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The Retail Banking Administration Act 2008
RabbitMad
Posts: 2,069 Forumite
I've solved the Banking Crisis
OK hindsight is a wonderful thing but with this solution both NR and HBOS fiascos could have been avoided.
The Retail Banking Administration Act 2008
In the event of a retail bank having to enter administration the goverment will guarantee all retail deposits.
All assets of the company shall be frozen (except retail deposits with interest added up unitl the administration date which will transfered to a NS&I special rescue vehicle offering bank account and savings accounts)
The companies assets shall then be valued by an independant 3rd party with the whole lot going up for auction.
Should the auction not cover the value of the retail assets then the government shall keep all assets and run the bank itself with creditors and shareholders getting nothing.
Once the bank has been wound up the NS&I special rescue vehicle shall be re floated on the stock market or split up into tranches and sold off to the highest bidder.
Obviously we need a little work around the edges but in essence this would have prevented NR and HBOS because if a bank goes bust the retail account holders are 1st in line and those creditors that force the bank into administration would get nothing hence they wouldn't do it.
Who thinks this is a good idea?
OK hindsight is a wonderful thing but with this solution both NR and HBOS fiascos could have been avoided.
The Retail Banking Administration Act 2008
In the event of a retail bank having to enter administration the goverment will guarantee all retail deposits.
All assets of the company shall be frozen (except retail deposits with interest added up unitl the administration date which will transfered to a NS&I special rescue vehicle offering bank account and savings accounts)
The companies assets shall then be valued by an independant 3rd party with the whole lot going up for auction.
Should the auction not cover the value of the retail assets then the government shall keep all assets and run the bank itself with creditors and shareholders getting nothing.
Once the bank has been wound up the NS&I special rescue vehicle shall be re floated on the stock market or split up into tranches and sold off to the highest bidder.
Obviously we need a little work around the edges but in essence this would have prevented NR and HBOS because if a bank goes bust the retail account holders are 1st in line and those creditors that force the bank into administration would get nothing hence they wouldn't do it.
Who thinks this is a good idea?
0
Comments
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I've solved the Banking Crisis
OK hindsight is a wonderful thing but with this solution both NR and HBOS fiascos could have been avoided.
The Retail Banking Administration Act 2008
In the event of a retail bank having to enter administration the goverment will guarantee all retail deposits.
All assets of the company shall be frozen (except retail deposits with interest added up unitl the administration date which will transfered to a NS&I special rescue vehicle offering bank account and savings accounts)
The companies assets shall then be valued by an independant 3rd party with the whole lot going up for auction.
Should the auction not cover the value of the retail assets then the government shall keep all assets and run the bank itself with creditors and shareholders getting nothing.
Once the bank has been wound up the NS&I special rescue vehicle shall be re floated on the stock market or split up into tranches and sold off to the highest bidder.
Obviously we need a little work around the edges but in essence this would have prevented NR and HBOS because if a bank goes bust the retail account holders are 1st in line and those creditors that force the bank into administration would get nothing hence they wouldn't do it.
Who thinks this is a good idea?
I think it's a lot better than the US idea of nationalising the debt of the bank and just letting get on and make profits for the private shareholders. (Socialise the losses, privatise the profits)
I'd say nationalise any failing banks, guarantee the deposits, get the bank into order, wait for recovery and then use profits made in the future to repay the public purse for the cash sunk into underwriting the bad debts.
Once the bank has paid its debt to the taxpayer and is making profits, float it on the market. Broadly similar to what you suggest.
It's a lot better than taking on hundreds of billions of dollars of toxic debt with no idea of when it can be sold on, or for how much with no upside other than the possibilility that the debt might become worth something again, someday.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
I've solved the Banking Crisis
OK hindsight is a wonderful thing but with this solution both NR and HBOS fiascos could have been avoided.
The Retail Banking Administration Act 2008
In the event of a retail bank having to enter administration the goverment will guarantee all retail deposits.
All assets of the company shall be frozen (except retail deposits with interest added up unitl the administration date which will transfered to a NS&I special rescue vehicle offering bank account and savings accounts)
The companies assets shall then be valued by an independant 3rd party with the whole lot going up for auction.
Should the auction not cover the value of the retail assets then the government shall keep all assets and run the bank itself with creditors and shareholders getting nothing.
Once the bank has been wound up the NS&I special rescue vehicle shall be re floated on the stock market or split up into tranches and sold off to the highest bidder.
Obviously we need a little work around the edges but in essence this would have prevented NR and HBOS because if a bank goes bust the retail account holders are 1st in line and those creditors that force the bank into administration would get nothing hence they wouldn't do it.
