Another day, another use for public money

We learn today that LLoyds TSB has to pay a large fine to the US authorities for its conduct over money transfers and sanctions. If this were private shareholder money it would be a matter for them to hammer out with their Directors. Now this bank has taken substantial sums from taxpayers who are co-owners, it becomes a matter for all of us.

I am not sure this was the kind of use for the cash the government had in mind when it put up new share capital. Did the government know this action was pending? Did they discover anything before they bought in, or did they studiously refuse to do any due diligence as they implied at the time? When I called for them to do proper due diligence, I had in mind not just the possibility that some of the loan books needed writing down more, but also the issue of any outstanding legal suits, claims, and other unusual liabilities.

I heard on the radio that the bank had made some provision for this potential loss, but even so the cash they need to pay the fine in one sense comes from the taxpayer. This is not the way I want my taxpayer pounds to be spent. We need to know from the government what questions they will be asking their bank, and what management action will follow over the people involved in creating and supervising the problem.

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6 Comments

  1. john locke
    Posted January 10, 2009 at 11:09 am | Permalink

    regarding “due diligence”…i presume the government carried this out with all financial institutions before offering taxpayers money in order to ascertain the full liability. This being the case then the government must know about all the toxic debts of Northern Rock, B&B RBS etc, as the UK taxpayer is now a shareholder, i think this information should be disclosed. Or maybe they did not carry out due diligence…but no, that would be too stupid to contemplate.

  2. rugfish
    Posted January 10, 2009 at 1:43 pm | Permalink

    Funnily enough I don’t really go in for conspiracy theories as a rule, but I have to say I’m beginning to wonder if there’s some evil plan afoot to hoover up all the cash in the world through all these bailouts across here, Europe and the US, and stick it into some big evil fat cat’s pocket somewhere so he alone can buy up all the cheap assets to rule the world !

    I reckon it’s someone like Scarramanger or Dr NO.

    I can find no earthly reason in the alternate no matter how hard I try, to see why we – BRITISH TAXPAYERS – are paying FINES to a foreign country who has a President with the capacity, the authority and the ability but I guess not the wit, to squash that fine !

    Don’t tell me they are that hard up they need to go fining us hardworking UK taxpayers which THEY helped to bankrupt in the first place ?

    One you could also not make up !

  3. Hawkeye
    Posted January 10, 2009 at 2:54 pm | Permalink

    Illustrates nicely why the state should not be involved in commerical organisations. The truth of the matter is that Labour politicians have no clue about money, how to manage it or its uses. It is there to be spent on furthering influence and agenda.

    Every time Gordon goes abroad on official business, hundreds of millions get handed out to his hosts. It would be a lot cheaper to keep him at home.

  4. ken from glos
    Posted January 10, 2009 at 3:12 pm | Permalink

    That old saying comes to mind, “If you want to wast money give it to a Government”

    Labour are hell bent on proving it to be correct!

  5. chris southern
    Posted January 10, 2009 at 5:17 pm | Permalink

    it’s not suprising realy as the banks will look after themselves first.
    this is what is also happening in america, where the tax payers money isn’t being used for what it was intended.

    ah well, we will just have to wait till 2010 to pick up what is left of ole blightey and start again.

  6. mikestallard
    Posted January 10, 2009 at 5:44 pm | Permalink

    You, John, have been in business. You know about due diligence.
    Now, please, name me just one person in the government front bench who has been in business too.
    That is why they are making such a hash of our economy and wasting our children’s future.
    In 1997, it was unthinkable for graduates to be indebted, and rare for them to be on the dole; for people to be unable to afford a first house; for the total private debts of people to be £1.3 trillion pounds; for the government to be running billions and billions into the red; for the army to be improperly equipped; and for normal people not to have a pension.
    Nowadays we take all this for granted, in the ballooning welfare state that is Socialist Britain.
    What will our children/grandchildren have to take for granted? (PS Most of mine are now living abroad.)

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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