Lets blame the bankers

MegaMiniMouse

leveller2911 wrote: »

Thread title should read:

" Lets blame the bankers for lending, Government for not regulating and F@ckless borrowers for borrowing more than they could pay back".........................


Bit long winded I agree but at least accurate........;)

But the bankers didn't just 'lend' (that's what they used to do in the old days, and that's what they've started to do again - until they find a new market to rip apart...)

The Banks moved beyond lending - they manipulated the property market, and they manipulated the money market. They were supposed to be the 'professionals'. but they didn't understand what they were doing. They marketed their 'products' aggressively

It was obvious to most ordinary people that the property market was out of control, but still the banks stoked up the prices

The banks are exclusively responsible for the long term effects of their own business procedures - any other kind of business would simply have gone bust, but the banks remain immune from such an outcome because of their close links with governments, politicians, and national economies

The 'regulation' thing has not changed at all - next time the banks need a bail-out, they will probably get one - they wield too much power, and they need to be stopped

MMM

chris_m

MegaMiniMouse wrote: »

Gordon was in charge of the banks

Really? Did his salary reflect such a huge job? Don't Banks employ their own bosses?

They do and GB wasn't "in charge"of them anyway. What semblance of control he had went when he gave the BoE the task of setting interest rates instead of doing it himself - probably one of the few good moves he made TBH.

What did all those multi-million bonus earners do from 9-5 then?

What many people don't realise is that many (if not most) of the big bonus earners, excluding directors and senior management, are the investment bankers and traders - who were and still are making large sums for their employers (and tax bills for HMG) and never were responsible for the downturn anyway. All the fuss about bonuses (including the soundbites from our political "masters") conveniently ignored the fact that most investment bank traders don't have a large salary but are paid on performance by way of bonuses. Since it's a high-pressure job their working lives in that role are rather short before they get "burned out", hence the market has to pay large bonuses to get the right people because the traders are effectively having to earn most of their working life's income in only a few years. As such, arguing that their bonuses should be witheld was totally unreasonable.

The real blame for the downturn lies, jointly IMO, with the lending arms of the banks and the borrowers who borrowed as much as they could get away with so they could "keep up with the Jones's" without really considering the practicality and affordability of repayment. When you start making a habit of lending more than people can repay it's not too long before the bubble bursts.

MegaMiniMouse

chris_m wrote: »

When you start making a habit of lending more than people can repay it's not too long before the bubble bursts.

Exactly right...!

But the 'blame' then needs to be directed towards those who are guilty of irresponsble behaviour

MMM

vivatifosi

For sure there were some really stinky banks around, but can you honestly tar every single one of them with the same brush?

An example: David Buik talking about the flak banks are taking on the TV the other day. He said sure, blame the bad ones, but why tar others with the same brush? He mentioned HSBC and how they identified their US toxic debt problem early, ring-fenced it and even flagged the problem to the rest of the industry - many of whom sat on their hands or ignored it - why should they be held responsible?

chris_m

MegaMiniMouse wrote: »

The 'regulation' thing has not changed at all - next time the banks need a bail-out, they will probably get one - they wield too much power, and they need to be stopped

It's not so much that they wield power as that if the banking system collapses everything else goes with it. Don't forget that the bail-out they got from HMG was effectively a loan, which will, in time, come back to the Exchequer. The better the banks recover and perform, the more money HMG will get because the shares they own (on our behalf) are worth more.

I don't disagree that some element of control and regulation is needed but knee-jerk suggestions of withholding loan/mortgage payments is not the solution. Far better is legislation, like that which I believe of going through to force the banks to have a higher ratio of cash held to loans issued. The other thing in hand is the requirement for better proof of ability to repay loans, which should reduce so-called "liar loans" and prevent people from borrowing (and banks from lending) more than can be repaid.

kabayiri

The spotlight will turn back onto the bankers again when the bonus rounds come up.

Nothing to do with fairness or the validity of these bonuses however.

In harder economic times the media at large will pick up any headlines of this nature.

You can see it now. They will find out how much one bank pays in bonus next time, and equate it to the salaries of X nurses or Y social workers or Z policemen.

Inevitable really.

chris_m

MegaMiniMouse wrote: »

Exactly right...!
But the 'blame' then needs to be directed towards those who are guilty of irresponsble behaviour

Indeed - but there are two parties to any transaction. You can't blame the lender without also blaming the borrower who took on more than they could afford.

MegaMiniMouse

chris_m wrote: »

Indeed - but there are two parties to any transaction. You can't blame the lender without also blaming the borrower who took on more than they could afford.

If I went into a department store and ordered a 3-piece suite, would they deliver it unless they were sure that they would get their money?

MMM

StevieJ

MegaMiniMouse wrote: »

If I went into a department store and ordered a 3-piece suite, would they deliver it unless they were sure that they would get their money?

MMM

I don't know where they get that idea from, if I was a shareholder of a company I would expect to see stringent credit checking procedures or I would consider it negligent. Would they leave the doors open all night?

MegaMiniMouse

StevieJ wrote: »

I don't know where they get that idea from, if I was a shareholder of a company I would expect to see stringent credit checking procedures or I would consider it negligent. Would they leave the doors open all night?

Equally, if there was an item in your local news about a department store which repeatedly delivered 3-piece suites to customers with no means of paying, and then asked for a council bailout because they were bankrupt, but were an important part of the local economy...

What would you think? Who would you blame?

MMM