Paid cash in, counted and weighed. Bank now disputes figure.
Discussion
drainbrain said:
What (I Think) Sid is trying to say is that the very top quality of loans didn't default, so the system really worked. Bit like saying well, the Titanic's propellor has been found and in perfect nick. So it certainly wasn't anything to do with the Titanic or its operation that caused it to sink. What Steely Dan call Pretzel Logic.
No, I'm saying that defaults weren't the cause of the crisis in the U.K as there weren't many defaults I.e it was a liquidity crisis (mark-to-market) rather than a default (credit) crisis.sidicks said:
drainbrain said:
What (I Think) Sid is trying to say is that the very top quality of loans didn't default, so the system really worked. Bit like saying well, the Titanic's propellor has been found and in perfect nick. So it certainly wasn't anything to do with the Titanic or its operation that caused it to sink. What Steely Dan call Pretzel Logic.
No, I'm saying that defaults weren't the cause of the crisis in the U.K as there weren't many defaults I.e it was a liquidity crisis (mark-to-market) rather than a default (credit) crisis.So if banks hadn't CHOSEN to mark-to-market (and in some cases even engineered the default scenario) and had instead said "hey, LTVs have risen beyond covenant, but time'll take care of that and anyway it doesn't appear to be affecting ability to repay so let it ride" then there wouldn't have been a crisis in the uk??
drainbrain said:
This is really quite interesting.
So if banks hadn't CHOSEN to mark-to-market (and in some cases even engineered the default scenario) and had instead said "hey, LTVs have risen beyond covenant, but time'll take care of that and anyway it doesn't appear to be affecting ability to repay so let it ride" then there wouldn't have been a crisis in the uk??
Mark-to-market or mark-to-model.So if banks hadn't CHOSEN to mark-to-market (and in some cases even engineered the default scenario) and had instead said "hey, LTVs have risen beyond covenant, but time'll take care of that and anyway it doesn't appear to be affecting ability to repay so let it ride" then there wouldn't have been a crisis in the uk??
Banks don't make the accounting rules.
Edited by sidicks on Monday 20th February 17:33
sidicks said:
No, I'm saying that defaults weren't the cause of the crisis in the U.K as there weren't many defaults I.e it was a liquidity crisis (mark-to-market) rather than a default (credit) crisis.
Mark to Market....Problems can arise when the market-based measurement does not accurately reflect the underlying asset's true value. This can occur when a company is forced to calculate the selling price of these assets or liabilities during unfavorable or volatile times, such as a financial crisis. For example, if the liquidity is low or investors are fearful, the current selling price of a bank's assets could be much lower than the actual value. The result would be a lowered shareholders' equity.
This issue was seen during the financial crisis of 2008/09 where many securities held on banks' balance sheets could not be valued efficiently as the markets had disappeared from them. In April of 2009, however, the Financial Accounting Standards Board (FASB) voted on and approved new guidelines that would allow for the valuation to be based on a price that would be received in an orderly market rather than a forced liquidation, starting in the first quarter of 2009.
2. This is done most often in futures accounts to make sure that margin requirements are being met. If the current market value causes the margin account to fall below its required level, the trader will be faced with a margin call.
3. Mutual funds are marked to market on a daily basis at the market close so that investors have an idea of the fund's NAV.
avinalarf said:
Mark to Market....
Problems can arise when the market-based measurement does not accurately reflect the underlying asset's true value. This can occur when a company is forced to calculate the selling price of these assets or liabilities during unfavorable or volatile times, such as a financial crisis. For example, if the liquidity is low or investors are fearful, the current selling price of a bank's assets could be much lower than the actual value. The result would be a lowered shareholders' equity.
This issue was seen during the financial crisis of 2008/09 where many securities held on banks' balance sheets could not be valued efficiently as the markets had disappeared from them. In April of 2009, however, the Financial Accounting Standards Board (FASB) voted on and approved new guidelines that would allow for the valuation to be based on a price that would be received in an orderly market rather than a forced liquidation, starting in the first quarter of 2009.
It's almost as if I know what I'm talking about!Problems can arise when the market-based measurement does not accurately reflect the underlying asset's true value. This can occur when a company is forced to calculate the selling price of these assets or liabilities during unfavorable or volatile times, such as a financial crisis. For example, if the liquidity is low or investors are fearful, the current selling price of a bank's assets could be much lower than the actual value. The result would be a lowered shareholders' equity.
