Banks: The guilty parties.

[Dawg]

This struck a chord with me. Anyone else feel the same?

Given that most of the banks would be bust without taxpayer guarantees I don't know why they don't just wind them up in a controlled manner, transferring assets and liabilities to the state, before beginning the process of building a case against their boards, freezing their assets and attempting to claw back their bonuses, property and pension funds - on the basis of the effectively fraudulent accounts, based on flawed asset evaluations, which have showed such huge profits over the last ten years. What would happen to a small or medium sized quoted business which inflated its assets in the accounts year on year, distributing huge dividends and bonuses until the day the assets turned out to be not quite as valuable as the liabilities ? At a minimum, HMRC would be all over their books, if not the Fraud Squad. In the States they'd do time - why not here ?

They might claim they truly believed the valuations - in which case sectioning under the Mental Health Act might be more appropriate. Their delusions have turned out profitable for them and dangerous for us. link (http://www.ukcommentators.blogspot.com/)

[cjd]

Yup, where do I sign?

Bunch of *****

[Alice3537]

I was discussing this with a friend today who still works in the banking sector and we agreed on a few points.

1/ Bankers and banks are not always the same. Bear with me here. Many of the poor to piss poor decisions were made at board level or can be levied at choices made by the 'City Banker' - ie the fund and hedge fund managers who bet not only our money but the money of the bank employees, many of whom took part in share save schemes and took bonuses in the form of shares much as many other private sector workers do.

2/ 'Sir' Fred Goodwin et al took risks they should not have done. In addition, RBS (that is where one or two of my friends work) displayed strange judgement in the past - aquisitions based upon peacock displays of power and money.

3/ The people who really 'make up the bank' are often those on the front line. My friend was p'd off because if he loses his job no-one would show sympathy for the fact that another business was laying off. I empathise with that.

4/ I believe that those who took risks that were not appreciated by certain unlikely investors (i.e. many people with money invested in a bank never thought they may be taking a risk with that money) should be brought to account. I suspect it will be more than difficult to find a way to do so, though, given the fact that this was a supposedly regulated industry which did not pick up in what was happening and does not seem to understand it. People more intelligent than I am will no doubt be working on this issue, if only to make a name for themselves!

Just a few of my thoughts. The link is not to a source I know, so won't comment on it at the moment, although I will say there is nothing as emotional as a post about banks at the moment!

I've worked in the finance sector and what pisses me off is that people who are not at the top of the tree can identify a crappy deal or an overly risky strategy when they see one. They just don't have a voice.

[cjd]

I've worked in the finance sector and what pisses me off is that people who are not at the top of the tree can identify a crappy deal or an overly risky strategy when they see one. They just don't have a voice.

I know a few of these people too - one of them is currently in a US jail thinking about Enron - and I can tell you that regardless of what they think of the risks of the deal they do them anyway and are happy to take the fees/bonuses.

The 'only following orders' defence lost quite a lot of its impact about 60 years ago.

[An Oasis]

Interesting that all the parties involved are all propping each other up in an insidious back slapping party...no it's not in the slightest bit interesting, what else were they going to do?

[KM-Tiger]

There would not be any business without risk - or if anyone knows the totally risk-free business, keep it to yourself, you are made for life!

The difference with banks is that it's not just the owner's/shareholder's money at risk, it's everyones, which is why the BOE used to keep a very tight rein on the risks, and that was a culture that existed all down the chain. I well remember the very stern interview to get my first mortgage many year ago.

That tight rein was relaxed in the last two decades of last century, and just at the turn of the century it was let go completely.

Human nature is such that there will always be those who will take what to others are unacceptable risks. If they lose there own lives or money, so be it. With banks the only workable control is tight regulation.

Right now we have many savers wanting a reasonable return on their savings, and we have borrowers who want to borrow at a reasonable rate. Bringing those together is what a bank is supposed to do, and all banks are failing at both objectives.

Our glorious government lobbing yet more cash at failure isn't going to solve that. Maybe Vince Cable is right and nationalise the lot, but who will run the nationalised bank?

[Dawg]

Where UKBF leads the FT follows; From today's FT (http://www.ft.com/cms/s/0/a35c925c-e65f-11dd-8e4f-0000779fd2ac.html):

For the moment, though, I cannot think of a more popular policy than shooting the bankers and nationalising the banks. It might even win Mr Brown an election. Come to think of it, it could also be the way to get us out of this mess.

[thebigIAM]

Shall we run a sweep stake on how many months it will be before they announce another bailout?

[Ian J]

Where UKBF leads the FT follows; From today's FT (http://www.ft.com/cms/s/0/a35c925c-e65f-11dd-8e4f-0000779fd2ac.html):

For the moment, though, I cannot think of a more popular policy than shooting the bankers and nationalising the banks. It might even win Mr Brown an election. Come to think of it, it could also be the way to get us out of this mess.

I don't think that complaining about the way the banks have acted is peculiar to UKBF as you can drop in on any UK forum devoted to almost any topc and you will find the same comments from it's forum members.

[UKSEOAgency]

exactly - the banks are still taking stupid risks out there - and raking it in on both siedes.

A friend of mine has 40k of debt secured against his house, spent on extending his house, buying a new car and paying off the credit cards, now he is paying monthly charges to the bank due to late payment, and the banks are getting money off the government!

most stupid thing is - he would not have taken the loans if it wasnt for them offering the thing to him at an annual review, hes on 21k+bonus's a year with a mortgage as well to pay! now the bonus's have dried up - he cant afford the payments and to eat!

why does the government not think that these bailouts should be used to reduce the overall borrowwing of the poeple who have borrowed the money - keep the loan term the same but use the reduced balance to put money back into peoples pockets! which will get them spending again!

