FSA report on the RBS collapse...
Discussion
since none has mentioned it I will bring this up that the FSA has finally come up and said that the Labour government are a bit more than partially responsible for what almost led to the collapse of RBS through the poor regulations that they put in place.
http://www.guardian.co.uk/business/2011/dec/12/lab...
http://www.dailymail.co.uk/debate/article-2073337/...
http://www.dailymail.co.uk/news/article-2073368/Fr...
http://www.thisislondon.co.uk/standard/article-240...
Winky, Blair and Balls are all mentioned as being the people that allowed this and urging the lax regulation.
Well its a total surprise to me I don't know about you.
CMD must think its his birthday... can any more happen to Labour?
http://www.guardian.co.uk/business/2011/dec/12/lab...
http://www.dailymail.co.uk/debate/article-2073337/...
http://www.dailymail.co.uk/news/article-2073368/Fr...
http://www.thisislondon.co.uk/standard/article-240...
Winky, Blair and Balls are all mentioned as being the people that allowed this and urging the lax regulation.
Well its a total surprise to me I don't know about you.
CMD must think its his birthday... can any more happen to Labour?
I am amazed it's a surprise to you.
Of course, the gradual reduction in regulation of the financial sector had been an ongoing work-in-progress by the UK government from about 1980.
In order to get elected in 1997, Labour had to show that they would not stop this trend and, indeed, made sure it continued.
Of course, the gradual reduction in regulation of the financial sector had been an ongoing work-in-progress by the UK government from about 1980.
In order to get elected in 1997, Labour had to show that they would not stop this trend and, indeed, made sure it continued.
Now, I should start by declaring that I cannot stand the Blair/Brown era of Labour, I hate them with every part of my body.
But, it does seem a little like the report says that it's Labour's fault because they didn't say the banks couldn't? I certainly don't claim to have a good understand of the problems and the causes, but from a laman's point of view that's what I read?
Has no one said "hang on a minute - but the banks actually did it, not Labour" ?
(Or have I understood this wrong?)
But, it does seem a little like the report says that it's Labour's fault because they didn't say the banks couldn't? I certainly don't claim to have a good understand of the problems and the causes, but from a laman's point of view that's what I read?
Has no one said "hang on a minute - but the banks actually did it, not Labour" ?
(Or have I understood this wrong?)
So bankers must get paid millions as they are highly skilled responsable professionals who must be trusted to do the best for the banks and if we didn't pay them millions the city would collapse.
Cameron is a hero because he is taking us out of the strict EU controls of the city
However when it went wrong it was because the highly paid skilled responsable professionals weren't controlled by the stupid labour politcians.
So its all poor peoples fault for breathing and voting labour
Its perfectly clear now
Kill all the poor people
Cameron is a hero because he is taking us out of the strict EU controls of the city
However when it went wrong it was because the highly paid skilled responsable professionals weren't controlled by the stupid labour politcians.
So its all poor peoples fault for breathing and voting labour
Its perfectly clear now
Kill all the poor people
Regulation is absolutely essential in the financial sector. It is the only thing that protects our savings and ultimately the ability of a country to do any kind of business.
There are two known facts from the dawn of time:
1 relax or remove too much regulation and you create toxicity which will lead to a collapse. Banks exist to make money. Regulation exists to stop them carrying out toxic activity for quick bucks.
2 relax or remove regulation and you create a boom which will get you votes and increase your tax receipts.
The massive deregulation under Labour was done to buy them votes and to give them the money to make everyone rich.
The banks are analogous to the scorpion and frog scenario. Every human has always known this. Especially Gordon.
You could look at pharmaceuticals as well as an example. Would they be more safe or more dangerous if they were not controlled by regulation? But would they make more or less money?
There are two known facts from the dawn of time:
1 relax or remove too much regulation and you create toxicity which will lead to a collapse. Banks exist to make money. Regulation exists to stop them carrying out toxic activity for quick bucks.
2 relax or remove regulation and you create a boom which will get you votes and increase your tax receipts.
The massive deregulation under Labour was done to buy them votes and to give them the money to make everyone rich.
The banks are analogous to the scorpion and frog scenario. Every human has always known this. Especially Gordon.
You could look at pharmaceuticals as well as an example. Would they be more safe or more dangerous if they were not controlled by regulation? But would they make more or less money?
