all, we are constantly told.

It's almost as if the government don't want people to save money but spend not only all their money today, but tomorrow's money too.

Am I being cynical?

Is there any good reason why getting credit should not be subject to the same ridiculous levels of bureaucracy (assuming you believe they are actually beneficial, which I don't believe at all) as opening a simple savings account?

Funny how the FSA can't police credit, yet have ridiculous rules to harrass savers by putting their private data at risk from having to post documents to nosey banks wanting to find out who your direct debits are to and how much you earn.

Yes I've always found this one funny and almost sinister. Mrs Pirata being a dirty foreigner had to jump through all sorts of hoops to get a bank account, but she (and I) are bombarded daily with credit card forms all filled out ready for us to sign.

When are they going to get the message that I DON'T WANT CREDIT!!!!

Actually, given that usuary is forbidden under Islam, maybe the politically correct police should start banning unsolicited credit card/loans correspondence on the grounds they may be offensive, they've already gone after carol services and anything involving pigs after all.

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Guest magnoliawalls

Does anyone feel bothered that the banks do not seem to be considering risk of default when pushing all these loans, credit cards and mortgages?

When I first arrived here I had to jump through endless hoops to get a bank account. I applied for a credit card to get a credit history and was rejected (unsurprisingly). But the credit card company promptly cold called me trying to push a loan for a fairly large amount. This with no credit history in this country whatsoever.

It is as though risk of default is irrelevant, how is that possible? Are the banks' loans packaged and sold on to a third party with little knowledge of the contents of the package? Who is really carrying the risk?

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It is as though risk of default is irrelevant, how is that possible? Are the banks' loans packaged and sold on to a third party with little knowledge of the contents of the package? Who is really carrying the risk?

This is a snippet from a Lex column in the FT recently regarding America (but is equally applicable here):

Banks have been happy to lend to marginal/risky debtors, safe in the knowledge that they could unload many of the loans either on one of the quasi-governmental housing agencies (Fannie Mae, Freddie Mac) or to private investors in asset-backed securities. Many of these loans end up in collateralised debt obligations (CDOs, which slice up bundles of loans into tranches of different riskiness for different investors). Japanese and European investors have been especially enthusiastic buyers of this sort of paper, but there are signs of battle fatigue now: spreads have widened sharply over the past couple of weeks.
Edited by IPOD

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Guest magnoliawalls

This is a snippet from a Lex column in the FT recently regarding America (but is equally applicable here):

QUOTE

Banks have been happy to lend to marginal/risky debtors, safe in the knowledge that they could unload many of the loans either on one of the quasi-governmental housing agencies (Fannie Mae, Freddie Mac) or to private investors in asset-backed securities. Many of these loans end up in collateralised debt obligations (CDOs, which slice up bundles of loans into tranches of different riskiness for different investors). Japanese and European investors have been especially enthusiastic buyers of this sort of paper, but there are signs of battle fatigue now: spreads have widened sharply over the past couple of weeks.

So these asset-backed securities are passed on to speculators and institutional investors such as pension funds?

Is information publicly available on how heavily exposed pension funds are to collateralised debt obligations; and if so where could this be found?

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So these asset-backed securities are passed on to speculators and institutional investors such as pension funds?

Is information publicly available on how heavily exposed pension funds are to collateralised debt obligations; and if so where could this be found?

The most likely holders of such information would be the various central banks; certainly it seems that the Fed has some information on this phenomenon:

http://db.riskwaters.com/public/showPage.html?page=133178

An apparent paradox associated with the rapid expansion of the CDO market is that it has come against a backdrop of a performance track record that can hardly be said to have been distinguished. A study published by Moody’s in February 2003 found that between 1991 and 2002, CDOs had what the agency described as an “extremely high downgrade rate” (of 10.9%) and a very low upgrade rate (of 0.6%). That, Moody’s explained, was “primarily due to the extraordinary number of downgrades and defaults in the corporate bonds that underlie these securities”.

