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Monday, 4 February 2013

Electric Fence needs high voltage

The squirming of the banks as they do everything they can to avoid complying with Vickers is salutary. The British Bankers Association Chairman Anthony Browne has said "This will create uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses". To a point, Lord Copper. 

Larger UK firms are currently sitting on something like £750bn of cash reserves, up to three quarters of it in overnight cash. Whilst this is partly down to the end of the old revolving credit lines with the banks and the uncertainties of the bond markets, it also reflects not only the inability of national governments to overtax commerce - golden geese can frequently just fly to alternative jurisdictions - but also the accumulation of battle chests to meet the wave of restructurings, mergers and takeovers that is overdue. 

When Browne talks about "lending to business" this is the sort of game the banks like to play - with stakes in the big-money, big-profit games of global acquisitions and mergers. He's certainly not talking about lending to small businesses and new startups, micro-enterprises and co-operatives - the sector that generates the highest growth and has the quickest impact on the economy and employment. This is best done by local retail banks, by local managers making loan decisions. 

And if the Vickers regulations restrict the banks from using retail balances to throw on the table as their stake in the big-boys' games of big-money business trading, then good. This kind of investment banking must stand or fall on its own merits, and its own ability to attract external investment for the banks' players to add to the stake. And if it takes a high voltage - an Act of Parliament that makes prosecution and imprisonment inevitable for breaking the rules, together with the compulsory re-structuring of bank operations - to electrify the fence, bring it on.


G. Tingey said...

Careful Radders, you're turning into a "socialist" by calling for state intervention/regulation!

[By some peoples' definitions, at any rate ]

Edward Spalton said...

I read a week ago in the Sunday Telegraph that some banks (including nationalised ones) had run off with the money which the taxpayer had provided to increase lending to British business. A great deal of it had been used to prop up bad business in the Republic of Ireland.

Having had a successful first year's trading with my own small business back in the Eighties, I thought I had better show the accounts to my bank manager, as I did have an overdraft facility which I hadn't used but was expanding trade quite nicely.

He was very offhand. I said "I thought we had done rather well".

"Yes" he said but you're not using any of my money to do it, are you?"

I said "But you have our funds on current account and deposit. I think I ought to be able to take a charge on your house for those. That's what you would do with me".

He was not amused.

DeeDee99 said...

The Banks will not "start behaving" until their Boards are made personally liable for the banks conduct under their watch.

They should face seizure of assets and jail for any serious transgressions that take place in the future.

I really can't understand why we have seen no senior bankers in court for the various "mis-selling" scams of the past decade.

This is fraud. Why haven't the police felt the CEOs' collars?

Anonymous said...

Investment banking? "Investment" anything but - "lottery banking" and not with their money either - they were and still are taking the piss and will continue to do so until the political sphere show some bottle and tackle the twats head on.
DeeDee, is spot on - make the board liable for the behaviour of their underlings in the exchanges.
Brown 'saved' the banks because he was told to - if one British bank had gone/been let go - the whole EU house of cards would have followed.
The EU commission told Brown to use British taxpayers involuntary contributions to shore up the Eurozone lenders - he caved in, weak **ck*r that he was/is.

They should have been allowed to fail - trouble is - we do not practise capitalism anymore - it's been a dirty word ever since Karl Marx became a 'spiritual guide' in Western Europe.

Do you remember infamous cowboys - Liberty life insurance? Probably - they just moved into banking at the end of the eighties.

Separate them; retail and 'lottery banking' they are not and should never be mutual - 'mutual' maybe the whizzkidz and 'masters of the Universe' thought that they were.

A last thought - who actually runs EUrope - ultimately it seems to be the banks. Something, that needs to change: bring back Capitalism in all its glory and failure.

Mr Ecks said...

Yes, govt "regulation" of the banks is such a good idea as govt regulation has been so successful everywhere else hasn't it?.

Yeah, the bankers are now a bunch of crooks. But they have the same relationship to the state that Igor had to Baron Frankenstein. Igor was a bad guy sure, but for the Baron to be trying to claim that the whole caper was Igor's idea and nothing to do with him would be a sick joke. 100+ years ago,bankers were liable for their banks and bank failure often meant the banker out on the pavement. That meant they were conservative and prudent (not Brown-type "prudent"). It also meant there was less money for political scum to borrow. So they started to change that and over time we have reached the mess we have now. The scum of the state are at the heart of that mess and their "regulaton" will only make a sick system sicker--although illness is not a good metaphor--illness is an accident. Our system has been fucked-up by greedy political crooks helped out by criminal bankers--but only helped, mind you--the bankers are the henchmen in this mess not the gang boss.

