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Metro Bank - It's like 2008 all over again

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On 16/05/2019 at 15:13, Si1 said:

Buy or rent a much smaller house in a cheaper area than you would otherwise have done, and maximise your tax efficient investments elsewhere.

Yes I've been doing that since 2006...and I would be £100ks better off had I maxed out on debt and bought...and I would have had the enjoyment of a nicer home all those years...

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59 minutes ago, 24gray24 said:

 Not in practical terms it can't.  

The government would have to tell it to; and the government doesn't want a rebellion.

There's also the consideration of how to pay for it... in practical terms it may be cheaper to let the banks go bust. 

The BOE would print the money and lend it to the FSCS  (either directly or via HMT). That is how FSCS is set up. It is not arranged in the hope that the Bank will indulge it. 

There would be no unaffordable collapse. The government is obligated to pay out under it anyway. And removing this protection illegally would open it to legal action and also remove confidence in the banking system as a whole. 

Metro would be bailed in anyway. There would be no impact on ordinary depositors and it is unlikely that the FSCS would need to be called upon. 

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1 hour ago, 24gray24 said:

 Not in practical terms it can't.  

The government would have to tell it to; and the government doesn't want a rebellion.

There's also the consideration of how to pay for it... in practical terms it may be cheaper to let the banks go bust. 

 

 

Yes it can.

Central banks guveth n central banks taketh.

BoE print enough to make whole losses. If the money causes inflation then BoE raises rates and pulls money out of the economy.

UK banks are finally in a good position. The ones that may go bust, inc. MetroBank, are getting their equity destroyed rather than bailed out.

I did not fully understand how banks worked. Why should I? Im not a banker. However it turned out few people in the run up to 07 did. And tgey were Pols, central bankers and bankers.

 

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1 hour ago, Wayward said:

Yes I've been doing that since 2006...and I would be £100ks better off had I maxed out on debt and bought...and I would have had the enjoyment of a nicer home all those years...

What have you invested in though at the same time?

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14 hours ago, rantnrave said:

There's some chronological confusion in that analogy me thinks...

Fair play, I got my dates wrong.  What I was hamfistedly trying to capture was elegantly done by Ah-so.

 

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I can only assume, Wayward, that you've compared cash investing to buying assets (of any type) and come up short. Which isn't what I said at all.

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2 hours ago, Si1 said:

I can only assume, Wayward, that you've compared cash investing to buying assets (of any type) and come up short. Which isn't what I said at all.

I put a lot into my pension to ensure I don't pay 40% tax..

I am invested in equities...mostly high divi and international.

I hold cash... p2p , regular ISA and prem bonds  (about one third of my wealth,)

And I am invested in a family business. (Another risk of not piling into housing full out is family circle around knowing you have liquidity)

Taking that all into account and my rent paid and at least 60% HPI since HTB etc...I am well down. I am sure most other HPCers in the SE are in a similar position.

 

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11 minutes ago, Wayward said:

I put a lot into my pension to ensure I don't pay 40% tax..

I am invested in equities...mostly high divi and international.

I hold cash... p2p , regular ISA and prem bonds  (about one third of my wealth,)

And I am invested in a family business. (Another risk of not piling into housing full out is family circle around knowing you have liquidity)

Taking that all into account and my rent paid and at least 60% HPI since HTB etc...I am well down. I am sure most other HPCers in the SE are in a similar position.

 

My apologies, I thought you were being evasive, soz

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1 hour ago, Si1 said:

My apologies, I thought you were being evasive, soz

No probs...I am just extremely angry that those that invested in the productive economy and not housing have been so severely punished by this government...the system is set to enrich the owners of land and property. Swim against that and expect to suffer the consequences.  I am in a particularly grumpy mood because the conversation with a few mates at the weekend turned to when they will pay off their mortgages...

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1 hour ago, Wayward said:

No probs...I am just extremely angry that those that invested in the productive economy and not housing have been so severely punished by this government...the system is set to enrich the owners of land and property. Swim against that and expect to suffer the consequences.  I am in a particularly grumpy mood because the conversation with a few mates at the weekend turned to when they will pay off their mortgages...

indeed. the subsidy of ludicrous low interest rates will have huge issues down the line, already has, I hate it

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On 16/05/2019 at 15:13, Si1 said:

Buy or rent a much smaller house in a cheaper area than you would otherwise have done, and maximise your tax efficient investments elsewhere.