This issue was seen during the financial crisis of 2008/09 where many securities held on banks' balance sheets could not be valued efficiently as the markets had disappeared from them. In April of 2009, however, the Financial Accounting Standards Board (FASB) voted on and approved new guidelines that would allow for the valuation to be based on a price that would be received in an orderly market rather than a forced liquidation, starting in the first quarter of 2009.
sidicks said:
Banks don't make the accounting rules.
No they don't. But:Wasn't the liquidity issue a by-product of the default issue? (like a tsunami is a by-product of an earthquake).
I think it's a mistake to try to separate a US crisis from a UK crisis although it may have manifested in different ways in different economic zones.
To be serious I think the default issue wasn't unrelated to US Govt pressure on Fannie Whatever to make funds available to inappropriate borrowers. And with the property market becoming an obviously hyper inflated bubble - overpopulated and even possibly stimulated by a mass of inappropriate borrowers - there was only one inevitable outcome.
Was it beyond the bankers to point this out to the govt and/or just say no? (hence the greed theory)
WinstonWolf said:
desolate said:
It must have been all the missing 60 quids that caused it then.
I wish the OP would update us, his sixty quid is far more interesting than this other unrelated b
ks.https://www.youtube.com/watch?v=Ddhrz0XKySQ
WinstonWolf said:
I wish the OP would update us, his sixty quid is far more interesting than this other unrelated bks.
So far I have not returned to the branch. I called the banks complaint line, supposed to have received a call from the Manager but no such call received as yet. Also in communication with the Bank via Facebook Messenger although they only seem to reply once a day and at 3.00am so the conversation is somewhat slow. I have yet to check my accounts to see if they have edited the amount payed in. I'll will do so and update progress tomorrow,ks.sidicks said:
It's almost as if I know what I'm talking about!
I never doubted your financial knowledge I do question some of your conclusions as to who should carry the can.You say that the US govt. FORCED the banks to lend money as mortgages to borrowers that did not fulfill good practice criteria.
Why ?
If the banks knew these loans might well prove toxic why didn't they request the govt.to provide security against that risk ?
If the mortgages were bundled into risk profile CDO's why were they not easy to recognise ?
Surely if the highest risk CDO's were a very small percentage of the total it would have been possible to isolate them ?
So why did the financial institutions treat all those CDO's as toxic and the market in them totally evaporate ?
You say that no laws were broken,so be it,but that doesn't mean that their was not sharp and reckless practice.
It is nigh impossible,in a Capitalist society that is market driven,to impose tight laws for every circumstance.
That leaves it to the financial institutions to behave in a responsible fashion,which in this case they did not.
The paper you quoted talked about banks actively trying to reduce their regulatory capital requirements. This is not a sign of greed. In a competitive market you've got to try to minimise your costs. Reducing your reg capital is in that sense exactly the same as structuring your business to be tax efficient. You won't survive unless you're as lean as possible. If the banking system as a whole is holding too little regulatory capital, that is a failure of regulation . Directors' primary responsibility is to maximise the value of their business on behalf of their shareholders. If you want to call that profit motive "greed", go ahead, but you aren't saying anything useful. No one is suggesting getting rid of the profit motive.
What's required is better regulation, and since the crisis there have been reams and reams of new regulations and it has driven up banks' costs, both in terms of internal bureaucracy and investment in new technology, and also (more usefully) by requiring them to hold more regulatory capital. These costs get passed on to customers and make it uneconomical to loan to some customers who would previously have been able to borrow. That is the intent of the regulations.
One of the key reasons that the collapse in credit confidence crippled the entire banking system was the difficulty in unpicking all of the transactions of a failing bank from the healthy banks they'd traded with. This systemic weakness had nothing to do with greed. The system just wasn't geared up to disentangle itself from a major bank like Lehmans. Since the crunch they're have been big changes to the way (a) that banks structure their businesses so that legal entities within a bank can be allowed to go bust and (b) the way that long term interbank contracts are now largely centrally cleared.
Edited because I see the time of the conversation has already improved.
Edited by ATG on Monday 20th February 19:36
ATG said:
Why speculate about what he's "trying" to say? Why not just take what he's saying at face value? And, frankly, why not try to learn from it? He's not making up excuses for the banks. All he's done in this thread is debunk misconceptions.
The paper you quoted talked about banks actively trying to reduce their regulatory capital requirements. This is not a sign of greed. In a competitive market you've got to try to minimise your costs. Reducing your reg capital is in that sense exactly the same as structuring your business to be tax efficient. You won't survive unless you're as lean as possible. If the banking system as a whole is holding too little regulatory capital, that is a failure of regulation . Directors' primary responsibility is to maximise the value of their business on behalf of their shareholders. If you want to call that profit motive "greed", go ahead, but you aren't saying anything useful. No one is suggesting getting rid of the profit motive.
