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Banker Bonuses to be linked to Mortgage Lending
Comments
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Global (mainly property) lending was a large cause of the financial crisis. The fact that all these bad loans were being traded without anybody looking too closely (possibly as it would affect their bonuses) was the driver of cheap wholesale money. The British market was part of it and just saying it was all somebody elses fault does not wash.HAMISH_MCTAVISH wrote: »Which is a nice distraction from the fact that UK mortgage lending did not cause the global financial crisis.
Northern rock was a victim,, not the cause.0 -
HAMISH_MCTAVISH wrote: »I think the wake up call was when the UK governments Minister for Housing realised he wouldn't have got a mortgage under the current restrictions.
I think you'll probably find the still overpriced housing market is the culprit not sensible lending restrictions.0 -
HAMISH_MCTAVISH wrote: »I think the wake up call was when the UK governments Minister for Housing realised he wouldn't have got a mortgage under the current restrictions.
Sensible and sustainable lending would be nice. Sadly, we're a long way from that.
Why not?...0 -
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
as soon as you mention bankers bonuses on this forum people's logic and views get totally skewed due to the large amounts.But is it, would banks take extra risks just to pay larger bonuses?
it's always those that don't understand how bonuses work and why they are paid and who they are paid by.0 -
HAMISH_MCTAVISH wrote: »Maybe you should ask him.
So could be nothing to do with restrictive lending, if you do not know why what is the point of saying it.0 -
as soon as you mention bankers bonuses on this forum people's logic and views get totally skewed due to the large amounts.
it's always those that don't understand how bonuses work and why they are paid and who they are paid by.
True, but paying bonuses to encourage riskier mortgage lending is just daft.
The terms of many bonuses just distort practise rather than producing any positive results.0 -
True, but paying bonuses to encourage riskier mortgage lending is just daft.
Is that what they are asking banks to do, or would it be to link bonuses with lending so that big bonuses won't happen in a bust?
To me this they are trying to restrict bonuses in busts, not encourage risky lending.0 -
Global (mainly property) lending was a large cause of the financial crisis. The fact that all these bad loans were being traded without anybody looking too closely (possibly as it would affect their bonuses) was the driver of cheap wholesale money. The British market was part of it and just saying it was all somebody elses fault does not wash.
Wrong - look at the default ratios. They remain low.
NR failed because it relied on the continuous availability of credit from the wholesale markets. In the past the assumption had always been (correctly) that if one international bank couldnt lend there was always another who would.
This assumption proved incorrect when the wide circulation of effectively unbacked US mortgage (in)securities stopped the wholesale money markets working overnight. No bank would lend to another as it had no guarantee that the borrowing bank's exposure to these US securities wouldnt cause it to fail before repaying the loan.
When the wholesale markets froze NR was unable to pay back its current loans as they matured.
Once the government stepped in and provided the backing, NRs mortgage business carried on happiily making the type of profit it had in the past.0 -
Global (mainly property) lending was a large cause of the financial crisis. The fact that all these bad loans were being traded without anybody looking too closely (possibly as it would affect their bonuses) was the driver of cheap wholesale money. The British market was part of it and just saying it was all somebody elses fault does not wash.
Do you think the world will go straight back to that on the back off this or that they may still closely evaluate the risk of any lending they may partake in?0
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