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DonkeyApple
12,021 posts
38 months
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AJS- said: As in stealing a load of money? Surely that would be illegal even without FSA/BoE regulation? Why would it be illegal to transfer client funds onto your balance sheet?
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AJS-
10,013 posts
105 months
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DonkeyApple said: Why would it be illegal to transfer client funds onto your balance sheet? It would be the making them unavailable to your clients that would be the illegal part.
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tonker
43,826 posts
117 months
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AJS- said: As in stealing a load of money? Surely that would be illegal even without FSA/BoE regulation? Like that stopped Lehmans US doing it .... if you're bust, you don't give a feck, so you bring all the cash back to the Mothership... typically, it is down to a strong local FD to refuse to wire the money to its parent..... and most of them aren't that strong.
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DonkeyApple
12,021 posts
38 months
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AJS- said: It would be the making them unavailable to your clients that would be the illegal part. No it wouldn't. Who reads the small print of their bank account? It's only the regulation around the definition of what 'Client Money' is and how it must be held and what it can and can't be used for that stops client funds from forming part of the firms' balance sheet. After all, if you give me all your money who now legally owns that money?
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AJS-
10,013 posts
105 months
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DonkeyApple said: AJS- said: It would be the making them unavailable to your clients that would be the illegal part. No it wouldn't. In what sense would it not be theft? If it disappeared because the company went bankrupt then that's that. All the more reason that depositors should be more careful who they deposit with, and not let bad banks grow so strongly in the first place. FWIW, I know all this seems a bit abstract in the context of the very immediate problems we faced in 2008, and still face now to some degree. Ultimately though, I do believe an unregulated banking market where people are much more careful about where they deposit their money, and ideally much more deliberate in their diversification of it, is the only answer.
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DonkeyApple
12,021 posts
38 months
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AJS- said: In what sense would it not be theft? If it disappeared because the company went bankrupt then that's that. All the more reason that depositors should be more careful who they deposit with, and not let bad banks grow so strongly in the first place.
FWIW, I know all this seems a bit abstract in the context of the very immediate problems we faced in 2008, and still face now to some degree. Ultimately though, I do believe an unregulated banking market where people are much more careful about where they deposit their money, and ideally much more deliberate in their diversification of it, is the only answer. Why would it be theft? Someone just puts some money in the account of another firm, it's entirely up to that firm what they then do with it as it is their money at that point.
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Du1point8
14,282 posts
61 months
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DonkeyApple said: AJS- said: In what sense would it not be theft? If it disappeared because the company went bankrupt then that's that. All the more reason that depositors should be more careful who they deposit with, and not let bad banks grow so strongly in the first place.
FWIW, I know all this seems a bit abstract in the context of the very immediate problems we faced in 2008, and still face now to some degree. Ultimately though, I do believe an unregulated banking market where people are much more careful about where they deposit their money, and ideally much more deliberate in their diversification of it, is the only answer. Why would it be theft? Someone just puts some money in the account of another firm, it's entirely up to that firm what they then do with it as it is their money at that point. Think its easier if you said it this way... If the firm is global, then why does it need to keep the assets that it gains in a single country in that country? If that were the case and say you wanted to borrow £100 off me in the uk, my assets are in germany (£100000), but in UK I only had a £50... So in your scenario I say no, yet I have the assets and the means to do it. However in DA scenario I can move those assets to which ever country I need them at the time, so I can help you. Its not like Im just removing all my assets from one country...
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DonkeyApple
12,021 posts
38 months
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Du1point8 said: Think its easier if you said it this way...
If the firm is global, then why does it need to keep the assets that it gains in a single country in that country?
If that were the case and say you wanted to borrow £100 off me in the uk, my assets are in germany (£100000), but in UK I only had a £50... So in your scenario I say no, yet I have the assets and the means to do it.
However in DA scenario I can move those assets to which ever country I need them at the time, so I can help you.
