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So now we all have to pay the banks Libor fine.
Comments
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GeorgeHowell wrote: »The banking premise has since time immemorial been that the Bank of England is the lender of last resort, and the bank rate is supposed the rate at which it will lend to other banks (although it isn't in practice). If a bank gets into trouble the BofE bales it out with loans in the short term to prevent ATMs shutting down etc. The government of course has to underwrite the BofE's ability to do that if it's a real biggie. It was not necessary to make decisions about buying back shares, in a panic situation, and arguable paying too high a price for them in the process. Short term lender-of-last-resort loans could have been made as an interim stop gap step, secured on the bank as a going concern., and backed up by HMG announced 100% guarantee of all personal and business deposit held by the bank. What to do in the longer term could have been postponed for more consideration, and it may well have ended up with full nationalisation but on the least worst deal for the taxpayer.
......
We must thank the Good Lord that Labour were in charge at the time and not George Howell.
HMG didnt "buy back" shares on a market, they bought new ones as a legal method to get close to full nationalisation and put money into a bankrupt bank. The price they paid was the amount needed to keep the bank running, putting in less than that required to keep the bank running as GH proposes would have been silly.
Not only would HMG have had to guarantee the deposits of all commercial and private customers, they would also have had to guarantee a lot more. For example deposits by other banks, pensions of RBS ex employees, various guaranteed financial products. And presumably this is world wide - RBS were one of the worlds largest companies. I dont know what the total liabilities were in 2007/2008, but even now they amount to over £600bn according to the 2011 annual report. Fancy putting a £600bn guarantee on a dodgy bank onto the national accounts? Would anyone have any confidence in it?
If the public didnt believe that the guarantees could be honoured, a run on the bank (and all other banks because of a domino effect) would have caused a catastrophic collapse.0 -
GeorgeHowell wrote: »The banking premise has since time immemorial been that the Bank of England is the lender of last resort, and the bank rate is supposed the rate at which it will lend to other banks (although it isn't in practice). If a bank gets into trouble the BofE bales it out with loans in the short term to prevent ATMs shutting down etc. The government of course has to underwrite the BofE's ability to do that if it's a real biggie. It was not necessary to make decisions about buying back shares, in a panic situation, and arguable paying too high a price for them in the process. Short term lender-of-last-resort loans could have been made as an interim stop gap step, secured on the bank as a going concern., and backed up by HMG announced 100% guarantee of all personal and business deposit held by the bank. What to do in the longer term could have been postponed for more consideration, and it may well have ended up with full nationalisation but on the least worst deal for the taxpayer.
Having said that I don't think Labour would have ever got a good deal for the taxpayer because they don't know how to, and virtually never did so. I think it did what it did to try to make the grand gesture -- we've sorted it, everything is under control (cost to the taxpayer immaterial, and let's make sure that Fred Goodwin gets a generous separation package). This was the same government that gave away a huge slice of the EU rebate for nothing, and some months after the banking crisis signed us up to contribute to the EU bail-out funds.
labour is rubbish
torys (sic) are wonderful
.. you say. When it comes to management of public finances, in relative terms that has to be true. Surprise me, come up with some specific examples to contradict it.
you miss understand what lender of last resort means
it's about temporary liquidity problems and not about bankrupt banks.
If you think too much money was given to the banks then you must think they are now over capitalised.
So if the stupid labour politician 'gave' too much to Lloyds and RBS then the clever coalition ones can simply instruct them (as major shareholders (owners)) to pay a massive dividend to get the money back.
Of course the banks would then go bankrupt as the money was used to recapitalise the banks.
Conservatives would have done precisely the same, acting on advice from BoE/FSA etc.0 -
you miss understand what lender of last resort means
it's about temporary liquidity problems and not about bankrupt banks.
If you think too much money was given to the banks then you must think they are now over capitalised.
So if the stupid labour politician 'gave' too much to Lloyds and RBS then the clever coalition ones can simply instruct them (as major shareholders (owners)) to pay a massive dividend to get the money back.
Of course the banks would then go bankrupt as the money was used to recapitalise the banks.
Conservatives would have done precisely the same, acting on advice from BoE/FSA etc.
That was my point -- how well was it understood in the panic period that it was bankruptcy as opposed to temporary liquidity ? Some temporary loan activity would have provided more of a breathing space to take stock of the situation. But we were at the start of 'Brown saving the world' at the time, and I don't think the decisions being made were necessarily with minimum hit to the taxpayer as the first priority. Given Labour's track record with public money you give them the benefit of the doubt it you want to ... I shan't be.
To the extent that they can make a profit it should mostly be paid back to the taxpayer as dividends instead of being paid to fat cats as bonuses.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »
To the extent that they can make a profit it should mostly be paid back to the taxpayer as dividends instead of being paid to fat cats as bonuses.
The top 300 senior managers at LloydsHBOS have had their pay frozen for 3 years (includes 2013). So the price is being paid. As adjustment slowly takes place.0 -
Thrugelmir wrote: »The top 300 senior managers at LloydsHBOS have had their pay frozen for 3 years (includes 2013). So the price is being paid. As adjustment slowly takes place.
Including bonus and share incentives?"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 -
GeorgeHowell wrote: »That was my point -- how well was it understood in the panic period that it was bankruptcy as opposed to temporary liquidity ? Some temporary loan activity would have provided more of a breathing space to take stock of the situation. But we were at the start of 'Brown saving the world' at the time, and I don't think the decisions being made were necessarily with minimum hit to the taxpayer as the first priority. Given Labour's track record with public money you give them the benefit of the doubt it you want to ... I shan't be.
To the extent that they can make a profit it should mostly be paid back to the taxpayer as dividends instead of being paid to fat cats as bonuses.
Once again your post ignores any actual facts but it is enough that is was Labour what done it.
That's OK, but it makes any debate on the issues completely pointless.0 -
grizzly1911 wrote: »Including bonus and share incentives?
Not legal to withhold contractually agreed arrangements. Remember it was HBOS that was bust. Lloyds itself was solvent and well managed.
So have patience. Everything takes time.0 -
Thrugelmir wrote: »Not legal to withhold contractually agreed arrangements. Remember it was HBOS that was bust. Lloyds itself was solvent and well managed.
So have patience. Everything takes time.
I'll take that as no:D"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 -
grizzly1911 wrote: »I'll take that as no:D
Does it matter? If you worked in Company restructuring for a while you'd realise how complex it was. So best to approach everything with a view on the decisions today impacting tomorrow. Not looking backwards in the mrror. As its too late to change whats been done.0 -
Thrugelmir wrote: »Does it matter? If you worked in Company restructuring for a while you'd realise how complex it was. So best to approach everything with a view on the decisions today impacting tomorrow. Not looking backwards in the mrror. As its too late to change whats been done.
I have done and know it is.
Barclays boss tells staff 'sign up to ethics or leave'
He said that performance would be assessed "not just on what we deliver, but on how we deliver it".
http://www.bbc.co.uk/news/business-21064590
The wheel turns we have been here before.
In so many performance contracts. When push comes to shove, profit/cost down or doing the right thing? I wonder what will get rewarded most?"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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