Comments on: Smaller banks, the Chancellor and the Governor http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/ Incisive and topical campaigns and commentary on today's issues and tomorrow's problems Thu, 09 Feb 2012 20:05:58 +0000 hourly 1 By: Javelin http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18097 Javelin Fri, 26 Jun 2009 12:16:33 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18097 Correct me if I'm wrong, ut as I remember it, it was the small banks that got into trouble and it was the Big English Banks that bailed them out. The two Scottish Banks were badly run, grew too fast and took high risks. In the old days big banks took turns bailing out small banks. Having lots of small banks would mean having lots of failures and no big banks to bail them out. Of course the key point here is that it doesn't matter whether a bank is big or small, what matter what risks they are taking. They way to check on this is to make the banks books transparent. The regulator should have a right to banks books and should have the right to (quietly) get them to unwind positions if they think they are too risky. It was RBs - mega bank in trouble, and LLoyds after it merged with HBOS Correct me if I’m wrong, ut as I remember it, it was the small banks that got into trouble and it was the Big English Banks that bailed them out.

The two Scottish Banks were badly run, grew too fast and took high risks. In the old days big banks took turns bailing out small banks. Having lots of small banks would mean having lots of failures and no big banks to bail them out.

Of course the key point here is that it doesn’t matter whether a bank is big or small, what matter what risks they are taking. They way to check on this is to make the banks books transparent. The regulator should have a right to banks books and should have the right to (quietly) get them to unwind positions if they think they are too risky.

It was RBs – mega bank in trouble, and LLoyds after it merged with HBOS

]]> By: Pat http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18096 Pat Tue, 23 Jun 2009 21:51:50 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18096 If a business is too big too fail- its too big for the country. If we bail out a business it loses competitive edge, and needs ever larger bailouts until someone brave pulls the plug. Should we have a brave leader again I would rather they didn't have to waste effort covering old ground- there' plenty of challenges without repeating old ones. Why not restructure corporation tax on a sliding scale dependent on share of UK market, so that large companies pay a high rate of tax and startups pay nothing. We should then get more startups and more overseas companies moving in, and large companies would focus on efficiency rather than market share. There should also be an absolute minimum of allowances- so that companies don't spend their time gaming the system. This should also reduce both the cost to HMG of collecting the tax, and the cost to companies devising tax avoidance systems- having some of the best brains in the country arguing about tax liability is extremely wasteful. If asked to pick the greatest business of 2020 I would say that todays great business is the most likely single candidate- but their are many many startups, and it is more likely that one of these will be top dog on 11 years time (though we have no idea which one) If a business is too big too fail- its too big for the country. If we bail out a business it loses competitive edge, and needs ever larger bailouts until someone brave pulls the plug. Should we have a brave leader again I would rather they didn’t have to waste effort covering old ground- there’ plenty of challenges without repeating old ones.
Why not restructure corporation tax on a sliding scale dependent on share of UK market, so that large companies pay a high rate of tax and startups pay nothing. We should then get more startups and more overseas companies moving in, and large companies would focus on efficiency rather than market share. There should also be an absolute minimum of allowances- so that companies don’t spend their time gaming the system. This should also reduce both the cost to HMG of collecting the tax, and the cost to companies devising tax avoidance systems- having some of the best brains in the country arguing about tax liability is extremely wasteful.
If asked to pick the greatest business of 2020 I would say that todays great business is the most likely single candidate- but their are many many startups, and it is more likely that one of these will be top dog on 11 years time (though we have no idea which one)

]]> By: jean baker http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18095 jean baker Tue, 23 Jun 2009 12:23:59 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18095 Regulation ensuring economic stability economic growth was the cause and government's responsibility. Toxic levels of debt confirm banks were given a free hand, blind eye and deaf ear in the process. Bush's regime reportedly worked in line with Blair's abolition of fiscal regulation and the results are well documented. 'Toxic debt' stems from speculation and greed, not prudent, secured lending. Labour's incurred a three generational level of debt against taxpayers against 'normal market forces'. Regulation ensuring economic stability economic growth was the cause and government’s responsibility. Toxic levels of debt confirm banks were given a free hand, blind eye and deaf ear in the process.

Bush’s regime reportedly worked in line with Blair’s abolition of fiscal regulation and the results are well documented.

‘Toxic debt’ stems from speculation and greed, not prudent, secured lending. Labour’s incurred a three generational level of debt against taxpayers against ‘normal market forces’.

]]> By: Waramess http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18094 Waramess Tue, 23 Jun 2009 08:23:40 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18094 I am not suggesting a little bit more or a little bit less regulation neither am I suggesting different regulation, I am suggesting the amount of regulation imposed by government should be neither more nor less than that imposed on any other commercial entity in this country. People argue that lack of regulation caused the banking crisis but that was far from being the case Notwithstanding the accusation by some that the free hand afforded the banks was their undoing, the banks were never given a free hand. The regulation was the wrong type of regulation, as with most regulation of this type, and the supervision was the wrong type of supervision and, the problems experienced would never have happened had normal market forces been allowed to prevail. I am not suggesting a little bit more or a little bit less regulation neither am I suggesting different regulation, I am suggesting the amount of regulation imposed by government should be neither more nor less than that imposed on any other commercial entity in this country.