What's required is better regulation, and since the crisis there have been reams and reams of new regulations and it has driven up banks' costs, both in terms of internal bureaucracy and investment in new technology, and also (more usefully) by requiring them to hold more regulatory capital. These costs get passed on to customers and make it uneconomical to loan to some customers who would previously have been able to borrow. That is the intent of the regulations.
One of the key reasons that the collapse in credit confidence crippled the entire banking system was the difficulty in unpicking all of the transactions of a failing bank from the healthy banks they'd traded with. This systemic weakness had nothing to do with greed. The system just wasn't geared up to disentangle itself from a major bank like Lehmans. Since the crunch they're have been big changes to the way (a) that banks structure their businesses so that legal entities within a bank can be allowed to go bust and (b) the way that long term interbank contracts are now largely centrally cleared.
So how do you explain this letter from a major highstreet bank I'm sitting looking at headed "Putting Things Right" ?The paper you quoted talked about banks actively trying to reduce their regulatory capital requirements. This is not a sign of greed. In a competitive market you've got to try to minimise your costs. Reducing your reg capital is in that sense exactly the same as structuring your business to be tax efficient. You won't survive unless you're as lean as possible. If the banking system as a whole is holding too little regulatory capital, that is a failure of regulation . Directors' primary responsibility is to maximise the value of their business on behalf of their shareholders. If you want to call that profit motive "greed", go ahead, but you aren't saying anything useful. No one is suggesting getting rid of the profit motive.
What's required is better regulation, and since the crisis there have been reams and reams of new regulations and it has driven up banks' costs, both in terms of internal bureaucracy and investment in new technology, and also (more usefully) by requiring them to hold more regulatory capital. These costs get passed on to customers and make it uneconomical to loan to some customers who would previously have been able to borrow. That is the intent of the regulations.
One of the key reasons that the collapse in credit confidence crippled the entire banking system was the difficulty in unpicking all of the transactions of a failing bank from the healthy banks they'd traded with. This systemic weakness had nothing to do with greed. The system just wasn't geared up to disentangle itself from a major bank like Lehmans. Since the crunch they're have been big changes to the way (a) that banks structure their businesses so that legal entities within a bank can be allowed to go bust and (b) the way that long term interbank contracts are now largely centrally cleared.
It seems to be saying that 'since the crisis' measures taken by banks were "unsatisfactory, unacceptable" and, requiring the oversight of an Independent Third Party to - "add a robust, transparent and independent step"? to investigations into self-accepted and acknowledged calumny??
Your theories are nice, but back in reality I asked the nasty ex-bank guy who deals with matters like this for a fee from its victims "WHY did they do the stuff they did to perfectly good and profitable customers who never missed a step of their agreements"?
The answer: One word. "Greed". And that's POST crisis. And nothing - NOTHING - to do with regulatory requirement.
avinalarf said:
I never doubted your financial knowledge I do question some of your conclusions as to who should carry the can.
You say that the US govt. FORCED the banks to lend money as mortgages to borrowers that did not fulfill good practice criteria.
Why ?
If the banks knew these loans might well prove toxic why didn't they request the govt.to provide security against that risk ?
If the mortgages were bundled into risk profile CDO's why were they not easy to recognise ?
They were, if the investor bothered to do the due diligence...You say that the US govt. FORCED the banks to lend money as mortgages to borrowers that did not fulfill good practice criteria.
Why ?
If the banks knew these loans might well prove toxic why didn't they request the govt.to provide security against that risk ?
If the mortgages were bundled into risk profile CDO's why were they not easy to recognise ?
Indeed many investors wanted sub-prime included as this increased the yield payable on the notes, as they were of the view that they were protected from large numbers of defaults by the subordination in the structure.
avinalarf said:
Surely if the highest risk CDO's were a very small percentage of the total it would have been possible to isolate them ?
1. Who said they were a small part of the total?2. How would you 'isolate them'?
3. Many investors had highly levered exposures.
avinalrf said:
So why did the financial institutions treat all those CDO's as toxic and the market in them totally evaporate ?
1. Small numbers of defaults caused collateral calls on highly leveraged investors which led to fire sale of assets regardless of underlying values.2. Banks did not know the exposures other banks had to these risks and hence they were reluctant to lend to each other, drying up market liquidity.
avinalarf said:
You say that no laws were broken,so be it,but that doesn't mean that their was not sharp and reckless practice.
Why was it 'sharp' practice? Banks packaged up risk to sell to other investors, allowing them to originate more loans, providing liquidity to the wider economy. Isn't that what banks are supposed to do?Reckless?
