But as the BoE note, banks create the loan first and this then becomes a deposit. Most people and many bankers don’t understand this. They still think it’s the other way round.
Like bookies innit? 😉
Anyone listen to Kate Hoey (Labour Brexiteer) on the Today programme this morning?
She wants to build a big beautiful wall and make the [s]Mexicans[/s] [i]Irish[/i] pay for it:
[i]"We’re not the ones who will be putting up the physical border. If this ends up with a no-deal we won’t be putting up the border they’ll have to pay for it because it doesn’t need to happen."[/i]
http://www.huffingtonpost.co.uk/entry/kate-hoey-radio-4-today-interview_uk_5a1bd32ce4b064948075558d
Not really 😉 but it is the complete opposite to how people think banks work which is one reason why the BoE wrote the piece that rone refers to.
I send it to loads of people!! It’s an excellent article.
How are you IGM? Nice to have some sanity restored after being told that two direct substitutes are the same thing !
Actually I think shes taking after the Mexicans....
THM - my very tongue in cheek comment was really just to say that as far as I can see banks are market makers providing the elasticity (in the non-economics sense) that allows borrowers and lenders to trade. They will take one trade (borrowing you say and I don’t know enough to argue) and then seek another trade or series of trades to back it off against.
They are not an introductions agency for borrowers and lenders.
Am I in the ballpark?
And don’t call me sane - if you’d met me you’d know...
IGM - been dipping in between meetings but need to focus now as back at HQ 😉
Will respond on train later
Anyone listen to Kate Hoey (Labour Brexiteer) on the Today programme this morning?
Yeah, saw that reported earlier. Nice.
Though still waiting to hear about how Irish domestic difficulties are affecting Brexit headlines.
I fear that like any difficult question for Brexiteers and Quitlings alike, it just gets ignored until the debate has moved on.
I seem to remember a similar approach to a sticky question from zokes about visas.
So you don't agree with her assessment that a border is a bit pointless because in a couple of years, once the Irish see what a fantastic job we've made of Brexit, they'll be ready to leave too?
@Gee, dunno - last polls showed 80+% supported remaining in the EU but fears of a hard border are high too.
Maybe the RoI will see sense and join a single market with the UK rather than the rest of the EU, given the strength of their trade with us. France might follow suit (wine!), then Germany (cars!), and perhaps in time another 25 countries might see the advantages. We could call it the Union of Europe.
Kate Hoey, much like most people pushing for full fat Brexit, or whatever you want to label it, needs to educate herself about how WTO operates. I can't be arsed to write about this again… so here is a new link where someone else, probably with a sigh expelled for every sentence written, has gone through some of the points yet again…
https://amp.ft.com/content/1ce27838-d370-11e7-8c9a-d9c0a5c8d5c9
Edukator - Reformed Troll
A new level of stupidity from you, THM. Anyone on this forum can Google that an see that "nope" is false as in incorrect as a provocative ignoring of the facts.Freddy and Fannie were exclusively financed by the Fed. The BOE is a major lender to British banks:
http://www.bankofengland.co.uk/markets/Pages/FLS/default.aspx
POSTED 8 HOURS AGO # REPORT-POST
Edukator, I hope you had a nice swim. You very kindly posted this link to correct my stupidity. That was very kind. Unfortunately, the link does not work on my iPad. But I am still interested to understand the BOEs role as a major lender to British banks especially through the scheme you highlighted.
Could you do me a favour? Any chance you could tell me how much the BOE lends to HSBC, Barclays, RBS and Lloyds under this scheme. IIRC Lloyds has been the most active user of the scheme in the past. Then I would be able to understand better. Thanks for your help in advance. Looking forward to another learning day.
Take a trip back to the 30s, the New Deal and the founding of Fannie. That was the point at which it was apparent that the only way to get the building industry back on its feet was a government organisation to provide finance to mortgage lenders. Since then governments(through central banks) have regulary made funds available to banks and mortgage lenders when the inability to secure finance has been an excessive drag on the economy. Recently the BOE.
