Bank bailouts and banker bashing

The bank bailout looks to have delivered a profit of £14bn to the nation. The RBS sale announced by the chancellor last night will result in a loss (the bank was rescued at too high a price) but overall we have a healthy profit. The guaranty scheme was never used and it delivered significant fees

The banks have shed many jobs (over 100,000) and paid billions in fines for inappropriate behaviour. New regulatory rules make a repeat of the excessive lending which lead to the crises unlikely.

This week’s news that HSBC will re-brand its UK retail bank is very significant. Its a very sensitive decision and HSBC spends a lot of money promoting its global brand (eg airport advertising pretty much everywhere) so to move away from that in the UK is significant. Creating a seperate UK identity gives it the flexibility to sell the UK unit and it is IMO a move to ensure the bank levy does not apply to it’s international business which represents the vast majority of the business. Continual increases in the levy have seen it rise to £700m per anum. It’s my view that unless the UK agrees that the levy will apply only to the UK retail bank they will move from the UK with the loss of 10,000’s of high paid jobs and a lot of tax revenue will be lost (£1bn-2bn pa ?). If HSBC moves it will be impossible for Standard Chartered to remain in the UK as shareholder pressure will be too great for a bank with only 2,000 of 90,000 employees based in the UK. Aside from the employee jobs there are huge amounts of support businesses be they accountants, lawyers, IT consultants or sandwich sellers.

So when is enough enough ?

So when is enough enough ?

When there isn’t a massive industry making obscene profits doing stuff with other people’s money, with no risk of failure.

Every generation, we take it into our heads to wipe out an industry or two. Last time around it was the turn of coal mining and the steel industry, this time it’s the bankers.

In ten years time we’ll be congratulating ourselves that our children are no longer being forced to work in the finance industry, just as now we’re pleased they don’t work in coal mines.

Just get over it already, it’s an english thing.

And yet there seems to be the need to save £12billion that will undoubtedly (again) unfairly target the poor, and no-one has been jailed for causing us to be in this shit storm in the first place.

I would suggest that largely the individuals in privately owned institutions that drove us very nearly to edge of bankruptcy can rightly think that they got away with it.

In the meantime folk are being penalised for daring to have hones with a spare room

I think society hasn’t been more unfair.to paraphrase Micheal Foot, I couldn’t give a shit about bankers they always find a way to make money

i have no problem with people making ‘obscene’ profits, go for it, nice one, just remember to pay the taxes.

i don’t even have much of a problem when the profits are built on a financial model that relies on loaning people money they obviously can’t afford (and then selling that debt as a high risk/return investment).

i do have a problem with our governments routinely basing expenditure/borrowing on an assumed 3% annual growth – that’s just stupid.

anyway, i heard that HSBC would probably wheel out the old ‘Midland Bank’ brand. But 10p of my very own money says they’ll be back to HSBC within 5 years.

When there isn’t a massive industry making obscene profits doing stuff with other people’s money, with no risk of failure.

Well let’s build up our other industries first and face the reality for example that the Germans are much better at making cars than we are.

Banking is no longer very profitable, the regulatory rule changes have seen to that although it’s always been a poor earner). Retail and small business banking is particularly poor. Banks have pretty much never had my money, I’ve always owed them more than I have had on deposit. this is true for almost all working people, it’s generally only pensioners who deposit more then they borrow. So the “other people’s money” argument is misguided.

no-one has been jailed for causing us to be in this shit storm in the first place.

So do you jail the CEOs/senior execs of HBOS, RBS, Northern Rock and Bradford and Bingley for making very poor decisions ? The fact is they did nothing illegal that would warrant going to jail. The root cause of the financial crises was excessive borrowing (individuals, companies inc banks and governments) and the worst excesses where in the US, how do we jail Americans ?

And yet there seems to be the need to save £12billion that will undoubtedly (again) unfairly target the poor, and no-one has been jailed for causing us to be in this shit storm in the first place.

@nick I think I’ve remembered this correctly from last night but Housing Benefit is £26bn and tax credits £30bn pa – given the electorate want to protect the NHS and education the cuts have to come from somewhere. As per the Newsnight discussion it makes no sense to be paying in work benefits to people working in supermarkets on low wages – the wages should be higher and we should be paying more for our food. The alternative is we pay via higher taxes required for fund benefits or we try and hide from the truth by borrowing more (which we did for years under Labour)

They didn’t just make “poor decisions” they made money from selling broken loans to people they knew couldn’t afford them and made bets with each other about who would fail first, all presided over by a regulatory body that allowed and even encouraged it, in many opinions that are better placed than us, they broke numerous laws knowingly

So yes, I would jail them.

International finance won’t be destroyed overnight by the goaling of some executives, but it may serve to “encourage the others”

Banking is no longer very profitable

…maybe for the shareholders but it is all rather jolly for those on mega bonuses and rewards for failure. Oh to be in ‘Sir’ Fred Goodwin’s shoes. I’m always astounded by the people on here volunteering to be apologists for these parasites.