Nevertheless, support for the CDO market from mainstream institutional investors continued to grow. Federal Reserve chairman Alan Greenspan observed in January 2004 that “insurance companies, especially those in reinsurance, pension funds and hedge funds, continue to be willing, at a price, to supply this credit protection, despite the significant losses on such products that some of these investors experienced during the past three years”.

http://www.post-gazette.com/pg/05307/600108.stm

Pension funds have a tradition of conservative investing in blue-chip stocks and top-rated bonds. But the $18 billion Iowa Public Employees' Retirement System holds over $800 million of junk bonds, more than double what it held in 1999. "There's absolutely no reward for investing in government bonds," says Michael Fitzgerald, the state treasurer. "When interest rates are this low, we're looking for more risk." Money has poured into junk bonds in recent years, bringing yields on them to a very narrow 3.5 percentage points above those on super-safe Treasury bonds; three years ago, this spread was 10 points.

Among the most popular are structures known as "synthetic collateralized debt obligations," or synthetic CDOs. Thanks to the magic of financial engineering, they can provide income from a pool of corporate bonds without anyone's needing to actually purchase bonds. The sponsor divvies up the synthetic CDO in slices that represent varying exposures to the risk of losses if any of the companies default. Then the sponsor sells investors the various pieces, according to their tolerance for risk and appetite for higher returns.

But as with other investments, when many are clamoring to buy, returns get squeezed. In a measure of today's high demand, a conservative slice of a typical synthetic CDO now pays only about 0.25 percentage point more than the benchmark rate at which banks lend to one another. Two years ago, comparable synthetic CDOs paid about 1.45 percentage points more than the benchmark rate.

One investor is a U.S. unit of Germany's Commerzbank. Its CDO holdings have risen to $500 million from nothing in three years. And though demand has driven the yield way down, "it's still better than in Germany," says Joachim Doepp, general manager of the U.S. unit.

http://www.pwmnet.com/news/fullstory.php/a...CDO_market.html

http://216.239.59.104/search?q=cache:gMAK1...on+funds+&hl=en

Senior CDO tranches find a home among pension funds, insurance companies, banks and conduits set up by banks that use the high-quality assets as collateral to support commercial paper issued to money market mutual funds and other cash market investors. The mezzanine notes go to insurance companies, banks, mutual funds and hedge funds.

page 25.

http://www.thelongwaveanalyst.ca/news/july28_05_loan.htm

graph_05_july28.gif

http://www.thelongwaveanalyst.ca/news/april19_05_cdo.htm

A few months ago Ian Sideris, a partner at Simmons & Simmons law firm, was completing a contract for a collateralised debt obligation when he asked a delicate question: who was the investor buying this CDO, a complex instrument that allows investors to buy pools of debt? The answer took him aback.

Rather than a hedge fund or bank, as Mr Simkins had expected, the client was an Australian charity. "We need to realise that the universe of investors for this type of product has widened in the last year," he says. "But then you also have to wonder about the capacity of some of these new investors to understand the economics [of what they are buying]."

....

Yet, as the innovation becomes wilder, it also makes more pressing the $445bn question: do investors really understand what they are buying? "I have been to dealer-sponsor events [selling CDOs] and the way they simplify things scares me," says Charles Pardue, of Prytania, a hedge fund. "I fear there are people being lulled into the idea they understand [these instruments] - when they may not."

Indeed, there have already been a couple of awkward incidents. Earlier this year, Barclays Capital, the investment banking arm of the UK bank, settled out of court with HSH Nordbank, a German regional bank, after the German group claimed Barclays mis-sold it tranches of CDOs with a value of £81m. Bank of America faces separate legal action from Banca Popolare di Intra about losses the Italian bank claims it suffered from buying credit derivatives issued by the US group in 2000 and 2001.

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Its all part of the brain washing required to change sentiment, and to put the context of what ever crisis develops and what ever becomes the scare story to culminate panic selling in the pending market bottom.

sp1

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Well the FSA seem to be "disappointed" and will be unable enforce consumer credit controls. Oh my, what a pathetic, weak, organisation this is. It really is quite simple you set out the rules (or the govt. does) and the companies follow them. If financial companies are unable or unwilling to follow some simplae regulatory guidelines THEN THEY HAVE NO BUSINESS TO BE OPERATING, shut them down or fine them immediately if they are found to be contravening the rules. What do we get - more time and rap on the knuckles.

reading between the lines there, I suspect that this is actually a veiled plea for more funding/resources. I doubt they would turn down the opportunity to take on even more regulatory power, but they'll also be keen to maximise the amount of dosh they get to do so

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reading between the lines there, I suspect that this is actually a veiled plea for more funding/resources. I doubt they would turn down the opportunity to take on even more regulatory power, but they'll also be keen to maximise the amount of dosh they get to do so

Beat me to this Fancypants.

