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Liebor scandal may have cost families their home
Comments
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Surely households would be the prime beneficiaries as it seems that LIBOR was rigged to be lower than it actually was?0
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Surely households would be the prime beneficiaries as it seems that LIBOR was rigged to be lower than it actually was?
Not quite.
There are two distinct phases in the lIBOR rigging scandal that have come to light.
Pre 2007 rates were rigged by traders to game the markets. This rigging resulted in Lobor being both higher and lower than it otherwise would have been, but usually only by tenths or hundredths of a percent. This lasted for many years.
There was a very brief period of institutional rigging post 2007 when the crunch hit. A matter of a few weeks, or months at most, where LIBOR was rigged to be a percent or two lower than it otherwise would have been.
Over the last 10 years, it's likely that the total impact would have been tiny to any individual mortgage holder.
Somewhere between a few hundred and a few thousand pounds over a decade.
Is it wrong? Yes.
Did it make a material difference to most people? No.“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 -
HAMISH_MCTAVISH wrote: »Firewalled subsidiaries.
No, just the opposite. Banks need to build capital, not liquidity.
What should happen is no bonuses/dividends for a number of years while the capital buffers are built, and then they can lend far more for the next cycle. Which will be required.
Eh?
Why not have the banks reduce their record high margins by raising savings rates while keeping mortgage rates the same. That way everyone wins..... Except the bankers.
Shareholders own banks not the public or politicians.
For those not controlled/owned by the state:-
- They are in business to make a legitimate profit not as a public utility.
- They can decide who, when, how, if, and a t what price they lend to anyone, within the terms of their license.
-If they want to hold greater liquidity that is up to them.
-Obviously if they don't lend ultimately they won't make any money.
If they don't lend what is stopping other banks coming into the market?
The reference to the spread graphs was to another thread you had posted/were posting on."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
HAMISH_MCTAVISH wrote: »That isn't the point...
This is about the politicians turning on the bankers.
Until now there has been a stalemate, a Mexican stand-off, between the politicians and the bankers.
The Tories know they can't get re-elected without lending increasing. They also know there is immense public anger building at the bankers refusal to lend into the economy.
But they've not really had the leverage they needed to force the banks to stop profiteering and lend, lend, lend.
That has now very much changed......
Do you believe that jailing traders and imposing fines....suggesting to the public that there could be compensation from the banks (especially surrounding business and pensions) is a way to kickstart lending?0 -
Banks have special privileges and the State is entitled to its quid pro quo.grizzly1911 wrote: »Shareholders own banks not the public or politicians."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Graham_Devon wrote: »Do you believe that jailing traders and imposing fines.... is a way to kickstart lending?
The only useful purpose banks have is to lend.
If the senior managers running those banks can't or won't do that, then throw the book at them for any transgressions you can find, and get some new ones in that will do as they're told.
That's what is happening here, make no mistake about it.“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 -
HAMISH_MCTAVISH wrote: »The only useful purpose banks have is to lend.
That's completely wrong. Banks make simple things possible, like shopping. Without banks, we'd all need to carry loads of cash around, eg I'd pay cash to Tesco for carrots, they'd give cash to the guys who drive their trucks around, cash to the farmers etc. That's the real reason they had to be rescued. We could easily have invented some new lending institutions.No reliance should be placed on the above! Absolutely none, do you hear?0 -
That's completely wrong. Banks make simple things possible, like shopping. Without banks, we'd all need to carry loads of cash around, eg I'd pay cash to Tesco for carrots, they'd give cash to the guys who drive their trucks around, cash to the farmers etc. That's the real reason they had to be rescued. We could easily have invented some new lending institutions.
Actually not.
Payment processing is the relatively easy bit. It's not the banks who make all that possible, it's the credit card companies.
Lending (and the associated money creation) is the absolute primary purpose of banks.
We could easily invent some new money storage institutions, or just use existing alternatives, like the Post Office.“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 -
To clear up a couple of things:
- this has most likely cost nobody their house directly. I have never heard of a normal mortgage being linked to LIBOR. They are usually linked to the BoE base rate or to the bank's own base rate.
My mortage is linked to LIBOR. What's "normal"? I got one of the last self-certificated mortgages from a subsidiary of Lehman Brothers; my mortgage and everyone else's were "securitised" in, I think, January 2009. The downside is that there is no flexibility: no mortage "holiday" provision, no ad hoc over-paying (you can only increase the DD to over-pay every month).
Luckily the first year was at a fixed rate so I wasn't exposed to the huge increase in LIBOR in the autumn of - I think it was - 2007.YouGov: £50 and £50 and £5 Amazon voucher received;
PPI successfully reclaimed: £7,575.32 (Lloyds TSB plc); £3,803.52 (Egg card); £3,109.88 (Egg loans)0 -
HAMISH_MCTAVISH wrote: »Actually not.
Payment processing is the relatively easy bit. It's not the banks who make all that possible, it's the credit card companies.
Payment processing uses more than just the credit card companies.
Money transmission is a key element and bring in useful income.."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0
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