People argue that lack of regulation caused the banking crisis but that was far from being the case

Notwithstanding the accusation by some that the free hand afforded the banks was their undoing, the banks were never given a free hand.

The regulation was the wrong type of regulation, as with most regulation of this type, and the supervision was the wrong type of supervision and, the problems experienced would never have happened had normal market forces been allowed to prevail.

]]> By: figurewizard http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18093 figurewizard Mon, 22 Jun 2009 23:02:27 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18093 The separation of retail (inherently a cautious business) and investment banking (inherently risky) achieved by the Glass Steagall act did lead to sixty six years of banking stabiliy, despite there being a six year world war in between. The history of the act shows that regulation of the former was far more effective as their business was focused and clearly understood by both the management of the banks and the regulators themselves. Since the repeal of the act however banks got to be a lot bigger; not by developing their retail business but by charging headlong into the (risky) investment fields previously denied to them, which we now all know neither they nor the regulators fully understood. The result is that we, the taxpayers have been loaded with collosal levels of debt which will take a generation to pay off. In view of this banks must be forced to change, and that change must lead to there being more and smaller banks, who know their business. This is why a new version of Glass Steagall should be considered. Those of us who are having to pay for their previous follies do not want to see them engineer a return to the status quo. Reply: The bank that went down, doing most damage, was Lehmans. Lehmans was just an investment bank. It was the failure to control risks and capital in all sorts of banks including ones that would have passed the Glass Steagall test that caused the crisis. The separation of retail (inherently a cautious business) and investment banking (inherently risky) achieved by the Glass Steagall act did lead to sixty six years of banking stabiliy, despite there being a six year world war in between. The history of the act shows that regulation of the former was far more effective as their business was focused and clearly understood by both the management of the banks and the regulators themselves.

Since the repeal of the act however banks got to be a lot bigger; not by developing their retail business but by charging headlong into the (risky) investment fields previously denied to them, which we now all know neither they nor the regulators fully understood. The result is that we, the taxpayers have been loaded with collosal levels of debt which will take a generation to pay off.

In view of this banks must be forced to change, and that change must lead to there being more and smaller banks, who know their business. This is why a new version of Glass Steagall should be considered. Those of us who are having to pay for their previous follies do not want to see them engineer a return to the status quo.

Reply: The bank that went down, doing most damage, was Lehmans. Lehmans was just an investment bank. It was the failure to control risks and capital in all sorts of banks including ones that would have passed the Glass Steagall test that caused the crisis.

]]> By: Lola http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18092 Lola Mon, 22 Jun 2009 18:10:33 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18092 Hear Hear. Which is exactly why NR, RBS and HBOS should have been let go. The pieces would have been picked by new entrants, the existing banks being so damaged and without sufficient funds. What price Tesco Bank or Virgin Bank. Hear Hear. Which is exactly why NR, RBS and HBOS should have been let go. The pieces would have been picked by new entrants, the existing banks being so damaged and without sufficient funds. What price Tesco Bank or Virgin Bank.

]]> By: Kevin Lohse http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18091 Kevin Lohse Mon, 22 Jun 2009 17:20:14 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18091 to be viable. to be viable.

]]> By: Kevin Lohse http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18090 Kevin Lohse Mon, 22 Jun 2009 17:19:26 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18090 If our banks are diminished in size, will they be able to viable in the global economy, or will they be gobbled up by the leviathans? Jean Baker. While the application of Labour policy was in part responsible for the credit crunch, I don't see how the application of an antedeluvian piece of Marxist theory could have improved things. Do tell. If our banks are diminished in size, will they be able to viable in the global economy, or will they be gobbled up by the leviathans?
Jean Baker. While the application of Labour policy was in part responsible for the credit crunch, I don’t see how the application of an antedeluvian piece of Marxist theory could have improved things. Do tell.

]]> By: jean baker http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18089 jean baker Mon, 22 Jun 2009 15:57:55 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18089 The government was elected to run the country, not it's banks; it's undemocratic and uncompetitive. Taxpayers were oblivious to the level of debt racked up by the ruling regime. The government was elected to run the country, not it’s banks; it’s undemocratic and uncompetitive. Taxpayers were oblivious to the level of debt racked up by the ruling regime.

]]> By: jean baker http://johnredwoodsdiary.com/2009/06/22/smaller-banks-the-chancellor-and-the-governor/#comment-18088 jean baker Mon, 22 Jun 2009 15:50:09 +0000 http://www.johnredwoodsdiary.com/?p=3900#comment-18088 Escalating borrowings for PFI's continues, according to reputable blog sites. It seems the manner in which the Fees Office operates serves to deflect from the more serious issue of borrowings against taxpayers. Escalating borrowings for PFI’s continues, according to reputable blog sites.

It seems the manner in which the Fees Office operates serves to deflect from the more serious issue of borrowings against taxpayers.

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