Its not like Im just removing all my assets from one country... But the core point is that you wouldn't hand your money to someone else without a contract being in place that defines what that money is and what can be done with it. Then, it becomes essential to standardise these contracts or people will be deceived or misinterpret the contract. And to standardise a contract across an industry requires a regulatory body. This doesn't solve the problem of a foreign bank stealing 'Client Funds' from another country but what it highlights is the additional risk of Client Money being stolen and the solution here is to clearly regulate the amount of client money an overseas operation can hold. Santander is a good example as it is a foreign bank based in a bankrupt country and is not actually solvent itself and yet holds an absolutely enormous % of UK retail client money.
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Du1point8
14,282 posts
61 months
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DonkeyApple said: Du1point8 said: Think its easier if you said it this way...
If the firm is global, then why does it need to keep the assets that it gains in a single country in that country?
If that were the case and say you wanted to borrow £100 off me in the uk, my assets are in germany (£100000), but in UK I only had a £50... So in your scenario I say no, yet I have the assets and the means to do it.
However in DA scenario I can move those assets to which ever country I need them at the time, so I can help you.
Its not like Im just removing all my assets from one country... But the core point is that you wouldn't hand your money to someone else without a contract being in place that defines what that money is and what can be done with it. Then, it becomes essential to standardise these contracts or people will be deceived or misinterpret the contract. And to standardise a contract across an industry requires a regulatory body. This doesn't solve the problem of a foreign bank stealing 'Client Funds' from another country but what it highlights is the additional risk of Client Money being stolen and the solution here is to clearly regulate the amount of client money an overseas operation can hold. Santander is a good example as it is a foreign bank based in a bankrupt country and is not actually solvent itself and yet holds an absolutely enormous % of UK retail client money. I hope their lose my mortgage... Savings are elsewhere.
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DonkeyApple
12,021 posts
38 months
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Du1point8 said: I hope their lose my mortgage...
Savings are elsewhere. They only administer the paperwork and collection of funds for your mortgage. Someone else owns your debt  You just have to hope that it's been miss sold to someone like the Salvation Army Pension Fund who won't have the heart to collect but then they will probably fold and it'll be put into the Govt 'bad bank' along with all the others.
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Du1point8
14,282 posts
61 months
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DonkeyApple said: Du1point8 said: I hope their lose my mortgage...
Savings are elsewhere. They only administer the paperwork and collection of funds for your mortgage. Someone else owns your debt You just have to hope that it's been miss sold to someone like the Salvation Army Pension Fund who won't have the heart to collect but then they will probably fold and it'll be put into the Govt 'bad bank' along with all the others. Alas unfortunately I know all that... Tis funny when I tell others that their whole mortgage could be wiped out by spain collapsing, they hope it will happen now, just so they have no debts... They got their hopes up a little too much i don't have the heart to tell them. f  k Im evil sometimes!!
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DonkeyApple
12,021 posts
38 months
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Du1point8 said: Alas unfortunately I know all that... Tis funny when I tell others that their whole mortgage could be wiped out by spain collapsing, they hope it will happen now, just so they have no debts... They got their hopes up a little too much i don't have the heart to tell them. f k Im evil sometimes!! More fun to tell them they would have to move out and let Pedro live there.
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AJS-
10,013 posts
105 months
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DonkeyApple said: Why would it be theft?
Someone just puts some money in the account of another firm, it's entirely up to that firm what they then do with it as it is their money at that point. If I deposit money into an instant access account, and it is not available for me to access when I need it then what else is it? If it later becomes available it is a breach of the contract I signed when I opened an instant access account, and that breach should be compensated for. If it does not become available again then it is either theft or a bankruptcy. I take your point about the convenience of these contracts being standardised, but I believe, as with many other markets, generic common law is enough to standardise these contracts over a relatively short period of time.
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DonkeyApple
12,021 posts
38 months
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AJS- said: If I deposit money into an instant access account, and it is not available for me to access when I need it then what else is it?
If it later becomes available it is a breach of the contract I signed when I opened an instant access account, and that breach should be compensated for. If it does not become available again then it is either theft or a bankruptcy.
