As someone who ran a business in 2007 that employed 37 staff and had over five million quids worth of work on – to loosing my house and being made bankrupt I have a pretty coloured opinion about our banking sector and the damaged they caused to house building in this country.

Of course there were mistakes made by many people (including myself) outside the banking sector.

So, what is your opinion and answers the following?

1.The banking crash of 2008
2.The fact that the banks are engaged in a PR lie that they are lending money when they are not.
3.The recent Ulster Bank, Nat West cock up?

Interested to hear your opinions.

harsh as it may be… it’s a bit serious for me on a MTB forum at 8.13am mate.

Mistakes happen, things break, especially in IT….

Banks lie, so do politicians, so do builders, so do chefs…. we all do it to make our business look better… it’s the way of the world.

LOL, fair answer!

Back on the bottle?

Very funny Colin, how are you?

Joe,

I think your first point has been done to death here and elsewhere.

Your second point nobody believes they are actually lending money easily, although actually to prevent a repeat of the last cock up that may not be a bad thing. Perhaps there are better ways of supporting the capital requirements of small business?

In terms of the RBS/NatWest/Ulster systems crash, obviously its not acceptable – but did your 37 people £5M t/o business ever make mistakes? Did you ever (or could you imagine) a mistake that would cause some of your customers some major inconvenience for a week? Its caused a small amount of problems to a very large number of customers (myself included) – I’ve spoken to a few people who are furious, but its not clear that once the disaster happened (which certainly should not have happened) that they could do anything else to speed up its resolution.

Very good thanks. Nice to see you getting back into things. Don’t fall for all this hype about 29ers though. They’re not for you 🙂

As always, there are bargains to be had on the classifieds though as folk go through the upgrade cycle. Check out Pauls Cycles too – they seem to have some regular good deals.

I had a bank cancel a business loan account with no notice, well actually they had posted me the letter to our PO box the day they pulled the loan account. There was about $3.4m spread over 6 other business accounts and it was invoice day so about another $900k about to clear. The account they closed was about -$190k but the fees added $39,000 ! Nice. Well done. They lost (with one exception):
1) All our business after I managed to recover the mess
2) All our personal banking, insurances and anyone I will ever meet I will tell.
3) All the banking of the company that subsequently bought us (6,500 people in this country, $n00m turnover)
A small thing but what they did was incredible and unthinkable and bizarre.
I funking hate banks with a passion. In revenge I did borrow about $1.6m from them knowing it was very short term and they were offering the earth + perks to do it. There were no penalty get outs (my lawyer checked) so we scored about $45,000 worth of various things for a 2 day loan. Hahahahahhaa I enjoyed that bit.

Poly, apologies if I am digging up old stuff. I have not been around here recently.

druidh,

26’ers to me are like 29’ers to normal sized people.

Name and shame NZ?

RBS?

1.The banking crash of 2008
2.The fact that the banks are engaged in a PR lie that they are lending money when they are not.

One of the root causes of the crash was bad lending, some of the worst was cynical (lending assuming default to get the house/asset cheap then sell on) some was bad judgement and some was due to never having seen a crash.
A generation of people grew up seeing houses as a cast iron investment. Couple this with excess credit and a want it/get it culture personal debt rode but we could always put it on the mortgage.

Stricter borrowing rules are needed to protect banks from exposure to the levels of bad debt that have built up. This doesn’t go hand in hand with lending to start a recovery. If the recovery is late then banks will have bad debt and be back at No. 11 for a bail out (As the government told them to lend)

It would have been simpler to bypass the banks for quantative easing by giving the money to tax payers. Some would pay off debt (reduce bad debt level & increase bank capital) some would spend it generating some short term growth. Others would invest it or save it (recapitalise the banks/markets)

As for a Computer cock up, it happens – they will not be passing on charges for it and refunding those incurred. Sensible really.

It’s too easy to demonise bankers without looking at the wider picture

The banking sector in this country carries on IMHO like an independent nation state, in its behavior. And one with tyrannical imperialist intentions. Which would be just about bearable if it wasn’t the case that we, as taxpayers, are effectively underwriting all their highly dubious and amoral activities.

The phrase ‘too big to fail’ is bandied around. But what this means is that we’re on the hook for any losses they incur, with no personal comeback for people causing the problems, who simply walk away with their huge salaries and bonuses intact, whatever the circumstances. Privatised profits. Socialised debt. The worst of both worlds. For us

It’s like having a delinquent teenager, and giving him them the keys to your car, and a credit card with an unlimited limit. Are they going to behave responsibly? Are they ****! They’d behave exactly as the banks are doing now

And as for funding useful economic activity – someone used a brilliant phrase on Newsnight last week. Bank investment activity is just ‘money talking to itself’

It’s too easy to demonise bankers without looking at the wider picture

The Spanish are currently very good at this – it’s always the banks’ (and the politicians’) fault, the fact that we were all caught up in a must-buy-a-house frenzy is rarely mentioned, or the way people purposefully overvalued houses to get a 120% mortgage… (Of course, the banks should have been stricter when it came to lending, but at least some of the guilt lies on the buyer for asking for it.)

