UK 'On Cusp Of Second Banking Failure'

BlondeHeadOn

This was in my BT news items this morning.... seems rather doom-mongering, even for the bears on this forum:

http://uk.finance.yahoo.com/news/uk-on-cusp-of-second-banking-failure-skynews-5809d3acd179.html?x=0

A few snippets:

"High street banks stand on the verge of another credit crunch and taxpayers may be forced to plug a £25bn-a-month funding gap, an economic think-tank has claimed.
Faced with a huge financial black hole, the New Economics Foundation (NEF) has said the banks could turn again to the Government for support.
According to its report - Where Did Our Money Go? - an estimated £1.2trillion of state cash has already been pumped into the banking system.
However, NEF has described a "shocking" lack of information about how that money has been used and demanded "urgent reform"."

and:

"Calling for reform, Tony Greenham, head of the finance and business programme at NEF, said: "We are on the cusp of a second banking failure.
"The public have already paid for the failure of the banks twice - first by bailing them out and then by suffering a programme of drastic cuts to public services to appease the financial markets."
A Treasury spokeswoman claimed the Government had already taken measures to reduce risks posed by the financial sector and is pushing for global standards to help protect taxpayers.
She said: "We have introduced a bank levy designed to address systemic risk.
"We have also established an Independent Commission on Banking, which is considering measures to reduce systemic risk presented by large banks, while promoting competitiveness in the industry.""

Surely if it was this bad, the Daily Mail would already be running this story?

Oh - Hang on, maybe they already have ????

Radiantsoul

The catalyst the article suggests is a sudden end to the special liquidity scheme. My guess is the scheme will be wound down slowly rather than suddenly stopped.

DervProf

And Hamish is calling for FTB`ers to be treated more generously by the banks. It seems that the banks aren`t in a position to help.

They blew it all pre-2007. That`s why house prices have risen so much, and why there is now a lack of support for the property market. I said it would all go wrong, but was largely told that there was no problem.

luvpump

http://news.sky.com/skynews/Home/Business/Banks-Facing-Second-Credit-Crunch-New-Economics-Foundation-Report-Says-Banking-System-Set-To-Fail/Article/201010115750551?lpos=Business_First_Home_Article_Teaser_Region_0&lid=ARTICLE_15750551_Banks_Facing_Second_Credit_Crunch%3A_New_Economics_Foundation_Report_Says_Banking_System_Set_To_Fail

I wonder how many years this will go on for ... The have completley screwed our economy !

chucky

DervProf wrote: »

And Hamish is calling for FTB`ers to be treated more generously by the banks. It seems that the banks aren`t in a position to help.

They blew it all pre-2007. That`s why house prices have risen so much, and why there is now a lack of support for the property market. I said it would all go wrong, but was largely told that there was no problem.

they are but not for FTB's.

economic climate isn't great (much better than it was though) but until things do improve - there's too much risk lending to FTB's.

why lend to an FTB with a higher risk when you can lend to a buyer with 50% LTV.

i would agree with you that there is not as much demand as before as well.

luvpump

http://online.wsj.com/article/SB10001424052748703466104575530144058983892.html?mod=WSJEUROPE_hpp_MIDDLETopStories

we dont live in a democracy , just an image of it ..

DervProf

chucky wrote: »

they are but not for FTB's.

economic climate isn't great (much better than it was though) but until things do improve - there's too much risk lending to FTB's.

why lend to an FTB with a higher risk when you can lend to a buyer with 50% LTV.

i would agree with you that there is not as much demand as before as well.

I was saying the very same thing to Hamish a day or two ago. You can`t blame the banks for doing what they are doing (like it or not). It is a reaction to risk. With less FTBers coming in at the bottom, the rest of the market will have to adapt. That may mean lower prices, which should mean lower risk for the banks. It is at that point that the financial authorities need to show self control and discipline (or the government need to implement control) to prevent another financial crisis.

Thrugelmir

Radiantsoul wrote: »

The catalyst the article suggests is a sudden end to the special liquidity scheme. My guess is the scheme will be wound down slowly rather than suddenly stopped.

Banks are already taking steps. Widening margins, limit on "private" lending for BTL (LloydsHBOS), selling on branches, tighter lending criteria. They are fully aware that the scheme will be pulled in its current guise, and that borrowing on the wholesale money markets will incur them with a tax charge.

Though odds on the SLS will be replaced with another more commercially tougher one. As there is insufficent wholesale money to plug the gap.

chucky

DervProf wrote: »

I was saying the very same thing to Hamish a day or two ago. You can`t blame the banks for doing what they are doing (like it or not). It is a reaction to risk. With less FTBers coming in at the bottom, the rest of the market will have to adapt. That may mean lower prices, which should mean lower risk for the banks. It is at that point that the financial authorities need to show self control and discipline (or the government need to implement control) to prevent another financial crisis.

please don't pretend to be a bull or HPI cheerleader

DervProf

chucky wrote: »

please don't pretend to be a bull or HPI cheerleader

I don`t think I was !

One thing I don`t do, is pretend anything. I just say it as I see it. You may agree or disagree with me, but please accept the fact that I am honest.

"I was saying the very same thing to Hamish a day or two ago." What I meant by that was that I was [STRIKE]arguing[/STRIKE], sorry, discussing with Hamish the reasons that the banks were charging FTBers a higher rate of interest. I think it`s because of the banks risk assessment of lending to FTBers at the moment. Hamish is critisising the banks, I was just pointing out why the banks were doing it, not celebrating FTBers difficulties, which Hamish would probably accuse me of doing.

chucky

DervProf wrote: »

I don`t think I was !

One thing I don`t do, is pretend anything. I just say it as I see it. You may agree or disagree with me, but please accept the fact that I am honest.

"I was saying the very same thing to Hamish a day or two ago." What I meant by that was that I was [STRIKE]arguing[/STRIKE], sorry, discussing with Hamish the reasons that the banks were charging FTBers a higher rate of interest. I think it`s because of the banks risk assessment of lending to FTBers at the moment. Hamish is critisising the banks, I was just pointing out why the banks were doing it, not celebrating FTBers difficulties, which Hamish would probably accuse me of doing.

i did say that with some sarcasm... it was questioning your honesty

we have a similar view but we're considered at the opposite ends of this bull vs bear nonsense - it's amusing.