Banking Regualtion.
Discussion
To all those who scorned me on the RBS thread, I say 
I've got a new friend.
"The Bank of England governor has hinted that plans to reform UK banking through regulation alone may not be enough.
Mervyn King said it was a "delusion" that tightening regulation could stop banks' most risky activities from failing and leading to huge losses.
In his starkest warning yet, he said banks may have to separate their day-to-day business from more speculative practices if they are to get state aid.
In his speech to Scottish business organisations in Edinburgh, Mr King hinted that G20 plans for tighter regulations may not be enough, because if banks knew they would be bailed out if they hit difficulties, they would continue to take risks.
"The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion," Mr King said.
Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff.
Mr King said "it was hard to see why" taxpayer support could not be limited to retail banking.
"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."
Direct or guaranteed investment in banks from the government was close to one trillion pounds, Mr King said.
"The sheer scale of support to the banking sector is breathtaking.
"Never has so much money been owed by so few to so many. And, one might add, so far with little real reform."
But he added: "It is hard to see how the existence of institutions that are 'too important to fail' is consistent with their being in the private sector.
"Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don't, distorts the allocation of resources and management of risk."
He said that those banks which continued to get public money to prop them up and aid their recovery should not be encouraged to try and earn profits to get out of government support "by resuming the very activities that got them into trouble in the first place".
http://news.bbc.co.uk/1/hi/business/8317200.stm
To those that previously disagreed with me, I say "Yah, boo, sucks to you".
I've got a new friend."The Bank of England governor has hinted that plans to reform UK banking through regulation alone may not be enough.
Mervyn King said it was a "delusion" that tightening regulation could stop banks' most risky activities from failing and leading to huge losses.
In his starkest warning yet, he said banks may have to separate their day-to-day business from more speculative practices if they are to get state aid.
In his speech to Scottish business organisations in Edinburgh, Mr King hinted that G20 plans for tighter regulations may not be enough, because if banks knew they would be bailed out if they hit difficulties, they would continue to take risks.
"The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion," Mr King said.
Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff.
Mr King said "it was hard to see why" taxpayer support could not be limited to retail banking.
"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."
Direct or guaranteed investment in banks from the government was close to one trillion pounds, Mr King said.
"The sheer scale of support to the banking sector is breathtaking.
"Never has so much money been owed by so few to so many. And, one might add, so far with little real reform."
But he added: "It is hard to see how the existence of institutions that are 'too important to fail' is consistent with their being in the private sector.
"Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don't, distorts the allocation of resources and management of risk."
He said that those banks which continued to get public money to prop them up and aid their recovery should not be encouraged to try and earn profits to get out of government support "by resuming the very activities that got them into trouble in the first place".
http://news.bbc.co.uk/1/hi/business/8317200.stm
To those that previously disagreed with me, I say "Yah, boo, sucks to you".
And on the other side of the Atlantic:
"Federal Reserve Chairman Ben Bernanke prodded Congress Friday to enact legislation overhauling the nation's financial regulatory system to prevent a repeat of the banking and credit debacles that had thrust the country into crisis.
"With the financial turmoil abating, now is the time for policymakers to take action to reduce the probability and serverity of any future crises," Bernanke said in remarks to a Fed conference in Chatham, Mass.
For its part, the Fed has been taking steps to strengthen oversight of banks, sharpen consumer protections and on Thursday unveiled a sweeping proposal to police banks' pay policies to make sure they don't encourage top executives and other employees to take reckless gambles.
But Congress needs to step in and close regulatory gaps and make other changes that only lawmakers have the power to do, Bernanke said.
At the top of the Bernanke's list: Congress must set up a mechanism -- along the lines of what the Federal Deposit Insurance Corp. does with troubled banks -- to safely wind down big financial firms whose failure could endanger the entire financial system."
http://finance.yahoo.com/news/Bernanke-urges-Congr...
"Federal Reserve Chairman Ben Bernanke prodded Congress Friday to enact legislation overhauling the nation's financial regulatory system to prevent a repeat of the banking and credit debacles that had thrust the country into crisis.
"With the financial turmoil abating, now is the time for policymakers to take action to reduce the probability and serverity of any future crises," Bernanke said in remarks to a Fed conference in Chatham, Mass.
For its part, the Fed has been taking steps to strengthen oversight of banks, sharpen consumer protections and on Thursday unveiled a sweeping proposal to police banks' pay policies to make sure they don't encourage top executives and other employees to take reckless gambles.
But Congress needs to step in and close regulatory gaps and make other changes that only lawmakers have the power to do, Bernanke said.
At the top of the Bernanke's list: Congress must set up a mechanism -- along the lines of what the Federal Deposit Insurance Corp. does with troubled banks -- to safely wind down big financial firms whose failure could endanger the entire financial system."
http://finance.yahoo.com/news/Bernanke-urges-Congr...
wooo hooo.... maybe when they investment banks move out of the UK they can pick somewhere hot and sunny like Sing or HK...