Immorality is legalised even encouraged at the top of society while poverty is being criminalised.

As a former Banker, when is it enough? When they’re much, much smaller.

The Banks, and the profits they make are an economic cancer – they generate something like 15% of the UKs GDP and a huge proportion of total tax income – which on the face of it sounds great – but it’s no way to run a country.

What do we really want? a large GDP, a figure most people don’t fully understand and has little impact on their day to day lives or a higher standard of living?

Relative to their financial size they employ relatively few people and they’re concentrated within a relatively small geographical and they make the UK a fantastic place for foreign investment – but not tangible investment – it’s financial alchemy – huge swathes of money comes to the UK a couple of people piss about with it and then it leaves again, slightly bigger than when it came in – nothing practical is produced, nothing is sold. but it pays the bills.

What does that mean for the UK – well it makes our currency very valuable – which is great if you want a cheap pint in Spain or a crap toaster for a fiver in Tesco – but a bit of a nightmare if you want to make something in the UK or heaven forbid export it afterwards – since the march of deregulation (from both sides of the house) started in the 70’s our economy relies on the banks making the money and the rest of us doing staff for each other we’re too busy to do ourselves. We’re facing a housing crisis because we can’t build enough houses because the Banks would rather we didn’t as it was hurt their balance sheets and now the crisis is over and they’re falling out of the spot light it’s only going to get worse.

Your analysis misses out the cost of funding the bailouts which would pretty much wipe out the profits.

I’m always astounded by the people on here volunteering to be apologists for these parasites.

I’ve worked in financial services for 35 years including for a number of banks. I am putting the other side of the argument. We live in a capitalist society and without banks we’d be battering food and goods and all be a lot lot poorer. Banks generate huge amounts of employment and many billions in taxes. Hundreds of well paid Americans, Germans, French, Italians work in their bank’s London offices putting large amounts of money into the UK economy. They do so as we have world class financial services. As I posted retail banking is far from parasitic, its not a money maker, the return on capital is very poor.

@P-Jay our econonmy is unbalanced but let’s not destroy banks/financial services before we’ve built up the rest eh ?

Bonuses bring in £8bn pa in taxes FWIW and there are many lawyers, accountants and advertising execs who make more than the bankers and get paid larger bonuses.

Your analysis misses out the cost of funding the bailouts which would pretty much wipe out the profits.

@mefty not at all. It absolutely does count the cost of funding the bailout. The repayments/cash and fees account for this. For example, the guaranty scheme was never called upon, ie the banks never made a claim of a single £ and the government collected billions in fees.

Now that the banking industry has been completely reformed, and is now staffed by responsible individuals, who believe in behaving in a responsible manner, within an ethical framework, and seeing themselves as a useful, socially responsible vehicle for delivering growth and change in society and business… all for modest reward… I can’t see what the issue is any more

Oh…. wait… hang on a minute….

So when is enough enough ?

when the greed and incompetence of those that ran the banks, ok’d the sub prime deals, repackaged and sold on the debt they didnt understand etc etc and sent the worlds economies into a tailspin that has impacted the lives of millions are rewarded with the jail time they so richly deserve?

You’re all missing out the continuing costs of the endless QE, both now and in the future.

So aside from all the fluffy jargon that can be manipulated to tell a pretty tale, how is it that the Rich have got considerably richer since the financial crisis, whilst austerity continues for ‘hard working families’?

http://www.theguardian.com/business/2015/apr/26/recession-rich-britains-wealthiest-double-net-worth-since-crisis

Well clearly the government should be doing more of such profitable business.

is it reasonable not to mention the 375 billion of QE, which was essential in returning the banks to health, and dwarfs the figures mentioned in that chart at the top?

edit – too late!

Mark Carney made me laugh. Talking of ‘increased prison sentences for wrong-doing.”

Couple of issues here…..

a) Its not ‘wrong-doing’, its fraud. Pure and simple. Its systemic. And on an industrial scale

b) Yeah… longer prison sentences would be good. Slight hitch here is that no-one – absolutely no-one – ended up in a court room. They just trousered their enormous bonuses and waltzed off into the sunset

You’re all missing out the continuing costs of the endless QE, both now and in the future.

Who do you think bears that cost?

@mefty not at all. It absolutely does count the cost of funding the bailout. The repayments/cash and fees account for this. For example, the guaranty scheme was never called upon, ie the banks never made a claim of a single £ and the government collected billions in fees.

Whilst the guarantee scheme were unfunded exposures, the cost of buying equity £100 billion was not and there is no interest line in that analysis.

what about jail time for those involved in

LIBOR rigging
FOREX rigging
Misselling PIP
Money Laundering for drug cartels
Assisting Tax evasion
Gold Price fixing
……………………………..

