The Banking Crisis......again !
Discussion
What I can't get my head around is that when a bank is fined (eg mis-selling ppi) the fine just comes out of the bank's funds (ie the customers end up picking up the bill in teh long run).
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
K
2. Thousands of bankers lost their jobs
3. The bailout costs are low in comparison to the increased revenue that was generated during the period when the previous government encouraged the era of cheap credit...
I understand that the climate of cheap credit encouraged borrowing and spending.
What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
Surely if due diligence was paid the danger of taking on those risks would have been recognised .
Either way such risks were ignored because of ignorance or greed ?
I do believe that some bankers argued against this climate of reckless risk taking but were either silenced or sidelined.
sidicks said:
avinalarf said:
I do not wish too get into a slanging match but you appear to have all the answers and suggest others do not have a grasp of the subject.
It's quite obvious that many people do not have a grasp of the subject, as evidenced by the numerous threads on here on this or related subjects.avinalarf said:
This is a complicated subject but too me the bottom line is that huge risks were taken by a section of the financial
community. When these risks went well huge profits were made,huge bonuses given,all was good.
BUT when "balls fell ",as it was bound to happen, the bankers walked away and all of us have had to bail them out.
1. Given that a significant portion of those bonuses were in company shares, when the economy collapsed so did much of the banker's earningscommunity. When these risks went well huge profits were made,huge bonuses given,all was good.
BUT when "balls fell ",as it was bound to happen, the bankers walked away and all of us have had to bail them out.
2. Thousands of bankers lost their jobs
3. The bailout costs are low in comparison to the increased revenue that was generated during the period when the previous government encouraged the era of cheap credit...
avinalarf said:
To me this is very clear,a simple explanation.
Indeed. Clear and simple but not accurate.avinalarf said:
I would like to know what you think went wrong,where the "blame"lies and why you think that nobody should be put in the dock ?
See above (and numerous other similar threads)...What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
Surely if due diligence was paid the danger of taking on those risks would have been recognised .
Either way such risks were ignored because of ignorance or greed ?
I do believe that some bankers argued against this climate of reckless risk taking but were either silenced or sidelined.
Fastpedeller said:
What I can't get my head around is that when a bank is fined (eg mis-selling ppi) the fine just comes out of the bank's funds (ie the customers end up picking up the bill in teh long run).
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
How is it the customers picking up the costs?Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
sidicks said:
Fastpedeller said:
What I can't get my head around is that when a bank is fined (eg mis-selling ppi) the fine just comes out of the bank's funds (ie the customers end up picking up the bill in teh long run).
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
How is it the customers picking up the costs?Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
In the same way that we all pay for 'free' Tesco carrier bags - they aren't free the customers are paying for them via the company income.
avinalarf said:
sidicks said:
crankedup said:
Over ambition on the part of bankers, public and Governments. Who benefited from it all before the crisis - bankers.
Seriously? You'd don't think that the whole of the economy benefitted from cheap credit pre-crisis?!
Governments who benefitted from increase GDP and tax income which then resulted in increased spending, benefiting the wider population.
Individuals who could borrow more money, more cheaply and acquire goods
Etc etc
crankedup said:
Retail banks will have a legislative duty in ensuring all loans fall within a set remit.
If a retail bank has to foreclose then they seize the asset the loan was granted against. Why would savers lose their savings?t
Agree about a regulatory body that knows what they are doing 100% But to be fair many investment bankers bosses didn't understand what their traders were up to. Likely didn't much care either.
Which investment bank traders caused the problems?.If a retail bank has to foreclose then they seize the asset the loan was granted against. Why would savers lose their savings?t
Agree about a regulatory body that knows what they are doing 100% But to be fair many investment bankers bosses didn't understand what their traders were up to. Likely didn't much care either.
Edited by anonymous-user on Friday 28th November 15:59
This is a complicated subject but too me the bottom line is that huge risks were taken by a section of the financial
community. When these risks went well huge profits were made,huge bonuses given,all was good.
BUT when "balls fell ",as it was bound to happen, the bankers walked away and all of us have had to bail them out.
To me this is very clear,a simple explanation.
I would like to know what you think went wrong,where the "blame"lies and why you think that nobody should be put in the dock ?
McWigglebum4th said:
The basic problem is private schools like eton and where the pupils end up
The really bright ones move into science and industry
The average ones move into banking
The thick ones move into running the country
Where as in a state school the thick ones end up collecting the trolleys in tescos
That's a very sweeping statement. The smartest person I know, and have known for 20 years, went to a private school, then LSE, and is now an investment banker, and he is VERY smart. The really bright ones move into science and industry
The average ones move into banking
The thick ones move into running the country
Where as in a state school the thick ones end up collecting the trolleys in tescos
avinalarf said:
I understand that the climate of cheap credit encouraged borrowing and spending.
