Sunday, January 11, 2009

‘bad bank’ solution or ‘bad government’ solution

Bank bosses discuss mortgage plan

"The government could be set to step in and guarantee mortgage lending under a plan being discussed this weekend. Some of Britain's top bankers are meeting at the prime minister's country residence Chequers. On the agenda is the possible implementation of the Crosby Report, which was published last November. Among recommendations was a plan for the government to provide guarantees on mortgage securities. " Are FTBs really going to jump into the market at the moment even if someone is willing to lend?

Posted by phdinbubbles @ 06:07 PM (1610 views)
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11 thoughts on “‘bad bank’ solution or ‘bad government’ solution

  • I think the big question here is is this really about making money available for FTB’s or is it really about recapitalising bankrupt banks by buying worthless paper off of them at their face value? This right before then end of the tax year too, at a time when banks and building societies will have to submit their accounts and prove that they are solvent.

    I suspect this is the case, but doing so in this way may inspire those waiting to buy a home to get a mortgage if they can and do so. Will it be enough to make house prices rally? A second flurry of greedy speculators and panicking first time buyers? Only time will tell…

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  • The problem up to now as been that any guarantees that the government has offered to banks have come with major strings and exorbitant fees attached.

    Speaking to the BBC, a senior bank executive described fees up to this as “usury” and “a disincentive to lend”.

    Erm. I’m speechless. Talk about pot and kettle. I wonder if that same senior bank executive would describe their own credit card fees as “usury”, or perhaps their own company’s charges.

    I also can’t believe that they’ve commissioned someone to make recommendations on what the government should do to get banks to lend, and that person is – a bank executive!

    Don’t tell me he’s not on the HBOS payroll anymore – that’s not how it works.

    So the bank executive’s solution? Get the government to lend taxpayer money really cheaply to the banks so that the banks can then decide if they want to lend to people at exorbitant “usury” rates.

    Here’s an alternative suggestion, how about we just tell Crosby to go to hell, and let the technically insolvent HBOS go out of business?

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  • Big Government doesn’t solve problems, it magnifies them.

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  • “…Up to 2000 the banks were self funding, which means they only lent out money they had on their books” where did he get that one from ????????If only he knew.

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  • “Are FTBs really going to jump into the market at the moment even if someone is willing to lend”?

    The short answer is yes. If you can spin the “opportunity” the “right” way, then its possible. Labour’s hold on power is linked to house price stability – and that means a flatline, or possible “recovery”.

    I’m sure there will be voices saying it must not happen, but if you think back, sensible people told us that we shouldn’t attack Iraq as there were no Weapons of Mass Destruction.

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  • tyrellcorporation says:

    “The short answer is yes”

    Um, no, not if you’re about to lose your job you’re not!

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  • Potential FTB’s are generally the first to loose their jobs and no-job = no-mortgage, or at least it used to.

    House price stability has passed away with 2007 levels being achievable by 2017 if we look at historical data from 1988-1998.

    Perhaps the New Labour Bad Bank could re-inflate the bubble by giving 10x salary loans to anyone under 40 with a pulse, after all they could effectively live rent free if it was state guaranteed (just add the interest to the amount owed), add a bit of state sponsored inflation (property or wage) and bobs your uncle Gordon gets out of jail free.

    Who needs a state/council house building programme when the Bad Bank can do it all without lifting a trowel.

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  • voiceofreason says:

    Am I thick ? Is it just me that doesn’t want the “debt markets” to open up again ? It seems govt wants them back.
    But they just encourage people to borrow what they can’t pay back…
    I quote:

    “The BBC has learned that neither the banks nor the government are aiming for a return to the levels of lending seen in 2007 – described by a senior banker as “heady” – nor do they want to see a return to banks relying solely on the money they get in from savers. That would lead to a collapse in house prices. ”

    Doh ! It wouldn’t lead to a collapse in house prices.
    It would lead to NORMAL house prices. Flippin idiots.

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  • “nor do they want to see a return to banks relying solely on the money they get in from savers. That would lead to a collapse in house prices.”

    I’ve got some monopoly money they could use. Failing that they could try this website I’ve found with a link to ‘What if the Bank runs out of money?’

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  • All UK population should max out on debt go bankrupt and leave this country.

    That my friends is the only thing that makes sense to me right now. MENTAL

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  • voiceofreason says:

    Tim to call International Rescue 🙂

    What’s that Parker ?

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