I personally have personal debt - but its manageable, but people like mike (my friend) have an excess of what they can afford - if the payments were reduced but no more credit was available - im sure the money would end up in the tills of the shops - not the banks as savings!

[cjd]

A friend of mine has 40k of debt secured against his house, spent on extending his house, buying a new car and paying off the credit cards, now he is paying monthly charges to the bank due to late payment, and the banks are getting money off the government!

most stupid thing is - he would not have taken the loans if it wasnt for them offering the thing to him at an annual review

It takes two to make a deal. Your friend's attitude of having it all now regardless of whether he can afford it is 50% of the problem. No one forced anyone's arm here, the bank appealed to his greed and he fell for it along with a few million others.

Apart from that, he essentially took out a 25 year loan (a mortgage) against an asset with a 5-10 year life (a new car) - now that's just dumb; but thousands of people did it.

[Steve2507]

Okay, the banks were at fault for doing stupid lending, but they are paid to make money and so they are going to take risks. As previously mentioned every business has to take a risk. This has been gone over loads of times and so everyone is blaming the government and banks.

BUT

Lets look at it from a different angle.

If people hadn't been going to the banks for more loans, then the loans would nolt have been given out in the first place.

Once upon a time people "made do" with what they had, but now people seem to want the latest of everything. You have people buying new cars, not because their old one is dead, just because they fancy a new one. Or how about those that change their living room furniture every year or two, again not because they need a new one but because they want a new one. Or those that change their tv because the latest one is flat panel 52 inch, not because their old one has blown up (as my mum's did the week before Christmas - smoke and everything).

Some people pay for their new purchases from hard earned savings which is good, but how many put it on their credit card with no intention of paying it off quickly or put it on the old hp? Then they complain that they can't afford the repayments and even blame the bank for agreeing to lend the money in the first place.

There was a news report recently about a family who had lost their home 10 or 20 years ago. The bank/building society had agreed to allow them to pay a vastly reduced sum to clear of the outstanding debt (I think it went from £20K to £3K or something like this). All they had to do was pay it back as a regular amount. However they have said they paid what they could when they could and couldn't aford any more. But the bank was now coming after them for the original amount plus interest and arrears. The new total was £50K+. I was feeling really sorry for them as they had been put in a position not of their making (I think they lost their jobs which was why they had lost the first house) and according to what was said had tried really hard to pay back the £3K.

I say "was" because then the camera panned to show a top range flat panel tv, an extremely well decorated lounge and a plush settee and chairs. If they had been trying so hard to pay back the money why did they buy all these top range items???? All sympathy went out of the window.


I agree banks have a hell of a lot to answer for but I also believe we as consumers have had a negative part to play in all this as well.

[UKSEOAgency]

It takes two to make a deal. Your friend's attitude of having it all now regardless of whether he can afford it is 50% of the problem. No one forced anyone's arm here, the bank appealed to his greed and he fell for it along with a few million others.

Apart from that, he essentially took out a 25 year loan (a mortgage) against an asset with a 5-10 year life (a new car) - now that's just dumb; but thousands of people did it.

Thats what ive said to him - and whilst everyone out there is blaming the banks (which are business's) for lending the money - it is also the people who borrowed its fault!

I think part of what kicked all this off - was how much easier the government made it for people to go bankrupt - giving people the easy way out which only lasts a couple of years - well this is how the media perceived it. This media perception would fuel people borrowing what they know they can not afford even more than they were before! because they planned to go bankrupt to wipe the debts, which were made on assets that could never have been recouped (going out for meals & having a few drinks on the credit cards), There is no way any bailiff could ever recover this money

[Cromulent]

The UK is in a rather ironic position at the moment. The taxpayers are paying the banks to get them to lend them money. Seems a rather silly thing to do to me.

Rather than us giving the banks all this money, why not just lower taxes by the same amount and inject funds into the economy that way? That seems the more capitalist approach to me.

Still, that does mean you need to trust the banks and like everyone else I find that hard to do. I'm glad I'm with HSBC which seems to have come out of this relatively unscathed compared to its competitors.

[Dawg]

HSBC is as OK as all the other banks. Their little headache is called Household, and is their subsidiary dealing with American sub prime mortgages. Small matter of a $35bill black hole.....


Who the devil does Jesus save with these days?

[directmarketingadvice]

Where UKBF leads the FT follows; From today's FT (http://www.ft.com/cms/s/0/a35c925c-e65f-11dd-8e4f-0000779fd2ac.html):

For the moment, though, I cannot think of a more popular policy than shooting the bankers and nationalising the banks.

I can think of one.

Shoot the bankers ADN the politicians who encouraged the bankers to do what they did.

IMO, this problem is 100% the fault of the politicians. It was they who set up the rules of the game and those rules meant the smartest thing the bankers could do was gamble.

The same rules - deposit insurance + no restrictions on investments or lending - caused the S&L crisis in the US just 20 years ago, so it's not like we shouldn't have seen this coming.

Steve

[Dawg]

Doesn't wasting bankers make you blind?

[Ian J]

The taxpayers are paying the banks to get them to lend them money. Seems a rather silly thing to do to me.

So far that has not been the case as the monies pumped into the banks has been to recapitalise them to cover the losses that they have made.

We are now in a situation where the banks have been roundly castigated by all and sundry for irresponsible lending and now that that they are claiming to be more selective in their lending they are being roundly castigated again.

[Cromulent]

We are now in a situation where the banks have been roundly castigated by all and sundry for irresponsible lending and now that that they are claiming to be more selective in their lending they are being roundly castigated again.

From what I have heard it is not a case of careful lending, more a case of not lending. That is why the government have introduced so many schemes to get banks lending again.