I take your point about the convenience of these contracts being standardised, but I believe, as with many other markets, generic common law is enough to standardise these contracts over a relatively short period of time. It wouldn't work. A subtle and clever wording of the contract can easily make it look like a competitors offering but with different obligations. You would remove regulation from pharmaceutical companies and for the same reason the banks. It's essential in order to protect. If you rellied firmly on market forces alone you would go back to how banking worked 200 years ago. In essence it didn't. It was a system that served the wealthy which was exactly why most people kept their savings under the mattress. Current accounts in the UK are only protected and equal because of regulation. It is regulation that defines very precisely what the meaning of 'client Money' is. Without that people would lose all their savings left right and centre. If you want a modern example of this in action look to the spot FX market. Regulated in the UK, UK firms must segregate client funds. In other markets where many are set up there are no such restrictions and client money paid in instantly becomes the property of the owners of the firms. These firms regularly fold taking all client funds and then the owners start up again under a different name. They do this so easily because they advertise better deals than te UK competitors. In the UK the Fin Prim regs stop firms from not just lying but glamourising their product. Human greed does the rest. Retail punters lap up the better deal and then lose their money.
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AJS-
10,013 posts
105 months
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This becomes self-perpetuating though. People need protecting because they believe the banks can't fail. Ultimately they can and in my view will fail, and the more people do now to protect against this the less catastrophic it will be. The more people abrogate responsibility and carry on believing that the government and the banks will sort it out, the worse things will get.
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Du1point8
14,282 posts
61 months
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AJS- said: This becomes self-perpetuating though. People need protecting because they believe the banks can't fail. Ultimately they can and in my view will fail, and the more people do now to protect against this the less catastrophic it will be. The more people abrogate responsibility and carry on believing that the government and the banks will sort it out, the worse things will get. well don't use them and store your money under mattress and pay for everything in cash. Simple solution
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AJS-
10,013 posts
105 months
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Du1point8 said: well don't use them and store your money under mattress and pay for everything in cash.
Simple solution I don't have anything in UK bank accounts. I just wish a few other people would wake up to the reality of what is happening here.
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NorthernBoy
6,025 posts
126 months
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AJS- said: I don't have anything in UK bank accounts. I just wish a few other people would wake up to the reality of what is happening here. A slow but sure improvement in economic data, strongly recovering bank balance sheets and reserves, and a government in charge whose debt still has an AAA rating. Oh, and a pretty good deposit insurance scheme to make sure that you are virtually certain to get your money back. This being the case, it's possibly not everyone else that needs to wake up to reality...
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AJS-
10,013 posts
105 months
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NorthernBoy said: AJS- said: I don't have anything in UK bank accounts. I just wish a few other people would wake up to the reality of what is happening here. A slow but sure improvement in economic data, strongly recovering bank balance sheets and reserves, and a government in charge whose debt still has an AAA rating. Oh, and a pretty good deposit insurance scheme to make sure that you are virtually certain to get your money back. This being the case, it's possibly not everyone else that needs to wake up to reality... Well Mr Cameron, how about A much feared double dip recession becoming a reality. A government in charge who are still borrowing more than they are spending after 2 years in office, and deeply unpopular due to the supposed severity of their supposed cuts. A deposit insurance scheme that looks good on paper, and served to set some minds at rest, but backed by a government who couldn't possibly cover the cost of replacing said savings if they vanished, even if they weren't struggling to pay the bills anyway. Oh and throw in continuing inflation, an impending collapse of the Eurozone and a slowing economy in Asia. It could pull through, and I will be happy to be wrong, but in my view we're just barely keeping our head above water now and the next big wave could finish it quite spectacularly.
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NorthernBoy
6,025 posts
126 months
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Could, yes, and an earthquake could take out California, or an eagle could drop a tortoise on your head.
It's maybe not a bad time to be buying some other currencies, especially in countries in which you may one day want to live, but that's a very long way from suggesting that people with UK assets are blind to reality.
For one thing, of you live here, having most assets in other currencies or centres is exposing you to volatility that you have no need to face.
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