What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
You have got things the wrong way around - the government encouraged and forced the banks to take on extra risks which led to the climate of cheap credit.What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
avinalarf said:
Surely if due diligence was paid the danger of taking on those risks would have been recognised .
In the UK at least, the issues were primarily caused by expectations of what might have happened rather than what actually happened.avinalarf said:
Either way such risks were ignored because of ignorance or greed ?
Amongst many other factors...avinalarf said:
I understand that the climate of cheap credit encouraged borrowing and spending.
What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
You have got things the wrong way around - the government encouraged and forced the banks to take on extra risks which led to the climate of cheap credit.What I do not understand is why that was taken as a signal by the Heads of Banks to indulge in taking on bad risks.
avinalarf said:
Surely if due diligence was paid the danger of taking on those risks would have been recognised .
In the UK at least, the issues were primarily caused by expectations of what might have happened rather than what actually happened.avinalarf said:
Either way such risks were ignored because of ignorance or greed ?
Amongst many other factors...Fastpedeller said:
sidicks said:
Fastpedeller said:
What I can't get my head around is that when a bank is fined (eg mis-selling ppi) the fine just comes out of the bank's funds (ie the customers end up picking up the bill in teh long run).
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
How is it the customers picking up the costs?Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
In the same way that we all pay for 'free' Tesco carrier bags - they aren't free the customers are paying for them via the company income.
It's not consumers' money (i.e. not coming from your bank account or as a surcharge on your mortgage) but are part of Own funds and capital and the money is hence coming from the shareholders eventually. That may be also customers of the bank, but in this instance are owners of the bank.
Each bank has to own capital for prudential purposes (i.e. I do business and there is a statistical opportunity that thing go pear shaped) and for conduct risk (i.e. someone intentionally or accidentally does something that causes a damage (like PPI mis-selling)). With no capital the bank cannot operate, and trust me, this is heavily enforced and regulated. Very few sectors of the economy are as heavily regulated as credit and banking.
I would check the PRA and FCA websites if you want to learn more about ongoing banking reform post the 2008 financial crisis. I am not across the proposals under Volker in detail but my understanding is that is focused on eliminating banks from proprietary trading. ICB/ring fencing which has a year end 2008 compliance date proposes that any UK based FI with over £25bn in retail deposits must ring fence its retail and commercial banking activities from the riskier IB stuff. Change is coming......you just need to be a bit more patient.
Enricogto said:
Fastpedeller said:
sidicks said:
Fastpedeller said:
What I can't get my head around is that when a bank is fined (eg mis-selling ppi) the fine just comes out of the bank's funds (ie the customers end up picking up the bill in teh long run).
Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
How is it the customers picking up the costs?Surely those who did the mis-selling (or their superiors who directed them to do the deed) should be losing this from their wages/bonuses.
Whole thing stinks.
In the same way that we all pay for 'free' Tesco carrier bags - they aren't free the customers are paying for them via the company income.
It's not consumers' money (i.e. not coming from your bank account or as a surcharge on your mortgage) but are part of Own funds and capital and the money is hence coming from the shareholders eventually. That may be also customers of the bank, but in this instance are owners of the bank.
Each bank has to own capital for prudential purposes (i.e. I do business and there is a statistical opportunity that thing go pear shaped) and for conduct risk (i.e. someone intentionally or accidentally does something that causes a damage (like PPI mis-selling)). With no capital the bank cannot operate, and trust me, this is heavily enforced and regulated. Very few sectors of the economy are as heavily regulated as credit and banking.
Fastpedeller said:
So we are agreed that those responsible for losing it haven't been penalised in any way then?
sidicks said:
1. Given that a significant portion of those bonuses were in company shares, when the economy collapsed so did much of the banker's earnings
2. Thousands of bankers lost their jobs
2. Thousands of bankers lost their jobs
McWigglebum4th said:
The basic problem is private schools like eton and where the pupils end up
The really bright ones move into science and industry
The average ones move into banking
The thick ones move into running the country
Where as in a state school the thick ones end up collecting the trolleys in tescos
The really bright ones move into science and industry
The average ones move into banking
The thick ones move into running the country
Where as in a state school the thick ones end up collecting the trolleys in tescos
That might just be the most brilliantly insightful thing I've read this week.
