Taxpayer may get £500bn liability

ManAtHome

Every 1% either way is a smidge over £10,000,000,000** (TM Generali) - do you feel lucky..?

**That's 10 billion quid - "a lot of hospitals and schools" as they say (when anyone else suggests any stuff like tax cuts).

treliac

SamIAm wrote: »

Wouldn't it be a bad thing for tax payers if everyone followed this policy? By forfeiting all the banks that have received tax payer’s money then the bank will have no customers, which removes any possibility of the bank’s survival.
If this happens wouldn't the government have to effectively write off the bailouts, which ultimately means all that tax payers money has disappeared down a black hole?

Or have I missed something?

I'm not suggesting you are wrong to have moved your money, it's just I can't see everyone doing this resulting in anything but disaster!

Disaster for those banks probably, but why is that a bad thing? These banks aren't trusted and they aren't responding to our money in the way in which they have been asked to. The message doesn't seem to be reaching their hierarchical circles.

Why not let natural selection take place. Not many of us wanted to give them the money and if a few were allowed to fall on their own swords, perhaps the survivors would be more likely to stick to sensible banking in the future.

I think the govt is digging us into a deeper and deeper grave ATM.

SamIAm_3-2

treliac wrote: »

Disaster for those banks probably, but why is that a bad thing?

Disaster for those banks certainly. But my point was that, now we have had the bailouts and suggesting a boycott on those banks that have received the bailouts, it would be disaster for the taxpayer too. Surely the time for a boycott on banks would have been before the bailouts? Boycotting them now seems a bit like cutting off your nose to spite your face.

treliac wrote: »

Why not let natural selection take place.

I'm not suggesting we should or we shouldn't - I don't fully understand the repercussions of a boycott yet. My question was asked in order to try to understand this better.

Another thing I don't see the full consequences of yet is what would happen if we did let a bank fail? Similar questions have been asked before but they are typically oriented around the consequences of letting _all_ banks fail. My question is restricted to one bank.

I assume that, in administration, outstanding debts to the bank would be demanded back (i.e. all loans, overdrafts, mortgages would need to be immediately repaid). I don't think many people would be in a position to fulfil this otherwise they wouldn't have the debt to begin with. So what happens then?

What would happen with savers (those with deposits greater than that guaranteed by the government) and those with current/business accounts that are in credit?

Apologies if these questions seem simple or have been asked before - I've searched and not found them.

Kenny4315

!!!! ...... £500,000,000,000 that's more 0's than a doughnut factory has ...

Generali

SamIAm wrote: »

I assume that, in administration, outstanding debts to the bank would be demanded back (i.e. all loans, overdrafts, mortgages would need to be immediately repaid). I don't think many people would be in a position to fulfil this otherwise they wouldn't have the debt to begin with. So what happens then?

Usually, overdrafts (which are repayable on demand) are called in by the administrator. Other debts are parcelled up and sold on to others, often (rich) private investors at (say) 50% of face value - often the buyers of such debt will call the debtors and say, "I'll let you off 20% of your debt if you repay it all within 60 days".

Clearly the market for bank originated debt is limited at the moment which would make this more complicated.

SamIAm wrote: »

What would happen with savers (those with deposits greater than that guaranteed by the government) and those with current/business accounts that are in credit?

They'd lose their money or at least most of it.

SamIAm wrote: »

Apologies if these questions seem simple or have been asked before - I've searched and not found them.

There are no stupid questions. If you look around on here you will find many stupid answers, mine among them.

Wookster

Rochdale_Pioneers wrote: »

Yes, its £1.3tn. Assuming that the banks are defaulted on every penny they are owed. And assuming that every penny of assets the banks own are utterly worthless.

So yes, if you set aside reality and make up the numbers, we're all in for £1.3tn. Does repeating this fictional number make you feel better or worse?

The spin doctor is back! Are you married? If not, Hazel Blears would be the perfect partner for you, you could spin yourself into thinking she was attractive :rotfl:

purch

Hazel Blears would be the perfect partner for you

Is that the Rt Hon Hazel Blears, MP for Munchkinland ??

StevieJ

Generali wrote: »

Not really. It's more like a drunk blaming the pub landlord.

I would blame the pub landlord if he ran a slate

SamIAm_3-2

Generali wrote: »

Usually, overdrafts (which are repayable on demand) are called in by the administrator. Other debts are parcelled up and sold on to others, often (rich) private investors at (say) 50% of face value - often the buyers of such debt will call the debtors and say, "I'll let you off 20% of your debt if you repay it all within 60 days".

Clearly the market for bank originated debt is limited at the moment which would make this more complicated.

Thanks, Generali, for your responses. I understand that now. I have a couple more questions, though:

Is the purchaser of the debt required to adhere to the original terms and conditions of the debt?
If the debtor is unable to pay back the debt in (using your example) 60 days can they negotiate a different payment plan and lose the "discount"? Or will they be forced into bankruptcy (or similar extreme measures) and/or lose their asset if the debt is secured?

Generali wrote: »

There are no stupid questions.

Agreed - that's why I chose the word simple (as in non-complex) instead. It can be annoying asking questions whose answers are easy for some people to see (especially if the questions are asked many times) - which is why I apologised in advance .

Rochdale_Pioneers

Wookster wrote: »

The spin doctor is back! Are you married? If not, Hazel Blears would be the perfect partner for you, you could spin yourself into thinking she was attractive :rotfl:

So you dispute my comment that the methodology used by ONS is unreal?

Will bank loans default ata rate of 100% as assumed by ONS or will they not?
Will bank assets devalue at a rate of 100% as assumed by ONS or will they not?

You're very good at putting your witty comments about spin without bothering to answer the question. Thats called evasion - a principle tool of the spin doctor. Does it take one to know one in your case?