Im packing my bags already!!
This is almost as good as the US idea to cut the top 25 bankers wages to 10% of what they were for any bank that still owes money.... cue those top bankers sticking 2 fingers up and moving to the banks that are not stuck with those rules like GS...
they were warned yesterday by top bankers that it will happen and they are effectively making those banks that owe money lose their top people.
Im packing my bags already!!
This is almost as good as the US idea to cut the top 25 bankers wages to 10% of what they were for any bank that still owes money.... cue those top bankers sticking 2 fingers up and moving to the banks that are not stuck with those rules like GS...
they were warned yesterday by top bankers that it will happen and they are effectively making those banks that owe money lose their top people.
Hong Kong said:
IMHO, there is a huge geo-political issue at stake here, clearly missed by those in the US and UK.
rocksteadieeddie said:
Hong Kong said:
IMHO, there is a huge geo-political issue at stake here, clearly missed by those in the US and UK.
On Monday 1st December 2008 Durruti said:
"US - Still the key to where we all end up is this - Is the idea of the USA and the belief in the $ as the worlds reserve currency strong enough to bear the extra weight of a phenomenal amount of debt or will the Chinese and Arabs finally say enough and stop propping up a system whose time has possibly arrived?. Rumours abound that the Fed have already reached the stage of buying T bills themselves and even if they won't readily admit it, this has to show fairly quickly in terms of inflation if they are printing bucks to buy their own paper.
Whilst it's easy to fall into the near future trap and concentrate on whether this will be a recession/depression?, an 18 month or 5 year event? it is interesting to look over the horizon and ask yourself - what will the world look like in 10 years time and who will be in the economic driving seat?"
http://www.forexyard.com/en/reuters_inner.tpl?acti...
French step closer to taxing bank profits.
Fittster said:
If Investment Banks would all flee, why did the US have thriving Investment banks when it was illegal for a bank to be in both the retail and investment segments?
Damn, i missed this one. They don't need to flee - they have thriving offices based in London e.g. Lehmans where different regulations apply. Hedgies have moving to Switzerland, and there are a few corporate relocations to Hong Kong and Singapore as we speak. Keep squeezing and we'll have the agrarian economy some people on here seem to wish for.Edited by fido on Monday 26th October 13:37
fido said:
Fittster said:
If Investment Banks would all flee, why did the US have thriving Investment banks when it was illegal for a bank to be in both the retail and investment segments?
Damn, i missed this one. They don't need to flee - they have thriving offices based in London e.g. Lehmans where different regulations apply. Hedgies have moving to Switzerland, and there are a few corporate relocations to Hong Kong and Singapore as we speak. Keep squeezing and we'll have the agrarian economy some people on here seem to wish for.Edited by fido on Monday 26th October 13:37
Fittster said:
anonymous said:
[redacted]
And how long before they are also undercut? Should countries keep cutting tax and regulation on banks until they reach the bottom to attract the banking industry?At the moment Singapore and Hong Kong will be ahead, but that doesnt help the need to have a European base for this time zone.
But I assume if Paris happens to become Investment bank friendly, you will see many simply move the Investment bank to paris.
Or even more out there, what if south africa offer it, you would see SA rubbing their hands together thinking of the instant GDP it will create for them.
rocksteadieeddie said:
Osborne comes up with a belter this morning too. No cash bonuses over £2000. Was a bit stumped when they asked him what a cashier on £12,000 per year basic was going to do if her £3500 bonus this year didn't come through.
If anyone (even in lowly retail) earns as little as £12k they should make it part of her basic package. Simples. I wonder if all this posturing by Osborne is to win public affection, because he doesn't come across like someone who engages in the politics of envy (even though he is).
As for 'cutting taxes' (in the post above) - even New Labour spin machinery couldn't come up with a better euphemism - no they should have just kept them at 40% for everyone!
Edited by fido on Monday 26th October 15:45
anonymous said:
[redacted]
So if these organisations use the finest minds the city has to keep the tax bills nice and low why should the rest of society be that bothered if they decide to up and leave for a nice low tax environment. Come bonus time a few estate agents/car dealers/coke dealers might not see as much wonga as they are used to but is that really enough to make bending over backwards to be banker friendly worthwhile?fido said:
rocksteadieeddie said:
Osborne comes up with a belter this morning too. No cash bonuses over £2000. Was a bit stumped when they asked him what a cashier on £12,000 per year basic was going to do if her £3500 bonus this year didn't come through.
If anyone (even in lowly retail) earns as little as £12k they should make it part of her basic package. Simples. I wonder if all this posturing by Osborne is to win public affection, because he doesn't come across like someone who engages in the politics of envy (even though he is).
