Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if economic

[Legal Beagles]

It may look like a bail-out, and to all intents and purposes actually be a bail-out, but please don't call it one. Rather, yesterday's "special liquidity scheme" is depicted by Bank of England and Treasury spiel as a temporary piece of support for the distressed banking system designed to improve liquidity and raise confidence at no risk to the taxpayer.


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[righty]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

It may look like a bail-out, and to all intents and purposes actually be a bail-out, but please don't call it one. Rather, yesterday's "special liquidity scheme" is depicted by Bank of England and Treasury spiel as a temporary piece of support for the distressed banking system designed to improve liquidity and raise confidence at no risk to the taxpayer.


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Yeah & thanks for that...........is there anyone out there who believes this rubbish being spouted by the Treasury.....if so put them in a straight jacket before they hurt themselves will you

No risk to the taxpayer:tung:.......get real Gordon:tinysmile_cry_t:

[LuggerBugs]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

So let's get this straight. The Treasury is giving money to the banks to help EXISTING mortgage holders, or so that the banks can carry on lending to new accounts. Hmm.

OK, if it's to protect EXISTING mortgagees, a LOT of them will be unable to repay their mortgages, and will default. And so the Treasury is left holding the baby, because the banks are protected.

or...

The banks carry on lending, the economy turns to ratsh!t, and so folks will default and the Treasury is left supporting the banks' bad policies. Again.

Am I missing something here???? It sounds like Joe Average is bailing out the banks yet again for their stupidity. But hey, they've all got degrees and stuff in finance, and I just end up with a pocket full of pound coins after a good night out. What the heck do I know?

[tomterm8]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Frankly, I think this is a warning shot, the banking system is in a terrible mess, and they forget to mention the £20 billion bailout over the last two months.

[scoobydoo]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

In the years they have made huge profits why did the banks BS have reserves themselves to cover their own risks? This is what really annoys me the Financial institutions lecture us and yet do not take their own advice.

In simple language they have gone overdrawn and now dont want to pay the penalty. Sounds familiar? but we all know the answer to that - its your fault you should have known better so just find the money from somewhere!

I found the above article very interesting and just would like to know if the Government used the opportunity to gain something in return other than in financial terms.

Jan

[righty]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

scooby they didn't get one single undertaking from the banks. By we I mean we the taxpayer gave the banks 50 billion without anything in return

Once again we have the spectacle of a load of useless politicians & inexperienced civil servants with no experience of the finance world negotiating with some of biggest sharks in business & losing hands down.........again

[scoobydoo]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Unfotunately thats what I thought - what a missed opportunity ! As far as my limited understanding extends the banks disguised the sub prime lending within seperate trading identities at least the government could have used the opportunity to stop this and also improve other banking practices.

Unfortunately I do feel something had to be done as we must all remember this does not just affect the mortgage market. If there is no construction/building/refurbishment because of lack of funding then thousands of jobs will go.

Wonder if they dd a credit check and ability to pay check on the banks

Worrying

Jan

[righty]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

It's important for everybody to understand that the banks didn't just get taken in by the sub-prime lenders but that they ARE the sub-prime lenders in everything but name.

The banks created them & funded them.........at arms length so they would be able to have more then 1 bite of the cherry without consumers realising whilst, at the same time, not being accused of behaving badly toward the consumer by charging exorbitant rates of interest

[LuggerBugs]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

As far as they're concerned though, it still be their customers' fault for missmanaging their income.

[argentarius]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Dear me, you lot do like to write rubbish about the banks.

If you read the details of the government £50bn scheme, it is nothing like a "bail out" or "hand out".

There are two reasons for this:

- firstly, any bank borrowing under the scheme will pay the equivalent of 3 month LIBOR for the money they borrow. That's the going market rate, not a bargain deal.
- secondly, any bank borrowing under the scheme will have to provide way more than adequate security for the borrowing. Broadly, they will have to provide £100 of mortgages (or credit card debt) as security for every £70 to £90 they want to borrow.

Now, some people may say "that's not much of a buffer; if house prices fall by 10% or more then the taxpayer is at risk".

But that's rubbish.

The point isn't that house prices may fall by so much, or not. The point is that, even in the worst recession scenarios, only a relatively small proportion of mortgage borrowers will default.

If (say) house prices fall by 25%, and distressed sales of repossessions realise only 50% of the original value, this still isn't a big deal because significantly less than 10% of mortgage borrowers will default.

So losses = 10% x 50% = 5%.