Working in the City I can see why you'd say it. I'm not sure it's wholly accurate, but for some it probably is.
I was average at a s
t comp, so you can only guess at how smart I am! My dog seems to exhibit more intelligence than the current opposition front bench, which is the main doubt I have about your hypothesis.avinalarf said:
For me it's the lack of regulation and RESPONSIBILITY that sticks in my craw.
I do not care how much someone else earns,good luck to them BUT they have to take the hit when they feck up.
The leadership got sacked and the shareholders lost their stake. In what sense was responsibly not taken? Do you think there should be criminal liability for taking misguided commercial decisions? Perhaps you can point to another industry where that applies? Indeed Finance is the only sector I've heard of where there are criminal sanctions handed out where the burden of proof is only a balance of probabilities. I do not care how much someone else earns,good luck to them BUT they have to take the hit when they feck up.
ATG said:
avinalarf said:
For me it's the lack of regulation and RESPONSIBILITY that sticks in my craw.
I do not care how much someone else earns,good luck to them BUT they have to take the hit when they feck up.
The leadership got sacked and the shareholders lost their stake. In what sense was responsibly not taken? Do you think there should be criminal liability for taking misguided commercial decisions? Perhaps you can point to another industry where that applies? Indeed Finance is the only sector I've heard of where there are criminal sanctions handed out where the burden of proof is only a balance of probabilities. I do not care how much someone else earns,good luck to them BUT they have to take the hit when they feck up.
I really think that some of you have not grasped what a feck up we have been left in.
Yes of course the government were at fault, but that does not absolve those at the head of the banks from their responsibilities.
It was their greed and recklessness or sheer stupidity that lead to this debacle,it was one or other.
They knew that the banks were to big to fail and therefore took this "get out of jail free card " to feather their nests.
Yes thousands of shop floor bank staff lost their jobs,they should not have ,they did not have the position to make those bad judgement calls,you don't see the likes of Fred Goodwin impoverished.
The banks were acting like a casino,only thing was heads we win,tails we win cos the suckers will have to foot the bill.
The decisions I make in my business are built on experience and good practice AND there is nobody going to bail me out AND if I place fast and loose I'd be banged up.
These top bankers were paid huge salaries they had a responsibility to their Banks to act prudently,they shirked that responsibility for short term greed and personal gain.
You can keep repeating that narrative as much as you like. It won't make it true. To reduce the risk of another debt fuelled credit crunch the first thing we have to do is understand what caused the last one and what the consequences actually were. An awful lot of people still clearly haven't got the slightest idea, so instead they cling on to little more than a fairy story in which there are goodies and baddies and a simple narrative.
avinalarf said:
Some of the leadership were sacked,for many others it was business as usual at another institution.
I really think that some of you have not grasped what a feck up we have been left in.
I really think YOU have not grasped the cost of the bank bailouts.I really think that some of you have not grasped what a feck up we have been left in.
Please answer these questions:
1) what is the current amount of money owed by banks in respect of bank bailouts
2) what was the value of increases GDP & extra tax raised in the period prior to the credit crisis as a direct result of the government encourages / forced cheap credit economy?
avinalarf said:
Yes of course the government were at fault, but that does not absolve those at the head of the banks from their responsibilities.
You keep ignoring all the other people at fault, why is that?No one is saying the banks should be absolved from (partial) responsibility.
avinalarf said:
It was their greed and recklessness or sheer stupidity that lead to this debacle,it was one or other.
avinalarf said:
They knew that the banks were to big to fail and therefore took this "get out of jail free card " to feather their nests.
Which makes no sense, given how much of their bonuses are in shares and hence were decimated under the bailouts..avinalarf said:
Yes thousands of shop floor bank staff lost their jobs,they should not have ,they did not have the position to make those bad judgement calls,you don't see the likes of Fred Goodwin impoverished.
The banks were acting like a casino,only thing was heads we win,tails we win cos the suckers will have to foot the bill.
As explained the senior people were significantly impacted financially.The banks were acting like a casino,only thing was heads we win,tails we win cos the suckers will have to foot the bill.
avinalarf said:
The decisions I make in my business are built on experience and good practice AND there is nobody going to bail me out AND if I place fast and loose I'd be banged up.
If you committed a crime you'd be banged up - please understand the difference!avinalarf said:
These top bankers were paid huge salaries they had a responsibility to their Banks to act prudently,they shirked that responsibility for short term greed and personal gain.
Except this only partially stacks up, for reasons explained above.Edited by sidicks on Friday 28th November 20:24
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