Edited by DonkeyApple on Tuesday 13th December 10:32
Oakey said:
My understanding is Labour encouraged them to do it to be 'more competitive'?
But you could also argue the City encouraged the broader politic to regulate lightly and continued this pressure upon Labour as the Conservatives lost their sparkle in the mid 90s. Labour had to appease the City to become electable. If they hadn't I have every conidence whoever was in power would have regulated similarly.scenario8 said:
But you could also argue the City encouraged the broader politic to regulate lightly and continued this pressure upon Labour as the Conservatives lost their sparkle in the mid 90s. Labour had to appease the City to become electable. If they hadn't I have every conidence whoever was in power would have regulated similarly.
Very true but we expect parents to control their children not be controlled by them. Labour would have won that election without appeasing the City. They did it because deregulation was an overnight way to create personal debt and make everyone think they were wealthy and so keep electing them.
DonkeyApple said:
scenario8 said:
But you could also argue the City encouraged the broader politic to regulate lightly and continued this pressure upon Labour as the Conservatives lost their sparkle in the mid 90s. Labour had to appease the City to become electable. If they hadn't I have every conidence whoever was in power would have regulated similarly.
Very true but we expect parents to control their children not be controlled by them. Labour would have won that election without appeasing the City. They did it because deregulation was an overnight way to create personal debt and make everyone think they were wealthy and so keep electing them.
<nausiating brown nose>
I frequently read your posts with interest and respect your insider knowledge.
<nausiating brown nose>
What I don't fully understand is how the world of finance managed to collectively lose the plot. Why didn't the brilliant minds display a greater level of self control?
Oakey said:
My understanding is Labour encouraged them to do it to be 'more competitive'?
Correct... It was Winky and Balls that took the regulation away from the Bank of England with its vast knowledge of global marketing and handed it to the FSA which essentially is Consumer facing organisation with only a fraction of the experience, to regulate RBS they had 4 or 5 people on the books and this is a top 5 bank in the world.So bank of England became an ATM or lender of last resort and Winky and Co didn't comprehend that as the UK ATM it needed to be involved in regulation and as such it was a by stander.
But how the FSA could miss the ABN Amro issue when Northern Rock had just gone and the US was in meltdown and ABN Amro was loaded with US toxic assets is beyond me.
Oh and Fred the shred gets a mention... only cause everyone thinks he's an arse even though his reputation before this was as one of the best in the business and as such his word was god... maybe people should query things next time and not just go off someones rep.
scenario8 said:
What I don't fully understand is how the world of finance managed to collectively lose the plot. Why didn't the brilliant minds display a greater level of self control?
They hadn't done in the past. The laws that were relaxed had been put in place after the 1929 Wall Street Crash to protect the naive public's savings from casino investing. The banks just did exactly what you would have expected them to do. Add to that Clinton forcing NINJA mortgages on US banks and it was all too predictable.Du1point8 said:
Oakey said:
My understanding is Labour encouraged them to do it to be 'more competitive'?
Good stuff Poor analogy alert. I frequently exceed the speed limit. Probably every journey. But only by a bit. I know that if I drive at 60 in a 30 I am more likely to have a prang. It isn't the regulated speed limit that keeps my speeds down.
scenario8 said:
DonkeyApple said:
scenario8 said:
But you could also argue the City encouraged the broader politic to regulate lightly and continued this pressure upon Labour as the Conservatives lost their sparkle in the mid 90s. Labour had to appease the City to become electable. If they hadn't I have every conidence whoever was in power would have regulated similarly.
Very true but we expect parents to control their children not be controlled by them. Labour would have won that election without appeasing the City. They did it because deregulation was an overnight way to create personal debt and make everyone think they were wealthy and so keep electing them.
<nausiating brown nose>
I frequently read your posts with interest and respect your insider knowledge.
<nausiating brown nose>
What I don't fully understand is how the world of finance managed to collectively lose the plot. Why didn't the brilliant minds display a greater level of self control?
An individual could be a hi IQ genius able to think and act logically and with humanity to others. Put him in a room with 1000 identical people and logical thought is replaced by crowd mentality.
Crowds tend to operate at the IQ of the lowest member, never the highest.
It's how peaceful protests turn violent etc.