Isn’t it us capitalist bastards who have savings rather than spending every penny we earn?

So when is enough enough ?

Surely it’s a pretty simple answer, which is:

When the financial industry has been sufficiently reformed that a repeat of the credit crunch will not reoccur or at least, if it does will only impact those who benefited from the poor practices, not the whole country. Essentially, the big banks need to be able to go bust without bringing the country down.

So, have we done that yet?

Stop propping up failed businesses with taxpayer’s money. If they fail, let them.

Capitalism, like nature, abhors a vacuum. There’ll be another one along to fill the gap – probably run by people who won’t repeat the same mistakes that led to the previous failure because there’s nothing from the Free Money Tree to make failure worthwhile.

Life will go on. Ho hum.

aracer – gold star.

https://archive.is/UMcpi

when the greed and incompetence of those that ran the banks, ok’d the sub prime deals, repackaged and sold on the debt they didnt understand etc etc and sent the worlds economies into a tailspin that has impacted the lives of millions are rewarded with the jail time they so richly deserve?

But @kimbers you cannot send someone to jail for making bad business decisions and a lot of what you’ve posted here occurred in the US. The list below we could well see some criminal prosecutions and potential jail time.

what about jail time for those involved in

LIBOR rigging
FOREX rigging
Misselling PIP
Money Laundering for drug cartels
Assisting Tax evasion
Gold Price fixing

Stop propping up failed businesses with taxpayer’s money. If they fail, let them.

The tricky part of this is that has HBOS and RBS been allowed to fail many small and medium sized businesses would have failed as their overdrafts would have been withdrawn immediately. Its generally seen now that it cost the US much more to let Lehman fail than to have rescued it.

QE doesn’t cost that much as interest rates are so low. What it has done is inflate the equity markets which is good for anyone invested in them, like our pension funds. How the “unwind” occurs is important though, what happens when QE stops ?

@binners it’s fraud to lie about your income on your mortgage application too. Idiotic of course for HBOS to never make any checks.

Every generation, we take it into our heads to wipe out an industry or two. Last time around it was the turn of coal mining and the steel industry, this time it’s the bankers.

Utter tosh, no one is wiping out the bankers, they’re just reigning them in so they can’t do so much damage again.

As for the losses of jobs in retail banking, that’s just the long term trend of less cash transactions in person and more electronic transfers / online payments.

The job losses in the investment arms are just a correction to a huge over expansion pre financial crash.

QE doesn’t cost that much as interest rates are so low

It is why interest rates are so low, do you really have this little understanding or are you being disingenuous?

@scotroutes, we made a profit of £14bn on the bailouts and saved 100,000’s of thousands of small businesses from going bust as a result. If you want to send Ferd the Shred to jail and Applegarth the CEO of Northern Rock that’s fine by me but pointless really.

Pour encourager les autres

we made a profit of £14bn on the bailouts

Ignoring funding cost.

The bank bailout looks to have delivered a profit of £14bn to the nation.

Also utter crock. The loss in GDP caused by the crash since 2008 has cost the Exchequer 10s of billions in lost taxes and increases benefit payments.

It is why interest rates are so low

Exactly, that’s why it’s worked so well and why the EU (Germany) after watching it be successful in the US has finally started doing the same. Central banks set short term interest rates directly and long term rates indirectly.

Ignoring funding cost.

No mefty see my post above, the profit INCLUDES funding costs.

Also utter crock. The loss in GDP caused by the crash since 2008 has cost the Exchequer 10s of billions in lost taxes and increases benefit payments.

Sorry @footflaps buy the losses in GDP etc we would have had anyway. The bailout stopped them getting much worse and has been profitable.

tbh Irrelevant of anything lumping all banking activity together and then trying to deal with it (or even discuss it) in a single/simple solution is just plain daft. Same as blaming everyone who works in banking for the problems.

And I don’t remember the UK Taxpayer bailing out HSBC, so as a private company they can really take the path they decide – ie the one that suits their Shareholder objectives best.

Jambo, if you have such a long history in the financial sector, how come you didn’t realize we operate under a fractional reserve system?

It is inherently flawed

No mefty see my post above, the profit INCLUDES funding costs.

See my post explaining why it doesn’t, which you seem to have ignored.

Whilst there is a strong case for the benefits of the financial sector, you are a hopeless advocate as you seem to have very little understanding, are you a fifth columnist?

Sorry @footflaps buy the losses in GDP etc we would have had anyway. The bailout stopped them getting much worse and has been profitable.

Only if you absolve the banks of any role in the actual crash, which is like saying it’s OK for someone to mug you and put you out of work for 6 months as long as they cover the cost of the bandages, plus say 5%.

you are a hopeless advocate as you seem to have very little understanding

Just like yourself then, in restricting your definition of ‘profit’ to a tiny spectrum ie the cost of funding the bailout, ignoring all the other huge costs also associated with the crash (caused by the banking sector).