Read my link when you have a device that will access it. It's straight from the horse's mouth.
I've no idea how much each idividual bank borrowed on the scheme, perhaps you have and can tell us.
The condescending nature of your post is clearly meant to offend.
I know how fannie and Freddie work and how they get their funding - it isn't how you say but no matter - but I am intrigued by the UK. I was never aware that the BOE was a major lender. Shame you can't access the link either. Hopefully it will work on my PC later. It will be very interesting to see.
Let's hope Windows is better than Apple.
No thoughts on the Term Funding Scheme yet THM? Seems the most recent example of BoE lending to banks, with obvious direct links to what this thread is probably supposed to be about.
Funding for Lending SchemeThe Bank and HM Treasury launched the Funding for Lending Scheme (FLS) on 13 July 2012. The FLS is designed to incentivise banks and building societies to boost their lending to the UK real economy. It does this by providing funding to banks and building societies for an extended period, with both the price and quantity of funding provided linked to their lending performance.
The FLS allows participants to borrow UK Treasury Bills in exchange for eligible collateral, which consists of all collateral eligible in the Bank’s Discount Window Facility.
The Bank and HM Treasury announced an extension to the FLS on 24 April 2013, which was amended on 28 November 2013, on 2 December 2014 and on 30 November 2015. This allows participants to borrow from the FLS until January 2018, with incentives to boost lending skewed towards small and medium sized enterprises (SMEs).
Yes I thought I understood it kelvin but apparently not. Perhaps you can help as the link doesn't seem to be working for Ed nor I. Can you advise in the extent of the major funding provided but the TLS please?
FWIW:
RBS has a deposit base of £360bn IIRC and Lloyds £414bn. It would be good to know how the BOE finding compares. Thanks in advance.
£100+ billion in a year… IIRC.
RBS has borrowed £100bn from the scheme? really?
No idea on the breakdown.
Oh well, given it's importance it will be worth waiting for. Let's hope Eds link works on a PC.
RBS 0, HSBC 0, Barclays 0, Lloyds 30 bn, Santander 3.1 bn, total usage £48 bn, other borrowers dominated by Building Socs.
Looks like 'Thick as Mince' has been lying about having done his homework.
The Brexit secretary has previously told a select committee that his government was “in the midst of carrying out about 57 sets of analyses, each of which has implications for individual parts of 85% of the economy. Some of those are still to be concluded.”However, those inside the Department for Exiting the EU have insisted separate reports for each sector never existed. The suggestion is that civil servants have been working continuously on assessing the impact of Brexit on each of those areas, and have now pulled together information thought to meet the parliamentary demand.
The information handed to the committee has come in the form of 39 reports, it emerged on Monday night.
Cmon mefty, be serious. That low? Can't be...
lloyds has a balance sheet of £811bn - it must be much, much higher, surely?
The text from my link is up there ^^ . As for the relationship between the Fed and US banks since the financial crisis, it's outlined here:
Further to Leku’s link, we can talk about Brexit while the, erm, [i]bankers[/i] blow smoke up one another’s arses.
[url= https://s18.postimg.org/5u4ry3d4p/1_D342_BBB-_E530-4742-_B7_D0-_FD16_A4592_D6_F.jp g" target="_blank">https://s18.postimg.org/5u4ry3d4p/1_D342_BBB-_E530-4742-_B7_D0-_FD16_A4592_D6_F.jp g"/> [/img][/url]
The starting limit was 5% of qualifying assets so never going to be significant in context of whole bank.
I saw you link thanks. But if Mefty is correct - I think he must have the access we don't- then it looks like the scheme is rather small and not really used by the big banks at all. Do you think this is correct or does Mefty have it wrong too? Seems to suggest that banks must have much bigger alternative sources of funding.
Had a quick skim of the Cleveland report, Sorry what is that meant to tell me. I know that banks have large reserves following QE but they are not allowed to lend those out, what is the message?
Thanks mefty, So after all that the BOE isn't a major lender after all. Is that the lesson for today?