It would have been simpler to bypass the banks for quantative easing by giving the money to tax payers. Some would pay off debt (reduce bad debt level & increase bank capital) some would spend it generating some short term growth. Others would invest it or save it (recapitalise the banks/markets)

This is where the BOE messed up. The banks just took that nice new money, tucked it away and said thank you very much. Really stupid.

Problem is, the banks were told to re-capitalise AND to lend more. You can’t really do both 🙂

Handing it directly to tax payers would have seen it mostly spent abroad on new cars, TV, iPads and foreign holidays.

Perhaps it should have been given to the banks in such a way as to reduce folks outstanding mortgages given that house price inflation was one of the major causes of the whole crisis.

Perhaps it should have been given to the banks in such a way as to reduce folks outstanding mortgages given that house price inflation was one of the major causes of the whole crisis.

But that would have led to more house price inflation thus exacerbating a house price bubble that is still hanging over the economy. It needed to go into something that created jobs that couldn’t easily go abroad, like infrastructure construction.

Two sides to every Bad loan.

Everyone likes a scapegoat.

It’s the banks fault for lending loadsa money pre 2007

It’s the banks fault for not lending money post 2007

It’s the banks fault for not re-capitalising post 2007 to deal with the loans they made defaulting.

You seem to have summed it up quite well there tinas. 😉

This is where the BOE messed up. The banks just took that nice new money, tucked it away and said thank you very much. Really stupid.

As we told them to!! Along with telling them to lend more and save more..

Everyone likes a scapegoat.

We live in an age of zero accountability where all our problems are always someone elses fault …

Massive debt? – Banks’ fault for wrong lending
No money? – Banks’ fault for not lending
Too fat? – Mcdonalds’ fault for, er, being open for business

etc

what are these loans that viable businesses need to survive?
i have a small business( 3 employees couple of vans) and we dont owe one penny dont need to have a loan to survive.
when business is good we make hay when its slow we hunker down. we always live / work within our means.
I’m simply staggered when i watch the news and guys like me say the bank wont lend them 20k/ 200k to keep thier business afloat..

One of the root causes of the crash was bad lending, some of the worst was cynical

Did he argue with them until they gave him the money?

The banks lending too much? Hmmmmmm. Not to sure about that. I’m sure at the time they would have referred to this a ‘speculative activity’. Mainly in property. Making the somewhat dim-witted assumption that they couldn’t lose!

That’s no different from the hopeless optimist down the bookies maintaining this next one is a ‘dead cert’

Is that really how we want our financial institutions behaving?

what are these loans that viable businesses need to survive?
i have a small business( 3 employees couple of vans) and we dont owe one penny dont need to have a loan to survive.
when business is good we make hay when its slow we hunker down. we always live / work within our means.
I’m simply staggered when i watch the news and guys like me say the bank wont lend them 20k/ 200k to keep thier business afloat

You are a successful but small manufacturing company, you win a large order and need a loan to invest in stock and raw materials. No-one will lend to you. You can’t fulfill the order you remain a small manufacturing company and don’t hire any extra staff

When will you get paid for that large order, if ever? Businesses often fail when a major customer goes bust so a bank is likely to be wary of lending to fund an all-the-eggs-in-one-basket production run. I prefered having lots of small contracts to a few big ones. By the time my business was going well enough to borrow from the bank there was enough capital to invest without a loan.

This is getting quite well reasoned for STW….

May go to show there isn’t an easy answer to all of this

You’ve got to spend money to make money. This is a well proven business fact.

totalshell – How did your business get the vans? Magic money or a loan of some description? Leases, private investment, your own money invested in the business all count as a loan of some sort.

When will you get paid for that large order, if ever? Businesses often fail when a major customer goes bust so a bank is likely to be wary of lending to fund an all-the-eggs-in-one-basket production run. I prefered having lots of small contracts to a few big ones. By the time my business was going well enough to borrow from the bank there was enough capital to invest without a loan.

I get what your saying, the point is there will be occasions when well run businesses will need a loan, to help them expand and grow into larger business.

Banks lend money for profit, thats how they work. The banking crisis was caused by lenders losing their link with the people they lend to.
Instead their debt was sold on to investment banks who packaged up the various debts in complicated derivatives and then sold them on as investment products.

The lenders no longer cared who they were lending to as they could simply sell on any debt they had on their books. They actually made more profit selling riskiers loans on.

Its really the lack of regulation in the derivatives market that led to the banking crash.