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It wasn't all america's fault, it was the banks.
Comments
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the point has been raised here many times that Halifax problems originated from bad loans to business
Indeed.
The HBOS residential mortgage book was then, and remains today, extremely profitable.“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: »Indeed.
The HBOS residential mortgage book was then, and remains today, extremely profitable.
Yer...indeed...The parliamentary commission on banking standards says HBOS’ focus on the growth of its specialist mortgage lending saw it make “significantly” higher losses than rivals.
In its report, An accident waiting to happen: The failure of HBOS, published today, MPs say the growth in mortgage lending also led to the bank being “excessively confident” and taking greater risks in other areas such as structured investments.
The report states: “The [retail] division incurred substantially higher mortgage-related losses than its major competitors, reflecting the bank’s strategy of pursuing growth in higher risk non-standard mortgages.
“We also note that the division’s customer funding gap was a major factor in the group’s overall funding gap, which was a principal immediate cause in the short term of the failure of the bank. Prudent customer funding should have been a secure source of stability during market storms.”
Might well be profitable, but that doesn't mean it's good, especially at such excessive risk.0 -
Originally Posted by HAMISH_MCTAVISH
Indeed.
The HBOS residential mortgage book was then, and remains today, extremely profitable.
Really? Lloyds were shocked at what they uncovered after their review. Over 30% of residential mortgages were outside their own risk criteria.
The history of HBOS is well documented. I heard Moore the whistleblower speak publicly in 2011. HBOS wasn't run well.0 -
Thrugelmir wrote: »Really?
Yes.
Really.
From the actual parliamentary report, rather than a journalist's take on it.....7. Although experiencing some deterioration as a result of the crisis, particularly in respect of non-standard mortgages, HBOS's Retail impairments were substantially less than either the Corporate or International Divisions incurred and were not a material factor in the failure of HBOS.
Not a material factor, eh?
Perhaps because their mortgages remained so profitable throughout, they could even have afforded to pay for the PPI refunds and STILL remain profitable.....The Division generated profits before impairments of £3.5 billion in 2008.[348] Even allowing for significant pressure on this figure in subsequent years and for charges against the mis-selling of payment protection insurance, the Division's pre-impairment profits would have allowed the Group to absorb the likely level of impairments and still generate profits.[349]
Gosh, I wonder how incredibly, ridiculously, stupidly, low the default rate would be for that to happen?
Perhaps, even despite all that "non-standard lending" as low as...... 1%?we estimate that HBOS mortgage impairments for the 2008-11 period would have been some £2 billion (which represents 1 per cent of the 2008 book of secured loans).
And why would that be?The prime reason for the resilience of the Retail Division was the resilience of its credit quality.
High quality credit in the retail division, you say......
So the exact opposite of what Dev and Thrug are claiming then.
Alrighty.....
:rotfl:“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 -
Love how you stop quoting mid paragraph Hamish. It's your best trait....though on this one it seems you've gone even further and started quoting mid sentence too as you didn't like the initial start of the sentence.
Heres the full text.
You can pick and choose to take sentences you like from paragraphs as much as you like, but the report lays it out bare, and you simply cannot argue this was all rosy. Neither can you argue it was America's fault. Neither can you argue there was nothing wrong with lending. All your memes shot down in one report.44. The Retail business was the largest division in HBOS in terms of customer loans. A key element of the Division's mortgage strategy was to grow 'non-standard' mortgage lending, particularly buy-to-let and self-certified mortgages, where margins had remained higher than for standard mortgages and the overall profitability was thought to be more attractive, despite higher credit risks. By the end of 2008, £66.5 billion (28 per cent) of the banks' retail mortgage lending was classified as non-standard and 62 per cent of the Division's book had a loan-to-value ratio of over 70 per cent.URL="http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/14405.htm#note63"]63[/URL These proportions are significantly higher than for any other mainstream mortgage lender. Furthermore, at the end of 2008, the Retail Division had customer deposits of £144 billion and customer loans of £255 billion, a gap of £111 billionURL="http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/14405.htm#note64"]64[/URL which accounted for over half the Group's total funding gap of £213 billion.URL="http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/14405.htm#note65"]65[/URL
45. LBG does not publish divisional results for the HBOS Group and so it is not possible to know precisely the impairments the Retail Division has incurred since the financial crisis. We do, however, know that at the end of 2008, HBOS had retail impairments of £2.2 billion, of which £1.1 billion was against secured lending,URL="http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/14405.htm#note66"]66[/URL up from just £28m in 2007. We estimate that total Retail impairments would have been some £7 billion between 2008 and 2011.
46. The impairments incurred by the Retail Division were substantially less than those incurred by the Corporate and International Divisions and were not a material factor in the failure of HBOS. The Retail Division is likely to have remained profitable during the crisis period and subsequently, albeit at a reduced level. We note, however, that the Division incurred substantially higher mortgage-related losses than its major competitors, reflecting the bank's strategy of pursuing growth in higher risk non-standard mortgages. We also note that the Division's customer funding gap was a major factor in the Group's overall funding gap, which was a principal immediate cause in the short term of the failure of the bank. Prudent customer funding should have been a secure source of stability during market storms.
This thread was about the America thing that you kept peddling. You are now down to talking about sub divisions of the banks.