Sadly kelvin, looks like a false alarm/ red herring after all. Thanks for the help.
Oh, thm, I reliase we've moved on a page, and you still haven't answered that pretty simple question I asked.
Here's what you said:
Of course the Irish headlines have no link to domestic difficulties at the moment....,
To which I asked you to clarify what you meant by it. Thought maybe you'd forgotten with all the technical discussion about banking. Anything to add?
That on each point you've called me a liar you were wrong, THM, Simple as that.
In this environment, the institutions willing to lend in the federal funds market are institutions whose reserve accounts at the Fed are not interest-bearing. These include government-sponsored entities (GSEs) such as the Federal Home Loan Banks (FHLBs). The institutions willing to borrow are institutions that do not face the FDIC’s new capital requirements and do have interest-bearing accounts with the Fed. These include many foreign banks. As such, the federal funds market has evolved into a market in which the FHLBs lend to foreign banks, which then arbitrage the difference between the federal funds rate and the rate on IOER.
Central banks wouldn't be doing their job if didn't provide liquidity to banks as and when economic conditions made it judicious.
I thought central banks didn't lend to banks? Is this now about why RBS is different to the other banks? Scheme no doubt aimed at banks other than RBS, considering all the other channels money moved between BofE and RBS in the past decade.
[url= http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6646923/Bank-of-England-tells-of-secret-62bn-loan-to-save-RBS-and-HBOS.html ]BoE doesn't lend to RBS[/url] [ sarcasm ]
Further to Leku’s link, we can talk about Brexit while the, erm, bankers blow smoke up one another’s arses.
That tweet misses out that it's not just commercially sensitive data that won't be in the redacted (or hastily assembled) reports, but anything that might be relevant to the exit and trade deals ahead… g e n i u s !
It's almost as if these reports hadn't actually existed and they've had to bodge them together at the last minute.
Thanks Ed but not sure what an obscure reference to how the fed funds market works is helping.
But to stick to the Uk, we have stabilised that Central Banks provide a lender of last resort service - not needed in an iS apparently but that’s by the by - but we have yet to establish any idea that they are major lenders to banks. If mefty is correct the link provided suggests that not only have they lent nothing to three of the big UK banks but that this is a very limited and specific policy that doesn’t support your argument
So it would be great to see any evidence that central bankers are major lenders to banks. At the moment looks like you might have been mistake despite the strength of view you expressed.
You've got to admire the timing though - you would think that the non-disclosure/existence of reports detailing the effects of Brexit would be front page news.
Just as well we have something important like a Royal wedding to discuss.
So it would be great to see any evidence that central bankers are major lenders to banks.
[url= http://www.google.com ]Find things here![/url]
Tried that sr - blank
You need to type your query in the box and click search.
I'd of thought you'd of known this after 250 pages of not backing up your statements by telling people they can find the information themselves online.
So it would be great to see any evidence that central bankers are major lenders to banks. At the moment looks like you might have been mistake despite the strength of view you expressed.
You're distorting what I said again, THM, and putting words in my mouth. Go back to page 1077 for what I actually said in context.
It's just plain nasty the way you try to distort everything I post.
Also a small pedantic point is that FLS is not a loanm it is the lending of Treasury Bills against collateral and is off balance sheet for BofE accounting purposes - it is not a liquidity device but a pricing device.
this is a very limited and specific policy
It's an example that I brought up, as it is specifically about how the BofE has used extra, strings attached, lending to banks to help ease (I'd still say delay) the effects of the Referendum result.
If you want something more general, or more examples of, how central bankers supply loans to banks, there's a whole internet out there… knock yourself out. I suspect you know full well that this is one of the tools central banks use, and are just trolling… which would be fine, if you weren't be such an arse towards Edukator for his comments about central banks lending to banks… they do… both to save banks and influence lending to companies to attempt to influence the real economy.
Any chance of steering this thread back on to Brexit?
Yes, Mefty, pedantic, if you lend something it's a loan.
They are not lending money, they are effectively exchanging types of collateral.
