Monday, October 4, 2010

Banks are being propped up by the taxpayer

Banks may ask for more cash to plug £750bn funding gap, says thinktank

Britain's banks may soon demand a further bailout from the public purse despite £1.2tn already being put at risk to prop up the system.

Posted by devo @ 06:40 AM (2580 views)
Please complete the required fields.



21 thoughts on “Banks are being propped up by the taxpayer

  • More on this at Sky News:

    Faced with a huge financial black hole, the New Economics Foundation (NEF) has said the banks could turn again to the Government for support.

    According to its report – Where Did Our Money Go? – an estimated £1.2trillion of state cash has already been pumped into the banking system.

    However, NEF has described a “shocking” lack of information about how that money has been used and demanded “urgent reform”.

    The report warns that the industry is on a collision course for a severe funding crisis when current financial lifelines are withdrawn.

    In particular, there are fears over the Bank of England’s Special Liquidity Scheme – a vital source of money since the credit crunch – which ends in 2012.

    Reply
    Please complete the required fields.



  • You guys were right all along! They would make cutbacks and these would go strait to the bankers.. Well the strikes have started, when will the riots commence?

    Reply
    Please complete the required fields.



  • Why hasn’t this been forseen by the financial services industry? If they can plan their next Porche acquisition, how come they didn’t see this coming down the track?

    Reply
    Please complete the required fields.



  • This is why a HPC is unthinkable, for the government & banks.

    Reply
    Please complete the required fields.



  • They are liberally confusing the money needed for liquidity (i.e. lending) and that required as capital (i.e. to have a cushion against borrower defaults).

    SLS will disappear – because the BoE will not want to lose face. But it will be in name only. Watch for QE2 to buy up the banks’ MBS and possibly establish a ‘temporary’ Fannie-like agency.

    In terms of capital – I expect the government will participate in any rights issues required. But when oh when will they stop the leakage of vast amounts of capital in terms of wages and bonuses…after all, the ‘geniuses’ at the banks are only making a profit because of the BoE and taxpayer support.

    Reply
    Please complete the required fields.



  • The farcical thing is that the folks they owe most of the money to are us the taxpayers. So we are going to give them more money so they can keep paying us back. And themselves bonuses, of course.
    I love the Daily Mail Dacre drivel about ‘banks making profits again shock’, when in fact Lloyds profit last time around was obviously nowhere near enough to pay back the last bailout.
    Note how the oleaginous Daniels made his exit to retirement before this hit.
    People only have themselves to blame: it was obvious this would happen.

    Reply
    Please complete the required fields.



  • slartibartfast says:

    We are lucky they managed to get the bonus payments out before the tax changes. What state would they be in without all the talent?

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    The NEF are die hard lefties and so they exaggerate a bit, but let’s not forget that the official gross figure for bank support bandied around a year ago was £850 billion (of which some would be repaid, of course, no idea what the net figure was). So their figure of £1.2 trillion might be just about plausible.

    Reply
    Please complete the required fields.



  • What banks? Barclays? HSBC? I don’t think so…so which banks are they talking about? The main British banks have far better capital adequacy ratios than most of their foreign competition. When Basel 111 was announced, there was panic amongst many European banks but most of ours had already comfortably exceeded the stringent new capital requirements. You’ve got to give some thought to who’s behind this alarmist nonsense. You’re being played.

    Reply
    Please complete the required fields.



  • What banks? Barclays? HSBC? I don’t think so…so which banks are they talking about? The main British banks have far better capital adequacy ratios than most of their foreign competition. When Basel 111 was announced, there was panic amongst many European banks but most of ours had already comfortably exceeded the stringent new capital requirements. You’ve got to give some thought to who’s behind this alarmist nonsense. You’re being played.

    It could be a liquidity issue. Depends whether the banks freely lending to each other.

    Reply
    Please complete the required fields.



  • @8 flashman said :

    “You’ve got to give some thought to who’s behind this alarmist nonsense. You’re being played.”

    Can you expand on this? Mark has said the NEF are lefties, but I’m still in the dark.

    Reply
    Please complete the required fields.



  • hi alan: There are four “reform” bullet points in their report. Here’s one of them.

    “The transformation of the bailed-out Royal Bank of Scotland into a Royal Bank of Sustainability which must redirect its investment away from fossil fuels and towards building green infrastructure”.

    Reply
    Please complete the required fields.



  • the number cruncher says:

    MW & Alan

    James Robertson and his wife (the principle force behind NEF are not hard lefties (I am a hard lefty – so I should know) they are free market advocates, pushing forward the agenda of money creation not being in the hands of private banks. They have a social and environmental slant to all their work and frame monetarism and that nearer perfect free markets are a solution to moral problems.

    I have great sympathy with them.

    Reply
    Please complete the required fields.



  • Sorry alan, my last post is a bit light on explanation. Here’s a link to their website. It is a remarkably thin and unfocused report. As you will see, the bail out claim is completely unsubstantiated. They basically pulled it out of thin air. Mandelson and Campbell may be gone but new old labour and pals have officially started their election campaign with remarkably similar tactics

    http://www.neweconomics.org/press-releases/banks-set-to-demand-fresh-bail-out-in-2011-warns-think-tank

    Reply
    Please complete the required fields.



  • Capital adequacy requires banks to carry as capital a small fraction of their loan book. Whether this is adequate is anyone’s guess, based as it is on a multitude of imponderables that make up the future. The stress tests were designed to deal with this but clearly there are limits to this. I’d therefore neither insist that capital adequacy is sufficient or indeed insufficient, although some observations can be made on a relative basis. Thing might better here than Europe, and perhaps worse here than in the states where the bubble in property appears to be largely deflated. What is plain is that if capital adequacy is insufficient there is now a process for dealing with the issue.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    James Robertson is top man, but I take a lot of interest in think tanks, and take if from me, NEF are on the loony left fringe.

    I prefer Institute for Fiscal Studies, Reform, Bow Group, Policy Exchange or even Compass etc who are more middle of the road, i.e. just as likely to publish something left wing as something right wing. Heck, even Institute for Economic Affairs or Adam Smith Institute occasionally point out that we should legalise and tax drugs, or that rising house prices make us poorer (in among the usual knee jerk right wing dross).

    Reply
    Please complete the required fields.



  • In the run up to the last election, this Robertson chap published a newsletter, in which he reasoned that, of the three main party leaders, Gordon Brown was the most likely to properly regulate the banks, if he won the general election. ARRRROOOOO

    Reply
    Please complete the required fields.



  • cat and canary says:

    Anyone who promotes the “Happy Planet Index” (HPI) as an alternative to GDP is probably a bit lefty!

    Reply
    Please complete the required fields.



  • MW “take if from me, NEF are on the loony left fringe”

    That’s a bit like taking “meat is murder” from a vegetarian isn’t it?

    Had a listen to nc’s video above. Land tax, citizens income, … Is James Robertson your mentor mark? You old lefty you.

    Reply
    Please complete the required fields.



  • In the run up to the last election, this Robertson chap published a newsletter, in which he reasoned that, of the three main party leaders, Gordon Brown was the most likely to properly regulate the banks, if he won the general election. ARRRROOOOO

    If that is true, then taking the New Economics Foundation seriously is going to be very, very difficult.

    Reply
    Please complete the required fields.



  • [email protected]

    If that is true, then taking the New Economics Foundation seriously is going to be very, very difficult.

    …..in your blue rinsed opinion, perhaps.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>