As you have observed, 99.9% of European AAA RMBS securities paid all coupons and maturity payments expected. Banks invested in the RMBS issues of other lenders (and other jurisdictions) to increase diversification and thereby reduce risk.
avinalarf said:
It is nigh impossible,in a Capitalist society that is market driven,to impose tight laws for every circumstance.
That leaves it to the financial institutions to behave in a responsible fashion,which in this case they did not.
Which bit was irresponsible? It's only really with the benefit of hindsight that the severity of the liquidity issues can be understood. The banks were holding high quality AAA assets on their balance sheet.That leaves it to the financial institutions to behave in a responsible fashion,which in this case they did not.
cheddar said:
Would you lot like to start your own thread so we can keep this one on the OP's £60 discrepancy topic please
What's left to discuss?1. He has no legal obligation to return the money
2. Morally he might choose to return it (particularly if he thinks the cashier might get in trouble and if he is sure the £60 is in his possession).
3. Most people think he should keep it and keep quiet!
drainbrain said:
So how do you explain this letter from a major highstreet bank I'm sitting looking at headed "Putting Things Right" ?
It seems to be saying that 'since the crisis' measures taken by banks were "unsatisfactory, unacceptable" and, requiring the oversight of an Independent Third Party to - "add a robust, transparent and independent step"? to investigations into self-accepted and acknowledged calumny??
Your theories are nice, but back in reality I asked the nasty ex-bank guy who deals with matters like this for a fee from its victims "WHY did they do the stuff they did to perfectly good and profitable customers who never missed a step of their agreements"?
The answer: One word. "Greed". And that's POST crisis. And nothing - NOTHING - to do with regulatory requirement.
You keep trying to make the leap from the specific to the general. One UK bank had a department that was actively trying to foreclose on its customers. That doesn't mean all UK banks are doing the same, nor that banks generally were doing the same.It seems to be saying that 'since the crisis' measures taken by banks were "unsatisfactory, unacceptable" and, requiring the oversight of an Independent Third Party to - "add a robust, transparent and independent step"? to investigations into self-accepted and acknowledged calumny??
Your theories are nice, but back in reality I asked the nasty ex-bank guy who deals with matters like this for a fee from its victims "WHY did they do the stuff they did to perfectly good and profitable customers who never missed a step of their agreements"?
The answer: One word. "Greed". And that's POST crisis. And nothing - NOTHING - to do with regulatory requirement.
I don't know which bank sent you that letter, I don't know if it's the one I'm describing above. Banks are trying to rebuild their reputations. It makes no difference whether a specific institution's reputation has been tarnished fairly or unfairly; it is tarnished. Some banks have decided that the best option is to make a show off apologising for stuff they didn't do. It is a fundamentally dishonest and patronising approach, but you can understand the motivation; they just want to move on.
UK high street banking has managed to rip off an awful lot of its customers by selling them crap. The key failure here was to sell individual customers products that weren't appropriate to them. That is the predictable outcome of making the final point of contact with the customer a fairly low-skilled salesman who is rewarded on commission. The salesman wants to sell. The majority want to believe they're selling their customers something useful. What ought to be rigorous and thoughtful assessments of appropriateness become formulaic box-ticking exercises (the butt of the "computer says No" joke). And the self-delusion goes back up the management tree. No one wants to believe that the source of the strong sales figures is actually the result of mis-selling. No one would set out to do this on purpose because, as has been demonstrated, you'll get caught and the consequences well be devastating. The root of the problem was incompetence; incompetently structuring your bank so mis-selling was the likely outcome, incompetence in not properly auditing customer sales.
What does that tell us about systemic risk? Nothing. What does it tell us about mis-pricing credit risk? Nothing. What does it tell us about regulators not understanding risk measures like VaR? Nothing. Etc, etc, etc
I tend to think that a lot of the motivation to hugely oversimplify and attribute the failures to malice by shouting "it's all about greed" is because it is less scary than looking reality in the face and seeing the world for the uncontrolled, unpredictable place that it is. It's more comfortable to think that things happen for a reason, that someone somewhere did it deliberately, even if maliciously, rather than recognise that incompetence is rife and that the future is exceedingly hard to predict. Conspiracy theorists make the exact same mistake, and indeed much of the "explanation" on this thread is just conspiracy theory.
Misunderstanding and oversimplifying the root causes of the banking crisis cripples us from actually improving the banking system. You can't fix something unless you understand what is actually wrong with it.
Edited by ATG on Tuesday 21st February 06:33
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