Another £25bn to add to taxpayer debts

julieq

It isn't hard cash in crystallised losses, it's an estimate. The thrust of the article is that it could be revised up or down, and Peston (arguably the most irritating person on the planet) as usual is grandstanding without really drawing any conclusions, but his parting shot is that it may cost nothing at all. He can say he's right more or less whatever happens.

So there's a cost to the insurance scheme between zero and some very large number well north of £25B. Well thanks Robert, tremendously useful information as ever.

Thrugelmir

julieq wrote: »

It isn't hard cash in crystallised losses, it's an estimate. The thrust of the article is that it could be revised up or down, and Peston (arguably the most irritating person on the planet) as usual is grandstanding without really drawing any conclusions, but his parting shot is that it may cost nothing at all. He can say he's right more or less whatever happens.

So there's a cost to the insurance scheme between zero and some very large number well north of £25B. Well thanks Robert, tremendously useful information as ever.

However some aready has been.

As a result, the Treasury spent £24bn more than it was authorised to spend in 2008-9,

Whilst this may be recoverable ultimately on the sale of the banks. This is money that was spent.

The whole issue of the toxic debt relates back to Lehmans debt packages. Until they all unravel no one knows which banks are going to be holding the parcel(s)when the music stops.

Thrugelmir

Graham_Devon wrote: »

This is the problem, it's a double edged problem.

Should other banks lose out in terms of gaining business because they cannot offer such competitive rates, BUT, they have stood on their own?

Or should we implement competition policies which protect not only the banks we have already protected, but also those who are standing out on a limb, which means taking longer for our tax money to be paid back?

Personally, I would say the whole thing has to be fair.

Which banks are those?

chucky

Thrugelmir wrote: »

The whole issue of the toxic debt relates back to Lehmans debt packages. Until they all unravel no one knows which banks are going to be holding the parcel(s)when the music stops.

this debt has an expiry, how long do you think that it is a liability on the banks for?

Thrugelmir

chucky wrote: »

this debt has an expiry, how long do you think that it is a liability on the banks for?

Some at least 10 years plus.

Optimist

Interesting to note that the British tax payer is actually funding a lobby in the US against the banking reform that President Obama is trying to get through.

RBS owns The Citizens Group a heavy lossmaking bank in the US which aims to spend $1 million lobbying against the US Credit Card Act .

chucky

Thrugelmir wrote: »

Some at least 10 years plus.

i'm not too sure, that's if we're talking UK banks and securitised debt.
did you mean ohter type of de

securitised debt obligations are very rarely over 5 years and would say that the majority was for between 2-5 years.

Masomnia

This all comes down to how we actually measure the national debt, in my view.

Do we count future pension provision? Even if we don't have to pay it yet, it's a theoretical thing. Similarly Trident, it's money that has been planned, but we don't actually owe it yet as we haven't spent it.

Until we agree what should and should not be counted we're just going to go round and round in circles.

Thrugelmir

chucky wrote: »

i'm not too sure, that's if we're talking UK banks and securitised debt.
did you mean ohter type of de

securitised debt obligations are very rarely over 5 years and would say that the majority was for between 2-5 years.

Securtised mortgage debt as an example. (This can be up be to 30 years in the case of the US).

Mortgage debt was securitised on a long term basis. As in itself its a tradeable instrument. As the banks in the UK resold the packages to leverage up their lending by 40%. ( NR , B&B , HBOS etc).

As you know little capital is repaid in the early years of a mortgage, and with 25% of mortgage advances made between 2003 -2007 on an interest only basis. Its going to take some years before the picture becomes clearer.

By leveraging up. The loss isn't 100% of capital , its 140% of capital. In that for every £100 deposited the banks lent £140. So bad debts will hit hard.

This all part of the proposed changes requiring banks to hold more capital. To stop them leveraging up so high in the future.

Thrugelmir

Masomnia wrote: »

This all comes down to how we actually measure the national debt, in my view.

Do we count future pension provision? Even if we don't have to pay it yet, it's a theoretical thing. Similarly Trident, it's money that has been planned, but we don't actually owe it yet as we haven't spent it.

Until we agree what should and should not be counted we're just going to go round and round in circles.

All the toxic debt has been ring fenced by the Government, so that its a quantified liability. Over time it will reduce. Along the way there will be losses.