Who thinks this is a good idea?
You're confusing assets and liabilities. For a bank, customers' deposits are liabilities and loans are assets.
What happens to secured lenders? Repos are a very big source of funding for most banks. That is where you give someone some Government bonds to hold and in return get cash. Would you expect the lending bank to return bonds to an insolvent institution in the knowledge that they wouldn't get their money back?
What happens if the repo is with a foreign bank? It would be pretty tough to make a foreign bank return the bonds.
It's a nice idea but I don't see how it would work in practice.0 -
Yep sorry I meant should the auction not cover the value of the deposits.
I'm not really that familiar with the whole way banks are funded but got the idea because it was reported on the news that both NR and HBOS had borrowed lots of money from the markets.
Secured lenders would be next in line and yes I would expect them to return the "Repos" knowing they'd get nought back, with the government seizing any assets not returned.
With jonny foreigner banks, just seize the assets in the UK.
However the whole idea of the act it to prevent a bank collapsing as it would domino effect through the whole sector and therfore any bank demanding payment would be ensuring their mutual destruction.
I see it as a kind of nuclear deterant.0 -
Yep sorry I meant should the auction not cover the value of the deposits.
I'm not really that familiar with the whole way banks are funded but got the idea because it was reported on the news that both NR and HBOS had borrowed lots of money from the markets.
Secured lenders would be next in line and yes I would expect them to return the "Repos" knowing they'd get nought back, with the government seizing any assets not returned.
With jonny foreigner banks, just seize the assets in the UK.
However the whole idea of the act it to prevent a bank collapsing as it would domino effect through the whole sector and therfore any bank demanding payment would be ensuring their mutual destruction.
I see it as a kind of nuclear deterant.
You'd end the repo market in the UK at a stroke which would increase the cost of borrowing for consumers and businesses, probably substantially.0 -
You'd end the repo market in the UK at a stroke which would increase the cost of borrowing for consumers and businesses, probably substantially.
Oh well; I knew it couldn't be that simple otherwise Clown and his puppet would have thought of it.
Anyway today I've decided to solve world hunger.
What we do is put a great big motor onto some iceburgs and sail them down to africa. Hey presto instant irrigation for lots of crops.
Come back tomorrow when I solve world piece.0 -
Oh well; I knew it couldn't be that simple otherwise Clown and his puppet would have thought of it.
Anyway today I've decided to solve world hunger.
What we do is put a great big motor onto some iceburgs and sail them down to africa. Hey presto instant irrigation for lots of crops.
Come back tomorrow when I solve world piece.
It's the problem with intervening in markets: you solve one problem and in doing so create another.
Take maternity rights. One company I worked for (which was not run by men!) took a decision not to interview any woman of childbearing age because it's a pain in the whatsit when someone you rely on goes on maternity leave. It's illegal (and rightly) but try proving it's happening.0 -
It's the problem with intervening in markets: you solve one problem and in doing so create another.
Take maternity rights. One company I worked for (which was not run by men!) took a decision not to interview any woman of childbearing age because it's a pain in the whatsit when someone you rely on goes on maternity leave. It's illegal (and rightly) but try proving it's happening.
Its also very stupid. You are excluding a large pool of potentially excellent people. And whilst it maybe a pain there is usually plenty of notice (4-6 months) and therefore time to plan around this.
Also what is child bearing age? Did they not interview any women until their late 40's. On TV last night was Britain's Youngest Grannies (all in their 30's but the youngest ever was 26 I think) so they all had kids in their teens. On the other hand I know several ladies that didn't have their 1st child until early / mid 40's.0 -
Its also very stupid. You are excluding a large pool of potentially excellent people. And whilst it maybe a pain there is usually plenty of notice (4-6 months) and therefore time to plan around this.
Also what is child bearing age? Did they not interview any women until their late 40's. On TV last night was Britain's Youngest Grannies (all in their 30's but the youngest ever was 26 I think) so they all had kids in their teens. On the other hand I know several ladies that didn't have their 1st child until early / mid 40's.
They wouldn't consider any woman under the age of 40.0 -
Rabbit mad, its not the organisational problems that maternity leave poses, its the financial ones.
Its not uncommon for women (I am a woman too bTW) to have several children, taking ..as is their right...maximum paid and unpaid periods of time, and then, immeadiately their last child is born and maiximum benefit received to hand in their notice. This is very, very costly to employers in good times, in bad times you can see how this might not just be offputting but fnancially terrifying for employers.0 -
I assume they weren't an agency for P.E. Supply teachers or they were wasting their time. ;-)0
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