One other thing you are purposely and conveniently ignoring is that they couldn't have made the amount of loans they did in mortgages if it hadn't have been for the rest of the stuff they did. You keep trying to, but it's been pointed out to you before, you simply can't ignore what enabled them to do this.
Profit isn't always good. Illegal drug substances make massive profits...0 -
Graham_Devon wrote: »the report lays it out bare.
Indeed.
The report says.....
- Residential mortgage default rate was circa 1%
- Residential loan book credit quality remained "resilient" throughout
- Residential mortgage lending was so profitable, the retail division could have absorbed the recession AND the PPI refunds, and STILL generated profits.
As you've been told a million times Graham, UK mortgage lending standards were not the problem, and did not cause the downfall of any UK bank.
Indeed, HBOS defaults have been around average, 1% or so, and their residential mortgage book was then and is now extremely profitable.“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: »
High quality credit in the retail division, you say......
So the exact opposite of what Dev and Thrug are claiming then.
Alrighty.....
:rotfl:
2.8 But let's start with the cause and this fairly obvious proposition: even non-bankers with no "credit risk management" expertise, if asked (and I have asked a few myself), would have known that there must have been a very high risk if you lend money to people who have no jobs, no provable income and no assets. If you lend that money to buy an asset which is worth the same or even less than the amount of the loan and secure that loan on the value of that asset purchased and, then, assume that asset will always to rise in value, you must be pretty much close to delusional? You simply don't need to be an economic rocket scientist or mathematical financial risk management specialist to know this. You just need common sense. So why didn't the experts know? Or did they but they carried on anyway because they were paid to do so or too frightened to speak up?
http://news.bbc.co.uk/1/hi/uk_politics/7882581.stm
Everybody apart from Estate Agents and Mortgage Sales Directors then.
Low level of impairment because they were just written off?"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 -
Posted this before. Well worth a read for those that don't know the history.The Worst Bank in the World? HBOS’s Calamitous Seven Year Life
http://www.ianfraser.org/the-worst-bank-in-the-world-hboss-calamitous-seven-year-life/Lessons must be learnt from the short and calamitous history of HBOS, the bank which effectively went bust in September 2008, writes Ian Fraser (Note: This article was first posted under the headline “HBOS: When did the rot set in? And were shareholders asleep at the wheel?” on October 2nd, 2008 but has since been extensively updated).
At best, there were some appalling corporate governance failures at the failed British bank HBOS, with an obsession with growth taking precedence over risk management and prudent banking practice soon after Sir James Crosby became chief executive and Lord Stevenson of Coddenham chairman of the merged HBOS group in September 2001.
At worst, the bank was dangerously out-of-control and riddled with fraud and alleged criminality, having been pump-primed by its management team to deliver maximum short-term profits growth and maximum rewards for executives, irrespective of whether the bank had a chance of surviving long term — or whether its shareholders, creditors, depositors and customers were harmed.
Throughout the bank’s calamitous seven-year life, the Financial Services Authority (FSA) and other authorities for the most part turned a blind eye to the bank’s blatant wrongdoing and recklessness. In at least two cases, the Serious Fraud Office and Crown Prosecution Service may have “rigged” criminal trials in order to scapegoat suppliers and advisers (some of whom are already in jail) to ensure the bank and its executives were let off the hook.
The ‘wagon circling’ intensified after chancellor Gordon Brown appointed James Crosby a director of the FSA while he remained chief executive of the bank, in January 2004. After that, any attempt to properly regulate HBOS was abandoned. The consequences for many of the bank’s customers, staff, shareholders, Lloyds TSB shareholders, and British taxpayers have been dire.0 -
grizzly1911 wrote: »there must have been a very high risk if you lend money to people who have no jobs, no provable income and no assets.
If they'd done that on any sort of widespread basis, then defaults would be more than 1%.
The HBOS residential mortgage book was profitable then, is profitable now, and has remained profitable throughout.
The residential loan book credit quality remained "resilient" throughout
And residential mortgage lending was so profitable, the retail division could have absorbed the recession AND the PPI refunds, and STILL generated profits.
To try and claim otherwise, against the findings I quote from the Parliamentary commission Graham referenced in this very thread when he wrongly thought it supported his assertions, would be delusional.“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: »If they'd done that on any sort of widespread basis, then defaults would be more than 1%.
The HBOS residential mortgage book was profitable then, is profitable now, and has remained profitable throughout.
The residential loan book credit quality remained "resilient" throughout
And residential mortgage lending was so profitable, the retail division could have absorbed the recession AND the PPI refunds, and STILL generated profits.
To try and claim otherwise, against the findings I quote from the Parliamentary commission Graham referenced in this very thread when he wrongly thought it supported his assertions, would be delusional.
Guess the head of compliance was talking rubbish then.
1% of what?
Looks like Hornby found his niche.
Andy Hornby, chief executive of HBOS from 2006- Degree in English from Oxford University and MBA from Harvard Business School
- 1996 - 1999: Senior roles at Asda, including managing director of the George clothing brand
- 1999 - 2008: Senior roles at Halifax and later HBOS, becoming chief executive in 2006
- 2009 - 2011: Chief executive of Alliance Boots
- 2011 - Present: Chief executive of bookmakers Coral
http://www.bbc.co.uk/news/business-22027664"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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