Standard Government Department/Regulatory body/delete as appropriate trick. More non jobs soon to be advertised?

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Beat me to this Fancypants.

Standard Government Department/Regulatory body/delete as appropriate trick. More non jobs soon to be advertised?

I'm not entirely sure the exercise would be pointless... if only they weren't shutting stable doors after the horses have bolted over the hills and far away

ps how is Leeds looking tonight? I'm in one of those moods tonight where I really miss the place :blink:

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I'm not entirely sure the exercise would be pointless... if only they weren't shutting stable doors after the horses have bolted over the hills and far away

I read Private Eye and really shouldn't as I just get wound up with all the incestuous, jobs for the boys shenanigans that go on. FSA is a toothless wonder full of people who have worked for the biggest culprits and will always have one eye on going back into private companies. So no rocking the boat there then?

ps how is Leeds looking tonight? I'm in one of those moods tonight where I really miss the place :blink:

Damp and overcast tonight. Suburbs around me (Morley) still shifting a few houses, lots sticking and almost no realistic price reductions yet. Thousands of 2 bed flats still being built/bought by BTL, see Yorkshire HP thread in city centre, slowly working their way out of town into Hunslet and Holbeck (the new Urban Village :lol::lol::lol: ) around Kays/Marshalls Mills. Some nice archecture but area still swarms with drug dealers and prossies.

http://www.housepricecrash.co.uk/forum/ind...?showtopic=2806

If you are missing it...

Council http://www.leeds.gov.uk/

Footie http://www.leedsunited.com/index.asp

Old Leeds http://www.leodis.net/

3D tours http://www.vrleeds.co.uk/

Whats On http://www.leedstoday.net/

Edited by 2112

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Damp and overcast tonight. Suburbs around me (Morley) still shifting a few houses, lots sticking and almost no realistic price reductions yet. Thousands of 2 bed flats still being built/bought by BTL, see Yorkshire HP thread in city centre, slowly working their way out of town into Hunslet and Holbeck (the new Urban Village :lol::lol::lol: ) around Kays/Marshalls Mills. Some nice archecture but area still swarms with drug dealers and prossies.

http://www.housepricecrash.co.uk/forum/ind...?showtopic=2806

If you are missing it...

Council http://www.leeds.gov.uk/

Footie http://www.leedsunited.com/index.asp

Old Leeds

hmm the FSA is partly a cosmetic exercise, true, but you may be surprised by the amount of firms who deeply resent their presence and activity, grumbling about how it makes things tougher for them. I've heard ex-advisers only semi-jokingly rue that mis-selling isn't possible anymore.

I used to live in Hyde Park for ten years. Not too much development there, but boy are those flats along the canal gonna take a real hammering. They won't be able to give em away in 5-10 years time

oh for the simple life... a 15 minute walk into town or work... stroll into town and guaranteed to bump into people I know (actually that was partly behind me leaving!)

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Guest magnoliawalls

The most likely holders of such information would be the various central banks; certainly it seems that the Fed has some information on this phenomenon:

Yet, as the innovation becomes wilder, it also makes more pressing the $445bn question: do investors really understand what they are buying? "I have been to dealer-sponsor events [selling CDOs] and the way they simplify things scares me," says Charles Pardue, of Prytania, a hedge fund. "I fear there are people being lulled into the idea they understand [these instruments] - when they may not."

Thanks IPOD - nice bit of research.

Very scary stuff, as the debt and housing bubble bursts, pensions and other funds will also be hit.

I have no time now but intend to do a bit more reading on this to find out more about who is exposed to the risks of large scale defaults.

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Thanks IPOD - nice bit of research.

Very scary stuff, as the debt and housing bubble bursts, pensions and other funds will also be hit.

I have no time now but intend to do a bit more reading on this to find out more about who is exposed to the risks of large scale defaults.

short answer: everyone

*facetiousness mode off*

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Guest magnoliawalls

short answer: everyone

*facetiousness mode off*

Of course - but some are more exposed than others, and would be interesting to see how this situation developed.

The grey vote have much of the power - they may not give a damn about young families being forced to pay silly money for security of tenure but they will care when they realise their pensions are threatened.

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  • 301 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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