As for 'cutting taxes' (in the post above) - even New Labour spin machinery couldn't come up with a better euphemism - no they should have just kept them at 40% for everyone!
Edited by fido on Monday 26th October 15:45
Yeah, another supporter for reforming the banks 
The banking sector must be overhauled as profoundly as in the wake of the Great Depression or financiers will "game the state" over and over again, the head of the Bank of England's financial stability arm has warned.
On the eve of the G20 meeting of finance ministers in Scotland, Andy Haldane, the Bank's executive director for financial stability warned that the relationship between the state and banks represents a "doom loop" which will keep inflicting crises on the public unless arrested.
The warning, which follows Governor Mervyn King's call for investment banks to be split from their high street wings, is the most radical yet from the Bank, and comes amid growing concern that the G20 has abandoned any plans for far-reaching reforms.
http://www.telegraph.co.uk/finance/financetopics/f...
The banking sector must be overhauled as profoundly as in the wake of the Great Depression or financiers will "game the state" over and over again, the head of the Bank of England's financial stability arm has warned.
On the eve of the G20 meeting of finance ministers in Scotland, Andy Haldane, the Bank's executive director for financial stability warned that the relationship between the state and banks represents a "doom loop" which will keep inflicting crises on the public unless arrested.
The warning, which follows Governor Mervyn King's call for investment banks to be split from their high street wings, is the most radical yet from the Bank, and comes amid growing concern that the G20 has abandoned any plans for far-reaching reforms.
http://www.telegraph.co.uk/finance/financetopics/f...
Fittster said:
To all those who scorned me on the RBS thread, I say I've got a new friend.
"The Bank of England governor has hinted that plans to reform UK banking through regulation alone may not be enough.
In his speech to Scottish business organisations in Edinburgh, Mr King hinted that G20 plans for tighter regulations may not be enough, because if banks knew they would be bailed out if they hit difficulties, they would continue to take risks.
Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff.
"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."
Direct or guaranteed investment in banks from the government was close to one trillion pounds, Mr King said.
"The sheer scale of support to the banking sector is breathtaking.
"Never has so much money been owed by so few to so many. And, one might add, so far with little real reform."
To those that previously disagreed with me, I say "Yah, boo, sucks to you".
Hi Fittster, what would have happened to the UK if the banks had not been bailed out? Not a loaded question, I would like your thoughts on it. I've got a new friend."The Bank of England governor has hinted that plans to reform UK banking through regulation alone may not be enough.
In his speech to Scottish business organisations in Edinburgh, Mr King hinted that G20 plans for tighter regulations may not be enough, because if banks knew they would be bailed out if they hit difficulties, they would continue to take risks.
Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff.
"Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."
Direct or guaranteed investment in banks from the government was close to one trillion pounds, Mr King said.
"The sheer scale of support to the banking sector is breathtaking.
"Never has so much money been owed by so few to so many. And, one might add, so far with little real reform."
To those that previously disagreed with me, I say "Yah, boo, sucks to you".
anonymous said:
[redacted]
why is it likely to cost that? You want to see the mighty UK become a farming nation and a bad one at that, or do you know something else they can do to survive if the Financial sector goes?The government is already trying to sell them off and if rescuing them is going to cost that much why is there a queue as long as your arm ready to take them on?
Big issue is that if the government kept them there would be an additional cash cow for them that works, but no.... the financial wizards at downing street, "your beloved saviors and people that are sticking their nose in the financial sector" are going to sell the banks at the lowest point in the recession meaning they will get the least amount of money, just like the gold farce meaning we have no money for a rainy day.... Thank Winky Mcf
knut.... and the worse thing was the last time all the reckless bank officials told him not to do it as it was at the lowest point in a decade and was due to rise, so Winky does what winky does and says he has been advised to sell it... at 1/4 of the price it is worth.What you dont realise is that if the government hadnt stuck their nose in in the first place then the banks wouldnt have been pressured into (forced) to give mortgages to people who couldnt afford them (government classed it as the british right to own a home) then it all falls through and the government walk away trying to blame the retail banks for lending recklessly (even though it was the government itself that told them too) and then blamed the Investment banks too just for good measure.... their spindoctors then made damn sure the media didnt mention this and brain washed the rest of the population who are just bloody sheep (you).
Moral of the story.... if the government hadnt pushed them then maybe they wouldnt have learned to the losers who couldnt afford it and then we wouldnt be in this mess.
But you know what... the media and sheep (you) bleat on about the bailing out of the banks.... but here is the big but.... they are actually going to pay it back unlike all the public sector s
t like the public pensions that cost more than double the bail out a year.As for what have the banks given to the UK.... try about £1 Trillion in the last decade.
Your go....
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