It should be brought back into line under the Bank of England and through lenders operating with good practices based on prudence otherwise it'll end in another crisis somewhere down the line or an industry in handcuffs which will lead to business being done elsewhere out of the UK.

If someone is responsible for losses caused by bad business then such practice can be limited to the bank concerned so it doesn't become a problem if banks are acting within strict limits set by the Bank of England's prudential financial management systems and guides. The FSA is NOT required for this nor is government intereference except to make the system less deregulated because deregulation went too far !

Supermarkets selling financial products can't be right because trade and profit is taken away from the banking industry. It then has had to look to trade more imaginative products which otherwise it wouldn't need as deposits and profits from bread and butter financial products would otherwise have been higher if not sold in industries. Ordinary deposits are also being ploughed into supermarket banking, and so too insurance incomes. The whole system has turned into one of dog eat dog and financial prudence nowadays simply means "get rid of it quick"! This is not banking nor is it in the public's interest, nor is it prudent business for the bank or it's longterm desire which "should be" to give better service to the public.

It's easy to see why the public are being drained by credit cards and bank charges when banks have no way of ensuring their business is protected in a world where every man and his dog are searching our to sell products which should be under bank control to Joe Public !

Why did they seek our advice? They wanted to buy a bigger house based on benefit income. Could this have been done at the time (four or five years ago)? Yep. I could have easily finessed this past a number of lenders. Some of them high street, or subsidiaries of high street. Did I do it? No! Of course not. But I run a risk averse business. In my view it was irresponsible to do this. To get them into bigger debt based on benefit income. Others were certainly not so scrupulous. And many were directly sold by banks and the like.

Please note that this bloke was a Good Dad.

So I ask you. How can this be 'right'? How can it be so that so much money is paid over in benefits and is then used to buy a house? In two ways this is very bad. One it makes houses unaffordable for other earners not in the benefit net enjoyed by Mr X, and two the transfer payments from those other modest earners to Mr X make them poorer.

Gordon Brown's insane fiscal regime is a disaster. It looks like it might just now overwhelm us.

Kneejerk regulations is a singularly bad idea and is nothing more than PR spin designed to insulate Gordon and his cronies from the consequences of their actions. That is why the head of the FSA has been replaced.

All such matters should lie with the Bank of England, as they used to. It should be independent of government, and especially this government, whose record in enacting good legislation is woeful, or worse.

Now the banks have their begging bowl out it would be an ideal opportunity to make them start sharing this information to stop fraudulent applications in future.

I read speculation on Bloomberg this morning that the US government is considering allowing bad credit card debt and hire purchase etc into the pool with the bad mortgages.

Reply: Solvency and liquidity, coupled with a Central Bank that slows it down when it is going to fast and speeds it up when it is going too slow – our central Bank has been doing the opposite.

The failure came about because of a lack of transparency and complexity as far as regulation is concerned. I think the idiots (Notably one Right Hon. Gordon Brown) who keep talking about regulating bonuses have no understanding of the problem. The logic of their argument is:

Big bonuses were bad because they incentivised traders/bankers to do bad things because they were better off in the short term.

This leads to the question of:

Who paid these traders/bankers in this way? Their bosses. Were their bosses short termists? No, they were not, most bank bosses stay with their firms for significant periods of time. So they were stupid then? Seems unlikely since they did manage to become bosses of big smart firms. Yes, they do walk away with lots of cash, but did they just not care?

The logic of big bonuses = short termist bad deals with full knowledge is flawed.

Instead, the banks managements were lulled by the big profits and the internal VaR models into believing that everything was OK.

John,

I foresee much greater turbulence ahead. I thought that the US bank bailout is probably inevitable, given the size and scope of deleveraging going on, and I do think that Bush has seized the nettle swiftly and courageously. However, banking crises are always political economy problems. Surely some legislators are going to kick up a fuss about the cost and about moral hazard? The shareholders and executives can surely not expect to get away scot free? When these problems surface, expect some more unpleasantness.
Then I foresee further problems outside the US. The great leveraged boom has allowed lots of banks and firms to borrow recklessly and go on spending sprees, buying assets that are now worth a lot less. Take Iceland – a country with a gross external debt of 10 times GDP. They also have external assets, but what price those assets bought during the past five years? Will they generate enough cash to cover the debt? Will they be able to pay it back when the debt needs to be rolled over? This is repeated in all kinds of places. This crisis is going to run and run.
What do you think?