Why Do Banks Get All The Blame?

bendix

The_White_Horse wrote: »

go to the debt board if you really want to be made sick. there is no blame there. borrowing loads and getting into debt then not being able to repay is encouraged there. the conversation is:

Hi everyone, i earn 11k a year but i racked up 89k of debt on loans and credit cards

((((((((((((((( hugs )))))))))))))))) poor you, this is not your fault.

thanks everyone, you made me feel so good I went out and bought a mulberry bag for 5k

well done you, you deserve it. ((((((((((((((((((((((((((((hugs))))))))))))))))))))))))))))

______________

The real reason, the elephant in the room in fact, is large bloated public sectors and their pension liabilities. Still, far easier to blame the banks for lending to idiots.

I deliberately don't go to that part of the forum. My impression of the average Brit's sense of personal accountability is already too low; i don't trust myself not to get banned for life, if I read those whiney pathetic lowlifes' self-indulgent rubbish.

dtsazza

TruckerT wrote: »

The banks have ALL the responsibility!

Businesses operate by offering stuff to their customers at a certain price, and subject to whatever terms and conditions they might choose to impose

Customers simply take what's offered - if the business in question fails as a result, then it is clear that the business had a defective business plan

Except in this case, one of the (admittedly minor) terms and conditions of the "stuff" was that the customers repay the money.

The customers breached the agreement with with the business. While you can argue that perhaps the business should have taken steps to have a backup plan, or risk-weight the odds of this occurring, I think it's clear that the customer is primarily at fault. The agreement was formed by mutual consent; the business held up their end of the deal but the customer then reneged.

So blaming the business plan is probably even less relevant than blaming the regulatory and judicial bodies for allowing such breaches of contract to stand.

dtsazza

StevieJ wrote: »

A shopkeeper secures their premises at night to avoid being robbed, now if they forget to do this one night and are robbed are you saying that it is the (a) thieves fault (b) The Govt for not chopping hands off when theives are caught (c) The shopkeeper for leaving his shop open?

All three, roughly in descending order of magnitude.

Which fits in rather nicely with Alice's point at the start of this thread - just blaming (c) because the shop is now empty and so you can't get your morning paper is simplistic and wrong.

StevieJ

dtsazza wrote: »

All three, roughly in descending order of magnitude.

Which fits in rather nicely with Alice's point at the start of this thread - just blaming (c) because the shop is now empty and so you can't get your morning paper is simplistic and wrong.

OK let us rephrase that question, how much will the insurance payout be assuming they hadn't forgot to insure as well?

TruckerT

dtsazza wrote: »

Except in this case, one of the (admittedly minor) terms and conditions of the "stuff" was that the customers repay the money.

The customers breached the agreement with with the business. While you can argue that perhaps the business should have taken steps to have a backup plan, or risk-weight the odds of this occurring, I think it's clear that the customer is primarily at fault. The agreement was formed by mutual consent; the business held up their end of the deal but the customer then reneged.

So blaming the business plan is probably even less relevant than blaming the regulatory and judicial bodies for allowing such breaches of contract to stand.

The banks' backup plan was that property prices were on an ever-upward spiral, and that their risk was therefore close to zero - they would always be able to get their money back by taking possession of the property. The customer's ability to repay was neither here nor there. That was their business plan

There was massive public comment that property prices could not continue to rise much further, but the banks continued to fuel the spiral by their irresponsible lending (the more they could lend, the more they would profit, and the spiral would get faster and faster)

Wannabe home-owners trusted the banks to know what they were doing

The banks themselves created the house-price bubble, and the banks themselves killed their own Golden Goose

But the current situation is not about borrowers failing to repay their loans, it is about financial institutions realising that their investments have no value

TruckerT

TruckerT

TruckerT wrote: »

The banks' backup plan was that property prices were on an ever-upward spiral, and that their risk was therefore close to zero - they would always be able to get their money back by taking possession of the property. The customer's ability to repay was neither here nor there. That was their business plan

ps - in such 'risk-free' conditions, thiings like liar loans and 120% mortgages make perfect business sense, because they fuel the upward price-spiral, and banks profits increase accordingly

TruckerT

Jimmy_31

AliceJenkins wrote: »

See people can't even take responsibly for being stupid! it's the banks fault their dumb!

Strange that you chose that post to respond to and not the one regarding the banks taking ALL the responsibility.

You say.........The banks have taken ALL the responsibility, thats the point of the topic, did you miss that?

Some People hate the banks because they got bailed out by hard working tax payers, They are mainly the people who didnt go taking every loan they could get their hands on during the boom.

If the banks had taken all the responsibility then my taxes wouldnt have gone to a gang of robbing 8astards.;)

Emy1501

Because we as the public do not want to accept that it was us who elected the government who allowed banks to get so big that their failure would potentially bring the country down. We also don't want to accept that we were happy for our government to borrow large amounts of money to give off the illusion that we were all doing really well when reality we were not. This is the same for the US and the Euro Zone. We also do not seem to want to accept reading some of the comments on this thread that we should be capable of managing our own money rather than allowing banks to determine how much we can borrow.

As for RBS, the management was responsible for the share price fall but not the mess the country finds itself in now.

StevieJ

That's it then Emmy has spoken, I guess we need to run some pretty detailed economics courses so our citizens can quickly get up to speed in Macreconomics, then again I guess we should make sure they can all read and write first

AliceJenkins

Jimmy_31 wrote: »

Strange that you chose that post to respond to and not the one regarding the banks taking ALL the responsibility.

You say.........The banks have taken ALL the responsibility, thats the point of the topic, did you miss that?

Some People hate the banks because they got bailed out by hard working tax payers, They are mainly the people who didnt go taking every loan they could get their hands on during the boom.

If the banks had taken all the responsibility then my taxes wouldnt have gone to a gang of robbing 8astards.;)

Sure don't bail the banks out, then instead have the hard working tax payers who paid all their savings into banks go bust, they loose their hard earned money.