And the banks already only got 90% (or less) of the value of the security they put up.

And the banks are required to replace any security which becomes impaired. So basically, any mortgage which gets into serious arrears will be replaced before it goes to repossession. So the reality is that the government won't incur any losses at all due to repossessions unless the lender involved goes bust and hence loses the ability to replace its bad mortgages with good ones.


I don't, personally, believe that the lenders will be falling over themselves to subscribe for this scheme, simply because its terms are not generous. In reality the government has come up with a scheme, because it thinks it should do "something", but then it has made the scheme very unattractive to the banks because it doesn't want to be seen as "bailing them out".

Which it isn't!

By the way, it's a "nice little earner" for the government to be lending out £50bn at these rates, with basically no risk at all. If the full amount was taken up, it would make them almost £500m a year at current LIBOR rates, or at an absolute minimum £100m a year if LIBOR falls below 0.20% above BBR (as the rate payable by the banks is floored at BBR+0.20%). Does that really sound like a bail out to you?

[Paule]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Dear me, you lot do like to write rubbish about the banks.

I believe everyone is entitled to their own opinion on the subjects in the forum.
Or how they may interpret certain events.

Please remember that the majority of people on here have no great knowledge of the banking sytems or how certain things may work in practice.

By saying that everyone is talking rubbish, you do little in the way to justify any valid arguments you may raise on the subjects, as you instantly alienate everyone in your first line.

PKea

[argentarius]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Perhaps others might feel alienated or put off by arguments which start from the assumption that banks exist only to stitch people up and that anything the government do to intervene in financial markets is a "bail out" or a "giveaway"?

Fortunately my skin is thicker than that.

Everyone is, of course, entitled to their own opinion about anything and everything in life. But that doesn't necessarily render those opinions valid.

I can't see why there seems to be a common motivation on here that everything anyone does in connection with the credit crisis is wrong. If the government do nothing - as they did with Northern Rock, for too long - they get criticised for it. If they do anything - as they are trying to do now, or as they did when they nationalised Northern Rock - they get criticised for it.

I don't personally like, or support, the present government. But nor do I believe that it makes sense to criticise everything they do, or to label everything which involves lending to financial institutions a "bail out" without first attempting to understand the actual arrangements involved.

Jumping on the bandwagon along with a journalist who misguidedly calls everything a "bail out" isn't IMHO particularly productive.

I am beginning to wonder whether LB is in fact a discussion forum or whether it's intended to be a back-slapping campaign for those who think alike and don't like any challenges to their way of thinking. I hope that the latter isn't the case.

[stevokenevo]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

I am beginning to wonder whether LB is in fact a discussion forum or whether it's intended to be a back-slapping campaign for those who think alike and don't like any challenges to their way of thinking. I hope that the latter isn't the case.

I am not interested in the banking debate above, but, i did pick up on argentarius last paragraph.

I don't believe anyone on here would like to think the open mindedness of the forum had been compromised.

Bearing in mind a large number of the forum users have been victims of narrow mindedness.

It is easy for the scorned to jump on the bandwagon against banks which have aggresively plundered their accounts of unlawful charges etc.

But at the end of the day, rubbishing peoples opinions (right or wrong) is impolite :okay:

You are obviously a learned individual argentarius, i hope your time spent with your head in books has not tainted your perspective of the layman.

Your input at times is enthralling, especially with your specialist knowledge, but, at times over harsh.

May i suggest you lighten up a little, and bear in mind your peers are a mixture of individuals, from business men to houswives, from civil servants to emergency service workers, and not as well read on the intricacies of banking as you obviously are.

Please stay, and continue to help. set people straight, but remember, we are all in this together!!

Cheers

Stevo

[righty]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

Argen of course they think alike they have all been ripped off..............by the banks.....& frankly I don't care about the 'arrangments'.........what I do care about is that for years the banks have posted huge profits.......all of which has gone to shareholders & it's those shareholders who should be funding their banks........also the banks knowing that they have been buying into dodgy loans should have had a contingency fund ready to take up the slack

They hoped that the majority of sub-prime borrowers when in trouble would start churning their loans thereby shoring up the whole edifice.

Unfortunately most people did do that until income wise most reached breaking point & that coupled with government demands for 'responsible' lending & the dramatic increase in non-credit worthy consumers, due in main to the money lenders defaulting people at the drop of a hat, has finally been the straw that helped break the camels back

[stevokenevo]

Re: Jeremy Warner's Outlook: A banking bail-out that sticks in the craw even if econo

1111