Raising the £35,000 savings guarantee?

bristolleedsfan

moonrakerz wrote: »

When NR got into difficulties, the other banks wouldn't touch it with a bargepole - unless there was the probability of a huge profit for them if it went right. If it went wrong the taxpayer would pick up the tab. Which is just what this Govt did !

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/24/ccrock124.xml

"Over the weekend of September 8-9 King's point of view and the crisis at Northern Rock collided. Lloyds TSB had indicated to Northern Rock and the Government that it was interested in buying the Newcastle bank for £2 a share - if the Government would extend a £10bn line of credit to cover the risk of taking on the Newcastle bank.
King opposed the deal. Treasury officials advised Darling to overrule King, according to people familiar with the situation. Darling took the matter to Brown. Brown did not overrule King. The Prime Minister failed to act for fear it would expose him to charges that he was undermining the Bank of England's independence. "

moonrakerz

bristolleedsfan wrote: »

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/24/ccrock124.xml

"Over the weekend of September 8-9 King's point of view and the crisis at Northern Rock collided. Lloyds TSB had indicated to Northern Rock and the Government that it was interested in buying the Newcastle bank for £2 a share - if the Government would extend a £10bn line of credit to cover the risk of taking on the Newcastle bank.
King opposed the deal. Treasury officials advised Darling to overrule King, according to people familiar with the situation. Darling took the matter to Brown. Brown did not overrule King. The Prime Minister failed to act for fear it would expose him to charges that he was undermining the Bank of England's independence. "

My highlighting: - just what I said ! TSB wanted to buy cheap and for the taxpayer to underwrite any potential losses. Nice work if you can get it !
I would buy shares in a snake oil company if I knew that the taxpayer would pick up any losses for me.

Applegarth and his cronies sold their shares at almost £12 each.

bristolleedsfan

Id be facinated to know what the difference is to all the cash BOE has been chucking into the money markets+ the 50 Billion Pounds that BOE has lent to the Banks ( Its all taxpayers money, thats what the central bank is there for, bank of last resort.)

Also when a Building Society has got into trouble another Building Society has taken it over for next to nothing.

Ive always wanted to know how to do the underlining.

Anybody/Everybody could have sold their NR shares at 12.00 each, those who didnt sell @12.00 a share gambled that the share value would go higher.


Banks use £50bn lifeline to aid building societies
Sunday Times
April 27, 2008

Quote:
BRITAIN’S biggest banks are setting up emergency credit lines to small building societies giving them backdoor access to the Bank of England’s £50 billion crisis loan facility.

The move is one of a number of unofficial conditions imposed on the banking industry in exchange for the bail-out. It was first put forward at a meeting in Downing Street a fortnight ago.

Small building societies have in effect been excluded from direct access to the Bank’s emergency loans programme.

It allows lenders to deposit mortgages in exchange for cash, but they must first be parcelled into bonds, another type of financial instrument.

Only the UK’s largest building societies, such as Nationwide, Britannia and Yorkshire building society, have the necessary legal frameworks in place.

Lenders such as HSBC, Barclays, Lloyds TSB and Royal Bank of Scotland are planning to behave like central banks for smaller societies, according to banking sources. The move has been encouraged by Mervyn King, the Bank’s governor.

The big banks will allow the societies to piggyback on their access to the Bank by posting individual mortgages as collateral. The commercial banks are expected to charge a fee for the service.

The Bank’s £50 billion credit line was drawn upon last week, although officials will not say which institutions used it.

All the UK’s large banks have made a commitment to the Bank to draw on the facility, to ease fears that banks could be stigmatised for using it.

moonrakerz

bristolleedsfan wrote: »

Anybody/Everybody could have sold their NR shares at 12.00 each, those who didnt sell @12.00 a share gambled that the share value would go higher.

Totally agree ! but when you know that your company is about to go down the pan before anyone else does, and sell up, that is called "insider information" and is a criminal offence.

But of course that is very difficult to prove and it was just a huge coincidence that the board of NR sold theirs when they did :rolleyes:

KeithEssex_2

Please show your support for this new petition to 10 Downing Street to increase the Financial Services Compensation Scheme limit to at least £100,000.

http://petitions.pm.gov.uk/BankProtection

Please show your support by signing the petition and circulate the URL to your friends and family.

Thank you.

dunstonh

KeithEssex wrote: »

Please show your support for this new petition to 10 Downing Street to increase the Financial Services Compensation Scheme limit to at least £100,000.

http://petitions.pm.gov.uk/BankProtection

Please show your support by signing the petition and circulate the URL to your friends and family.

Thank you.

No thanks. I see better things for our money to be spent on.

Meltdown_2

dunstonh wrote: »

No thanks. I see better things for our money to be spent on.

Which "our" are you referring to?
An increased guarantee level shouldn't cost the taxpayers anything.
I don't see why it should cost the levy-payers anything either. It hopefully won't need to be used.

KeithEssex_2

dunstonh wrote: »

No thanks. I see better things for our money to be spent on.

I appreciate that your view is perfectly valid but I do disagree with it for the following reasons:-

Presumably you would apply the same logic to the pension companies - i.e. if one of them went broke you would not want to offer them any compensation for their contributions ?

As financial institutions are regulated by the FSA the state is clearly taking responsibility for ensuring that the way they manage their affairs is sound. We should be able to rely upon this but it would appear that they have done a very poor job over the last few years not to see this coming !

All of the current "Credit Crunch" debate demonstrates that the average Savers/Investors have very little information available to them on which to base their decisions. Even now the precise exposure to Asset Backed Securities is unclear.

Expecting people to manage a range of multiple accounts to circumvent a low compensation limit is an awkward and time consuming process (particularly for many elderly people).

For that reason I believe that the scheme is required and a higher limit is needed to ensure confidence in the Banking system.

moonrakerz

KeithEssex wrote: »

Presumably you would apply the same logic to the pension companies - i.e. if one of them went broke you would not want to offer them any compensation for their contributions ?
For that reason I believe that the scheme is required and a higher limit is needed to ensure confidence in the Banking system.

I totally agree with dunstonh.

As I said earlier, pension schemes have gone bust, the Government has done very little about it.

If the limit is increased to £100,000, why shouldn't it be £500,000 or a million. The higher the limit the more strain will be put on any system if problems do arise.

Would you rather have 100% of £35,000 or 0% of £100,000 ?

And as for: "the state is clearly taking responsibility for ensuring that the way they manage their affairs is sound" - if you really believe that ..................!!

Meltdown_2

moonrakerz wrote: »

If the limit is increased to £100,000, why shouldn't it be £500,000 or a million. The higher the limit the more strain will be put on any system if problems do arise.
Would you rather have 100% of £35,000 or 0% of £100,000 ?

Let's just analyse this for a second.
If someone has £700,000 (say) that they want to keep in savings accounts (Yes, I know a lot of you are shouting that they should be investing this amount, not saving it) then at the moment, to protect 100% of their money (as any prudent person would do) they would need to put it with 20 separately-registered deposit-takers (banks/BS). Are they likely to do that? Not really, it's a lot of hassle (particularly if you have to keep checking on rates). It is probably easier to deposit it with an institution that will give you a 100% guarantee (on a one-to-one basis) or to deposit it overseas somewhere. So the majority of UK banks lose out on that money.
They can of course choose to ignore the current UK guarantee entirely, and put the money with a bank so large (e.g. HSBC) that no government could allow it to fail.
Thoughts anyone?

And as for: "the state is clearly taking responsibility for ensuring that the way they manage their affairs is sound" - if you really believe that ..................!!

Perhaps it should have read "the way they manage their affairs is sound bites."