Once fully privatised, why should the Royal Bank of Scotland behave differently than in the past?
They’ve learnt that what they did in the past loses squillions.
We do all agree that private sector banks are run by greedy bastard capitalists, yes?
And greedy bastard capitalists like to make money, not lose it?
Quite, so they may well find interesting new ways of losing money in the future but they’re not going to do again what they did, are they?
The one major banking institution that did not take taxpayers’ money – and which, instead, helped rescue others that failed – was Nationwide building society. And it was the only major institution not on the stock market.
And a number of mutuals went under as well. It ain’t quite as clear as you’re making out.
He suggests that Nationwide is a major banking organisation “like the failed banks”, if I may paraphrase ever so slightly.
Perhaps he believes that taking deposits and operating a current account makes an organisation a major bank – which is strange when he’s just made the point that it was the non-retail other activities of banks which took them down.
All credit to Nationwide for sticking to its knitting but it has little in common with RBS et al. It has more in common with the lovely cuddly mutual and effical innit Cooperative Bank whose record even in deposit taking, retail lending and retail banking services was (and maybe still is) pretty dire.
Greedy bastard capitalists?
The banks?
Greedy corporate socialists, more like it.
And of course they’ll do it again. They’re doing it now.
> “The one major banking institution that did not take taxpayers’ money…”
From memory, neither HSBC not Barclays were bailed out. The former received loans from the parent group; the latter raised the money from private investors (middle-eastern, I seem to recall).
And I seem to also recall much wailing and gnashing of teeth from the one-eyed Scottish idiot, who obviously had wanted to use the situation to nationalise all the retail banks.
“they’re not going to do again what they did, are they?”
Up to a point Lord Copper. Two problems with that:
1) It’s obviously not always or even often true. PPI was a mis-selling scandal, and by no means the first. The bizarre thing is that these scandals are routine and seem always to involve all of the majors. This defies normality; the banks cannot be that incompetent. Are the rules too strict?
2) Sometimes it’s “rogues” working on specific desks. Their incentives are very different to those of the shareholders and the bank in general.
“they’re not going to do again what they did, are they?”
Well, yes, they probably are. Ship financing, property lending, sovereign syndicated loans are examples of things that have turned sour on the banks more than once.
Apart from HSBC and Barclays not taking the taxpayer’s shilling, it’s also down to the one-eyed Caledonian loon that Lloyds got shafted with HBOS.
Incidentally, I think it was ex-mutuals that failed giving us Santander’s presence here and not mutuals themselves going bust.
Don’t they do it again every generation, once the senior bankers who remember it all going pear shaped last time have retired?
I think that’s what the Spectator banking man says anyway.
What Andrew M said. In fact HSBC had a rights issue in Hong Kong so that it could buy and bail out any smaller banks that failed.
A few mutuals did go bust, memorably Dunfermline Building Society.
In fact none of the quoted companies actually went bust – they were told by HM Treasury under Alastair Darling that they needed a lot more capital than they had held under Gordon Brown and some of them couldn’t raise enough from shareholders so got taken over by bigger stronger banks. Bank of Scotland had lost billions but the Halifax half of HBOS had more capital than BoS had lost.
I have read Mr Calderwood’s report on Northern Rock which had net assets in excess of £2billion when it was expropriated by Darling. In order to pretend that the expropriation was justified, he’s done some very dubious things like charging NR for the fee that HM Treasury paid to Goldman Sachs to advise them whether or not to acquire NR, assuming losses on defaulting loans and ignoring the tax relief on those losses, and then, because that wasn’t enough, assumed that (i) a bank run would eliminate *all* its deposits (including fixed-term ones) overnight and (ii) the BoE would fail in its primary function as a lender of last resort so that (iii) it would have to make a “fire sale” of its book of mortgages and (iv) these would be sold at a 20% discount to their written-down value. If a private sector banker tried that sort of stuff, Martin Wheatley would be down on him like a ton of bricks.
Banks creating money and charging interest, as if on loans, isn’t working. End of.
Actually the entire banking system in other countries came out much much better than that in the UK-eg Oz and Canada.
The important question is why does it matter if a bank goes bust? Why is is that a bank failure can destroy the entire economy? How did this happen?
The ultimate answer, as best as I can tell, is that the banking system (= credit system) in a permanent deficit country like the UK is a branch of govt run by functionaries posing as business persons. They are untouchable bc they are vital for govt. business. Absent physical revolution, the banking industry provides more control over the UK population than the police force.
How else can we explain Fred Goodwin being knighted for services to banking? Cld the Tories have won the election without engineering a housing boom via the banking system?