I do rent a smaller cheaper house. have made use of pension contribution and ISA each year, but agree I have not made any investments, a capital at risk investment in FTSE would have created 5% return.

spy's quote exposes to the forum what idealy should happen right from TC to Base rate, this knowledge causes harm when realising it may not happening in one's lifetime. Brainstorming happening here with no access to power or position is what bothers me.

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Interesting post from BOE in 2015:

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the  bank holding it in trust for them, but rather they are one of the general creditors of the bank"

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2015/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters.pdf?la=en&hash=D6ACD5F0AC55064A95F295C5C290DA58AF4B03B5

I wonder what the reaction would be if a lot more people understood this..

 

 

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6 minutes ago, Assume The Opposite said:

Interesting post from BOE in 2015:

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the  bank holding it in trust for them, but rather they are one of the general creditors of the bank"

https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2015/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters.pdf?la=en&hash=D6ACD5F0AC55064A95F295C5C290DA58AF4B03B5

I wonder what the reaction would be if a lot more people understood this..

 

 

It's well known to people on this site. I only hope that folks spread their money around a bit so that if one of their banks goes down they have another source of funds to keep them going for the 6 months it will take to get compensation.

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19 minutes ago, micawber said:

It's well known to people on this site. I only hope that folks spread their money around a bit so that if one of their banks goes down they have another source of funds to keep them going for the 6 months it will take to get compensation.

No bank is going down. 

Rug and dust pan method 

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Bank of England finds poor practices across UK challenger banks

https://www.ft.com/content/9482944c-8e8e-11e9-a24d-b42f641eca37

Who have thought it!

Bunch of shyster and idiots allowed to set up banks.

Like challenger banks were an act of desperation from UKGOV/BoE as a result of standing by (forced by Gordy) as all the several dozen banks that existed 20 odd years ago were bought by either HBOS or RBS, who then promptly went bust, destroying UK banking capacity.

It would have been a lot cheaper if UKGOV/BoE had said 'No' multipe times 97->2007. But then Gordy would not have looked like a genius....

 

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2 hours ago, spyguy said:

Bank of England finds poor practices across UK challenger banks

https://www.ft.com/content/9482944c-8e8e-11e9-a24d-b42f641eca37

Who have thought it!

Bunch of shyster and idiots allowed to set up banks.

Like challenger banks were an act of desperation from UKGOV/BoE as a result of standing by (forced by Gordy) as all the several dozen banks that existed 20 odd years ago were bought by either HBOS or RBS, who then promptly went bust, destroying UK banking capacity.

It would have been a lot cheaper if UKGOV/BoE had said 'No' multipe times 97->2007. But then Gordy would not have looked like a genius....

 

What 'poor practices' do they cite? I can't read due to the paywall.

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31 minutes ago, Ghostly said:

What 'poor practices' do they cite? I can't read due to the paywall.

Poor Commercial Lending Underwriting. High risk appetite that is not reflected in their risk modeling.

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/9482944c-8e8e-11e9-a24d-b42f641eca37

In what was for some of them a damning assessment, the BoE found that many new lenders displayed an “inability to explain assumptions” in their stress-test models and an “aggressive” focus on growth, even though they tend to make riskier loans.

 



"In what was for some of them a damning assessment, the BoE found that many new lenders displayed an “inability to explain assumptions” in their stress-test models and an “aggressive” focus on growth, even though they tend to make riskier loans."

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59 minutes ago, Ghostly said:

What 'poor practices' do they cite? I can't read due to the paywall.

You think of a poor banking practise. And they are doing it.

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9 hours ago, TheCountOfNowhere said:

1 word... P2P

Thats 3!

Metrobank and the like still fall under normalish bank.

P2P is a whole different kettle of mutants. Theres been severAl instances of property development fwittery where the only conclusion ive come to is idiot p2p lending n borrowing.

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1 hour ago, Peter Hun said:

None of the challenger banks do p2p.

Being a bank, they have access to far cheaper funding which is far less of a legal quagmire than p2p.

I assumed the post was more in the way of - If you think the challenger banks are a bit fly then have a look at P2P lenders....

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  • 221 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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