UK banks 'to get more regulation'

[Legal Beagles]

Chancellor Alistair Darling says action is being taken to protect the UK's financial system against further banking crisis.

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[Amethyst]

Re: UK banks 'to get more regulation'

UK banks 'to get more regulation'


Lehman has about 5,000 employees in the UK

Chancellor Alistair Darling says that laws will be introduced to tighten the rules governing the UK banking system.
His comments came in a BBC interview as the world digested the fate of two of Wall Street's historic banks - Lehman Brothers and Merrill Lynch.
He called the resulting turmoil in global shares inevitable, but added that "on the positive side" UK regulators were taking action.
Separately, UK bank Barclays said it is looking to buy certain Lehman assets.
Speaking to the BBC, Mr Darling said that the government, the Financial Services Authority and the Bank of England were doing everything they can to "maintain stability in the financial system".

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But he added: "This doesn't mean we can stop the huge economic forces and changes currently taking place."

[scoobydoo]

Re: UK banks 'to get more regulation'

Ah but will they actually enforce the regulations by having a controlling body that actually has "teeth"

Apparently Lehman brothers were sound before the USA de-regulated and that is when they got into sub-prime area - so in theory this will be a good thing

Also I would like more fines if there is irresponsible lending .

[Amethyst]

Re: UK banks 'to get more regulation'

hmmmm

FSA CEO letter over valuation principles - Legal Beagles

[righty]

Re: UK banks 'to get more regulation'

I'm preparing an article on the 'sub-prime' crisis which I hope will be published but in the meantime I ask you to consider this.

Are we to believe, as the banks & government would have it that the crisis came about because suddenly & without warning millions of sub-prime borrowers stopped making payments & if that's not the case what caused the crash. In other words is there a more substantive reason which has no connection whatsoever to the so-called trailer trash defaulting in the numbers that would be needed to bring about such a crisis

[Guest]

Re: UK banks 'to get more regulation'

The crisis arose because of a gigantic confidence trick on the part of banks world-wide. In order to keep up their mortgage lending - and thus their wildly excessive bonuses - they packaged up parcels of their existing mortgages and sold these on to other banks. These packages were a mixture of good, bad and indifferent mortgages but were treated as prime debt. By circulating these round and round the banking system, bank financiers took greater and greater risks until the bubble burst. Of course, while the bubble was being inflated they paid themselves ever bigger bonuses, with fictitious profits. In good times, taking more risk means higher profits - and bigger bonuses. Remuneration is structured to reward risk-takers excessively, when they get it right - which isn't terribly difficult to do in a rising market.

Here in Britain the regulatory authorities (the main regulator, the FSA and the Bank of England) allowed the scam to go on unchecked. This set-up, by the way, was a creature of Gordon Brown’s invention and the FSA , in particular, failed. The result was the near collapse of our whole banking system of which we have not yet seen the worst.

[scoobydoo]

Re: UK banks 'to get more regulation'

CETELCO

that is a clear and good explanation. Also as far as I understand a lot of the banks set up hidden associated companies in order to hide what was going on.

Also The fact that the banks have been lending higher than normal salary ratios and to areas of the market they would not normally consider this has in turn fuelled house prices.

This is to their advantage in principle as if prices rise you borow more to move up the ladder and in the end pay back more interest.

Also as far as I understand there were a lot of USA customers who could pay the mortgages while the introductory rates were low - but were totally out of their depth when the rates increased. When they were evicted the houses were empty and in a lot of cases they could not be sold - therefore the banks had no assets and no chance of reclaiming what they were owed.

So a combination of errors really.

[breeze1996]

Re: UK banks 'to get more regulation'

What I don't undestand is how they can say everyone stopped paying at the same time?

Are we really to believe Mr & Mrs TT stopped paying along with all their family and friends, that there has been no warning signs over the last 3 years to tell the banks hang on, our customers have stopped handing in the cash, because this break down of the system has to have a start point before last week.

