Bank of England DERANGED?!

sabretoothtigger

Under the Transfer Order, the FSCS has paid out approximately £14bn to enable retail deposits held in Bradford & Bingley and covered by the FSCS to be transferred to Abbey Santander. The Treasury has made a payment to Abbey Santander for retail deposit amounts not covered by the FSCS, amounting to approximately £4bn, to be transferred to Abbey Santander. In return, the FSCS and the Treasury have acquired rights in respects of the proceeds of the wind-down and realisation of the assets of the remaining business of Bradford & Bingley in public ownership.

B&B deposits were not saved cost free, the company had massive debts that far outweighed those deposits (40 vs 20bn aprox and deposits are a loan to them anyway). What happened afaik is the bank was classified as a failed bank, fscs is responsible for that and in this case the government is making them pay the total bill I think

Meanwhile government holds b&b debt and manages it, any shortfall through default will be paid off by every bank and bs in the uk in proportion to their market share of uk depositors.
The fscs will be paying these bills starting in 2009 and for many years afterwards if the worst should happen I suppose

I should have just googled the link, here it is:
http://www.fsa.gov.uk/pages/Library/Communication/Statements/2008/bradford_bingley.shtml

john_s_2

martinman3 wrote: »

Actually, the FSCS does compensate small businesses, the definition of which is a business with a turnover of less than £1m, up to £50k just like personal customers.

Thanks for the clarification.

sabretoothtigger

Ditto, was news to me

Buzzbox

I just found this article, quite fresh stilll..... *gulp*.... bye bye interest!

http://uk.news.yahoo.com/22/20090103/tuk-uk-britain-bank-fa6b408.html

opinions4u

Here's how I see it.

1) The banks were lending too much money.

2) That source of that money (wholesale funding) dried up.

3) The government has replaced that short term, but the amount of loans outstanding is reducing as banks realise that they cannot rely on this source of funding longer term, and the risk of lending in the short term is higher too.

4) As the government has only replaced that funding short term, it hasn't pumped extra money in to the economy. It has merely replaced what was removed. This should not, therefore, be an inflationary act on its own.

5) The government pocketed £bns in stamp duty, inheritance tax etc and instead of saving it for a rainy day spent it. In my view wastefully. Others may consider the trebling of spending on health (double in real terms) has delivered value for money. Impossible to sustain if the economy is screwed though.

Whether the current interest rate policy will work, I don't know. It seems to me to be a way of smoothing the impact of the credit crunch in a way that gives us all time to adjust to the new world bank lending is going to have to operate in. I think that smoothing effect will be more palatable than the other alternatives suggested. But still bloody painful.

martinman3

dunstonh wrote: »

The FSCS has had to pay out significant amounts. Especially with B&B

But the FSCS didn't compensate anyone directly and no claims needed to be made to them, that was what I meant.
I acknowledge that levies will be increased to cover the difference between final value of B&B mortgage book and £14bn of missing deposits, and the annual interest.
Did B&B even have business accounts ?

I assume that as the Chancellor had guaranteed all deposits regardless of size and as they had access to all account details it was simpler and quicker to move the accounts to Santander and pay them the difference from the FSCS.

I am sure that the FSCS has a lot more employees now.;)

zarazara

if everybody lived within their means and borrowing could only be for realy good business ideas/purposes then things would be alright.

Nick_C

silentfox wrote: »

Those borrowing are the same people who have been telling others over the last few years... "guess what my house had gone up by £100K" again this is a daft point, unless you sell and buy a smaller house you are no better off.

I so agree, and it worries me that the Government and the Media are still talking about falling house prices as if that were a bad thing. Falling house prices are a good thing - property is still much too expensive. You should be able to buy a decent home for 3 times average salary, and you can't - its still at least 5 times or much more.

I heard again this morning on the BBC that the number of new mortgages is at a low level - that's a good thing - people should not be buying property at these current high prices.

A home should be a place to live, and should be affordable - it should not eb seen as an investment.

melbury

So what are retired savers supposed to live on - fresh air? Interest rates are going far too low:eek:

melbury

zarazara wrote: »

if everybody lived within their means and borrowing could only be for realy good business ideas/purposes then things would be alright.

I don't think many people are capable of living within their means - especially younger people.

The mentality is "I want it all and I want it now" and why shouldn't I have it when other people have - instant gratification? It's crazy, people need to get back to actually saving for things they want rather than sticking it on a credit card - I am sure they would appreciate it more.