Has the Government set a precedent?

oldfella

People knew about the guaranteed limit and the risk of savings with a foreign bank.

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not necessarily - I took out a 1 year account a year ago, and at that time the passport setup wasnt at all clear - the line at the time was - your savings are safe up to £35K. The passport was clarified a few months later

CluelessJock

baby_boomer wrote: »

They're not misleading us. What's the problem?

We might think they might not take that [political] risk, but we don't know for certain. It's something that people can use their judgement about if they are of a gambling nature.

Why should government take away the need for personal judgement?

What you know is that they are covering amounts up to £50K in the FSCS. That's crystal clear and there's no room for doubt.

I am not arguing the Government should take away the need for personal judgement, in fact I am firmly in the opposite camp.

My question is; is it reasonable for Anglo Irish savers to expect the Government to safe guard them in the event the Irish Government could not?

baby_boomer

It's not reasonable.

And why is Ango-Irish Bank offering such a high 2 year bond anyway when it has already benefitted from a savings inflow in the wake of the Irish government guarantee?

Why should the UK taxpayer subsidise / underwrite the risk takers among us?

And why has the Dublin government broken ranks from the rest of the EU when it can't afford its own guarantee should it ever come to it?

apt

When Darling made the original statement he also made it clear that the government was not obliged to go beyond the FSCS limits and that the decision to do this was not a precedent. If it were not for the crisis of confidence in the banking system and government's deep unpopularity I suspect the Icesave deposits would have been returned beyond the FSCS compensation scheme limits in the first place.

Scottish_Icesaver

baby_boomer wrote: »

He's gambling, with taxpayers' money, on not having to. It's hard to see how he could distinguish if similar circumstances arose.

I always thought it was a bad precedent, made for political purposes so that Gordon can say "No saver lost money on my watch in a savings account with a protection scheme in which the UK government was involved."

He should have let the £50K+ people lose money, there would have been a very useful repatriation of dosh to UK banks and it would have educated people about the £50K limit better than any advertising campaign.

And the £50K+ people who lost money might still have been grateful because the government raised the limit from £35K at the 11th hour.

However it is unreasonable to expect a statement on a future unfunded commitment.

This would make it a definite liability and the Treasury shouldn't have to tie up taxpayers' money in the event of Armageddon, because that's exactly when taxpayers' money won't be available.

And then there is the moral hazard of giving carte blanche to savers to chase the top rates via sites like MSE without a care in the world. It wouldn't help responsible banks in tough times.

Are you saying that the right thing to have done would have been to only cover the amount between the Icelandic 'guarantee' i.e £16,200 and £50,000 i.e. what they were limited to by the compensation scheme in place.

I suspect you aren't and are in fact saying that it was okay for the gov't to go over and above what was included in the FSCS guarantee for the first £16,200 but not okay for them to go over the guarantee for amounts > £50K which, if it is the case, I'd like you to explain a bit.

baby_boomer

Correct. I've come round to the view that supporting savers up to £50K with taxpayer freebies was probably least damaging approach in the current crisis on pragmatic grounds.

I don't like the taxpayer forking out such liabilities which go beyond prior commitments but the ordinary saver probably needed reassuring to avoid wider panic and queues at bank branches.

I do still think the £50K+ saver should be able to look after themselves. It's not the government's job to help the banks by guaranteeing everyone for everything. And those with £50K+ in various banks have no doubt been moving their money in recent weeks, regardless of the fact that the government backed the £50K+ IceSavers.

Scottish_Icesaver

baby_boomer wrote: »

Correct. I've come round to the view that supporting savers up to £50K with taxpayer freebies was probably least damaging approach in the current crisis on pragmatic grounds.

I don't like the taxpayer forking out such liabilities which go beyond prior commitments but the ordinary saver probably needed reassuring to avoid wider panic and queues at bank branches.

I do still think the £50K+ saver should be able to look after themselves. It's not the government's job to help the banks by guaranteeing everyone for everything. And those with £50K+ in various banks have no doubt been moving their money in recent weeks, regardless of the fact that the government backed the £50K+ IceSavers.

I can't really understand why you say it was necessary for the gov't to go beyond its obligations with the portion of the cash covered by the icelandic guarantee but not go over its obligations for those with over £50K. Unless of course you think they're not 'ordinary savers' which is one heck of a subjective judgement to make.

The precedent had been set with Northen Rock and B&B so I can't see it changing until this particularly nasty episode is over and I do believe the gov't will again raise the limit beyond £50K. While it's not the governments job to guarantee eveything for everyone it is there's to regulate much more effectively and I sincerely hope that when the dust settles there will be much stricter regulation of those banks who want to take UK savers savings than there has been in the last few years.

And I also think it's the job of people who run sites like this, and make good money from it, to try to in a simple, but clear and meaningful way to rate the security of the different banks.

CluelessJock

baby_boomer wrote: »

Why should the UK taxpayer subsidise / underwrite the risk takers among us?

Is that not exactly what they did when they bailed out the banks, underwrite the biggest risk takers, who are actually responsible for putting peoples savings at risk (not that there was an option).

If Anglo Irish had to go I think the Government would find it difficult not to cover up to the full £50K.

If ING had to go I think the Government, having approved the Kaupthing Edge take over, would find it incredibly difficult not covering up to £100K minimum for anyone having £50K in each institution prior to the take over, bearing in mind they would have had to cover the whole £50K in KE had it gone.

With the situation becoming more complex as the 'crisis' deepens I think it is the Governments responsibility to be crystal clear to stop the excessive theorising and speculation!

baby_boomer

Just because the government has done a few undesirable things, that doesn't mean that it should have to write them into a rulebook to constrain its future behaviour - especially if it involves huge future expenditure.

One of the problem with splurging £100bns is that once you've done it once, you start to wonder why you can't do it again!

CluelessJock

baby_boomer wrote: »

One of the problem with splurging £100bns is that once you've done it once, you start to wonder why you can't do it again!

That is exactly my point, people will expect it to be done as many times as necessary. If the Government is not prepared to do it then we should be told this.