You can also look at cul-de-sacs. As soon as one family lets their property go, someone else who is on the edge will see that property as an example to justify them not going the extra mile to keep theirs in line with the others, and this effect grows until almost all properties have declined and those last few remaining households who still make the effort will probably leave.
With finance it is exactly the same sort of effect, one firm pushes the regulatory boundries to release a new product which makes them more money than the others and so the others, to keep up, copy and then one of them will push that boundry a little more. If there is nothing on the other side of that boundry to push back and say 'no' then it keeps going and going. And trust me the FSA did nothing, absolutely nothing, for 10 years until the crash.
Financial institutions exist to make money like any corporation. Drugs would be much cheaper to make and sell if there was no regulation to ensure that these drugs were made safely and were as safe as they could be. Same with food. Health and Safety is a good example, without regulation many more people would die in the work place.
Regulation can go too far and strangle an industry and we know that an industry will always, always claim there is too much regulation but we also know that too little regulation and that industry will go into a massive boom that will ultimately explode and collapse completely.
If you look at the financial sector, not all institutions lost the plot. When you look back you can see that some self regulated reasonably well but were pilloried through the last decade for being conservative and not making the returns that they could. While others, the weaker player took full advantage of the near zero regulation to take massive short cuts to accelerate their growth.
If you look at Barclay's bid to buy ABN, their plan was to buy it but keep it as a separate entity so that if there were problems they could dispose of it. RBS wanted to be a big player and dived in to poach the deal. They worked on the assumption that Barclays, who they felt inferior to, would have carried out brilliant due diligence and only be bidding if they thought it was perfect so carried out no real due diligence themselves and when they massively overpaid for ABN they then made the catastrophic error of bringing it into their group.
It was all like a gold rush with more and more people taking more and more risks with less and less understanding. The smart people either fell in line or were drowned out.
scenario8 said:
Du1point8 said:
Oakey said:
My understanding is Labour encouraged them to do it to be 'more competitive'?
Good stuff Poor analogy alert. I frequently exceed the speed limit. Probably every journey. But only by a bit. I know that if I drive at 60 in a 30 I am more likely to have a prang. It isn't the regulated speed limit that keeps my speeds down.
so now do this thousands of times and turn it into a huge structured mess and then sell it as a AAA rated product. This product is then checked by FSA/regulatory committee (I believe) and it was left with the AAA rating, so in essence this is a very very low risk, in fact pretty much the same risk as putting money in your back and gaining small amount of interest.
Once the s
t hit the fan and the analysts/financial gurus finally got through the layers of these products it was found that they were mostly toxic st.This structured product was created in the good old US as a way to make a quick buck and sold over in Europe.
scenario8 said:
Du1point8 said:
Oakey said:
My understanding is Labour encouraged them to do it to be 'more competitive'?
Good stuff Poor analogy alert. I frequently exceed the speed limit. Probably every journey. But only by a bit. I know that if I drive at 60 in a 30 I am more likely to have a prang. It isn't the regulated speed limit that keeps my speeds down.
Another frog analogy is the one about dropping it into hot water or putting it in cold and slowly raising the temp.
But Winky steadily removed key regulations and safety devices that were in place to stop over heating or to give release as they were spending far more than the country was earning so needed more and more money. The only industry which would react almost overnight to changes and start producing more moeny was the City which is why he became fixated with ever more and more deregulation of that industry. He needed house prices to keep going up so people could keep borrowing and spending and the net worth of the UK would increase so he could borrow more against our property assets.
The property collapse in the US effectively ended his ever increasing debt spiral based on ever inflated asset values. This is why he frothed at and blamed the Americans for ending his dream. He must have been s
tting himself for years that something was going to happen to bring reality back to his synthetic market.scenario8 said:
But the City employs tens of thousands of analysts - clever people paid lots and lots of money - the media employ lots of financial journalists, also clever bods. How did the lot of them collectively allow the situation to get out of hand.
Poor analogy alert. I frequently exceed the speed limit. Probably every journey. But only by a bit. I know that if I drive at 60 in a 30 I am more likely to have a prang. It isn't the regulated speed limit that keeps my speeds down.
Because they all looked at their own properties and saw the value rocketing and collectively creamed their pants?Poor analogy alert. I frequently exceed the speed limit. Probably every journey. But only by a bit. I know that if I drive at 60 in a 30 I am more likely to have a prang. It isn't the regulated speed limit that keeps my speeds down.
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