For a long time, everthing has been valued in terms of how much, it is thought to be worth rather than true value and now I just think Banks and Other of the ilk are using this bad news to anounce loses and to off load because hey everyone else is.

Figures can be made to say almost anything, ask an accountant. So while there is some profit around in business, it's better to hide it in budgets and other balance sheet items so that once a profit is needed the cash can be reallocated, hey presto PROFIT.

And yes I do know what I'm talking about When i was younger I help do Management Accounts for a multi-million pound business and our accounts were very creative at times.

[Guest]

Re: UK banks 'to get more regulation'

Budgie

that is a clear and good explanation. ...

Who?

[righty]

Re: UK banks 'to get more regulation'

Spot on Celeto

You may recall the disaster that junks bonds were & yet another invention of Wall Street)

This investments otherwise known as SPV's (Special Purpose Vehicles) are a bit like 'pass the parcel' with each in the circle taking a slice until there was nothing left

When these spv's are sold for peanuts the buyers will want to liquidate the assets asap. They will proceed with all haste to repossess properties, sell them as quickly as possible irrespective of their true market value & reclaim there short fall from their GAP insurer.

They will write off any further lossess against taxation.

Bearns are writing off all their losses against their British operation & will not be subject to any CGT for at least the next 15 years. In fact we the tax payer may end up paying them & this government to what will be it's eternal shame is doing nothing whatsoever to stop them. I bet if they tried to off load all the world lossess in the States they would soon be in trouble with the Securities Commission not forgetting the IRS
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Budgie

that is a clear and good explanation. Also as far as I understand a lot of the banks set up hidden associated companies in order to hide what was going on.

Also The fact that the banks have been lending higher than normal salary ratios and to areas of the market they would not normally consider this has in turn fuelled house prices.

This is to their advantage in principle as if prices rise you borow more to move up the ladder and in the end pay back more interest.

Also as far as I understand there were a lot of USA customers who could pay the mortgages while the introductory rates were low - but were totally out of their depth when the rates increased. When they were evicted the houses were empty and in a lot of cases they could not be sold - therefore the banks had no assets and no chance of reclaiming what they were owed.

So a combination of errors really.

What you saying is what the banks want us to believe (blame the trailer trash in other words the consumer) but in the main it's not true. It went tit's up when the investment was greatly over subscribed by that I mean too many fingers wanting a piece of the pie

[scoobydoo]

Re: UK banks 'to get more regulation'

Who?

OOOPS:sorry:

I was multi-tasking at the time!
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No Righty

what I was saying is it a combination of mainly the explanation by Cetelco and other factors. I am blaming the banks for their lending - not the consumer

[righty]

Re: UK banks 'to get more regulation'

Yes I understand but to just blame the banks for irresponsible lending to the consumer conceals the fact that rather than the defaulting consumers causing the problem it was the banks who traded back & forth using these SPV's to fund their operation .............. & their huge bonuses till eventually they ran out of value once they had all taken their piece of the pie by effectively mortgaging them to the hilt

[scoobydoo]

Re: UK banks 'to get more regulation'

Yes I understand but to just blame the banks for irresponsible lending to the consumer conceals the fact that rather than the defaulting consumers causing the problem it was the banks who traded back & forth using these SPV's to fund their operation .............. & their huge bonuses till eventually they ran out of value once they had all taken their piece of the pie by effectively mortgaging them to the hilt

I do agree with you - there is more to this than meets the eye. and the fact that Lehman paid massive bonuses last year and this year can collapse is unbelievable. most companes during bad times can at least "tighten the belt" first for a period of time.

And I repeat there is a combination of factors. The consumer was also willing to invest in property on a big scale as they saw pension funds/endowments etc fail. Therefore in a lot of cases the house became a "pension" not just a home.

Was the big Ins company that has just been bailed out trading in loans as well?

[righty]

Re: UK banks 'to get more regulation'

The insurer AIG is the insurer of last resort. In other words they insure any losses they banks make & there are so many claims that they don't have sufficient liquidity (sound familiar) to meet their liabilities because they to played the same game with SPV's