G. Tingey said...

Anon & Mr Ecks

THIS IS "Capitalism in all its glory & failure"

Or had you forgotten?
The banks & big business moaned on for years about how all this regulation was stifling entrprise etc?
And various UK & US guvmints believed them, & took all the contorols OFF ... with the results we now have.

Um errr ....

Edward Spalton said...

Greg & DeeDee99 ,
You are both right but what we have got is not capitalism in the Adam Smith sense but a corrupt relationships between banks and political power which could be called "crony capitalism" or more formally corporatism, which is actually the basis of fascism. We saw the same thing at work in the press.

As DeeDee spotted, it is based on the legal immunities enjoyed by directors of limited companies to which the state grants a legal personality- probably a very necessary invention for economic progress. Gilbert & Sullivan spotted the potential for fraudulent behaviour and lampooned it very effectively in "The Gondoliers" and "Utopia Ltd".

I recently bought a couple of hunting prints for some friends who had got a new house. There was a note on the back of one of them (early 19th century) that the hounds belonged to a baronet who had been partner in a bank which had failed and that he had been sentenced to 14 years in Van Diemens Land. Of course, he had lost all his money and possessions too because there was no limited liability - and so had all the other shareholders in the bank. Now, I think they got the 14 years right and losing all his money right - but so had all the other shareholders in the bank - to the extent of all they owned. This would include people who had not had any part in the management of the bank. It is for them that limited liability was created. I think there is a good case for directors and senior managers of Public Limited Companies to have personal liability for company failures - at least to the extent of their bonuses and pensions.

Mr Ecks said...

Tingey: Took the controls off?--Fucking ZaNuLab who wanted to fine people £1000 for having not having a bell on your bike?.Took the controls off?.
Low to zero interest rates don't help real banks who want real people to invest in them. They do help crooked bankers who make their cash payoffs through lending money at peppercorn rates to the worlds political scum to piss up the wall on their welfare/warfare/pet projects. The banks were govt controlled zombies long before reality caught up with them in 2007. At least they made millions --whats your excuse?
Sit down sometime and spend 8 hours a day reading the worldwide banking laws/regulations. At that rate it will take you decades to get thro' them. Took the controls off?.
Standard leftist bullshit. The sickening thing is how many mugs out there swallow the state's lies whole. How many buffoons believe Obama killed Osama?.And it seems there are also plenty of mugs who will swallow the states bollocks about "We just took our eye of the ball for a moment and those nasty banks screwed everything up faster than we could blink".

TrT said...

Bank managers must be free to make lending decisions.

Banks must be regulated.

Thats an either / or right there.

The more banks are regulated, the more lending decisions must be based on credit scores and computer models.

G. Tingey said...

Mr Ecks
Took the controls OFF.
Look at what actually happened to & with the banks here & in the USA between the "Big Bang" 27 October 1986 in Britain & similarly under the SHrub in the USA.

What we have now is the logical result of that.

Check your FACTS, please!

Mr Ecks said...

So the banks were all perfectly sound and healthy and everything in the garden was lovely and Mr wonderful govt man who was keeping everything going SO well removed a few controls and everything just up and DIED!!!.
And this is what you regard as fact. ?

The political scum want and always have wanted cheap money for themselves and cheap money for the dummies who depend on and vote for them. Banks have lent shitloads to mugs who can't pay.Who promised the bankers that imprudence would not be allowed to swing back on them? It took some decades for the scum of the state to undermine everything and phase 1 is here--private institions totally unsound and "bailed out" with funny money. However the biggest brokest tossers around are the world's scummy states and when they can no longer cover their insolvancy with paper printing and bullshit phase 2 will hit. We are waiting on that now. The idea that our problems arise from people having too much freedom is a sick joke. Scum wasters at the top are our problemn--the banks are just spear carriers in this mess.

G. Tingey said...

I see Mr Ecks has changed hios target from some mythical "Left" - given that the Banks' & everything else' cpollapse was a result of supposedly "capitalist" greed to "The ploitical scum".
With that last, I will have no quarrel!

Mr Ecks said...

The leftist idea is the supremacy of the collective --usually the state--over the individual.Do the scum of the state anywhere not believe in that?--whatever lip service they may pay to the idea of freedom.
In practical terms the state is the cause of 99% of our problems (although the collectivist philosophy is behind the state)and the bankers are stooges in the world's economic mess. Criminal stooges, yes, who, Igor-like did the bidding of their political masters.

You also have changed your tune--you started out with the bankers in the frame--which is exactly what the scum of the state want everybody to think. At least now you see the true culprits.