Banking

Tuesday

Mark Bathgate

The bills just keep coming in

Two years after Northern Rock became the first bank failure of this crisis, another £30 billion of taxpayers’ money needs to be thrown at the banking system. Behind all the noise about improving competition and the European Commission lies one core fact: the UK banks have lost an astonishing sum of money. The above chart shows bank losses as a percentage share of GDP, and illustrates the scale of the crisis that has overwhelmed the banking system and the taxpayer. The IMF estimates that losses could be as high as 25% of UK GDP.   UK banks went on an orgy of lending around the world, becoming the biggest source

David Blackburn

Next step for banks provides further vindication of Osborne

Alistair Darling has unveiled the initial phase of his plan to get the majority state owned banks back into private ownership. RBS and Lloyds will dispose of more than 918 retail branches across the country over the next four years and will receive up to £40bn of taxpayer funds to strengthen their capital bases. In exchange for this injection, both banks have deferred cash bonuses for 2009. Also, Lloyds will not join the government’s asset protection scheme by securing £13.5bn privately through a rights issue. There is an argument that the government should have gone further and demanded the complete separation of retail and investment arms, followed by additional demergers,

Saturday

Fraser Nelson

Brown’s double hit

What is the true price of Gordon Brown’s economic incompetence and inept bank regulation? The soaring national debt is one. And if you own a mortgage, you’ll find that you’re paying another. The gulf between the Bank of England base rate and the average mortgage rate is now at a huge high – as banks rip off their customers, trying to fill the hole in their balance sheets. This is an under-discussed topic. The “action we have taken” (a phrase Brown uses to try to lay claim to the Bank of England’s base rate reduction) would have a far greater effect on the economy if the UK banking system was

Monday

David Blackburn

Brown’s new dividing line ignores that banks are our route to salvation

Gordon Brown and Alistair Darling will launch their umpteenth fight back today by talking tough on banks and bonuses. They hope to prove the Conservatives are interested solely in “helping their rich friends”. The Times has the details: ‘The Chancellor will tell the party conference in Brighton that legislation to be introduced in the next few weeks will scrap automatic year-after-year bonuses and stop executives getting payouts unless they can prove they are deserved. Bonuses will be deferred over a period so that they can be clawed back if they are not warranted by long-term performance.’ This is not a dividing line. The Conservatives intend to curb short term-bonus culture,

Wednesday

James Forsyth

A mutual decision?

There is an interesting little story tucked away in today’s Daily Mirror, the government might only sell off Northern Rock and Bradford and Bingley on condition that they are turned into mutually-owned societies. Jason Beattie reports that the idea of turning them back into building societies is being backed by John McFall, the chairman of the Treasury Select Committee, and 29 other Co-Operative party Labour MPs. I suspect that if Northern Rock and Bradford and Bingley are de-nationalised this side of the election, something that I suspect Brown would like to do, the price will be the key determinant. But, politically, I can see the appeal of insisting that they

Sunday

Alex Massie

Barclays vs RBS: A Tale of Luck and Greed

At the end of the Peter Oborne column James linked to yesterday, Peter writes: I believe that one genuine hero has emerged from the collapse of the British banking system. He is John Varley, the Barclays chief executive who this week proudly announced that his bank would not be taking government money to stay afloat. I admire Varley because he has fought hard to keep one of the greatest names in British banking for more than 300 years independent and out of the hands of the State. It is a hard fight and, who knows, he may yet fail. But at least Varley is doing his best. Fair enough. But

Thursday

Alex Massie

SNP to World: Help!

How would the SNP have delat with the banking crisis? The FT’s Jim Pickard points out that “This is a valid question. The rescue of the Scottish banks has cost British taxpayers an estimated £2,000 per household. If Scotland was independent, the figure could have been closer to £13,000. How would it have coped?“ Mike Russell, the minister for the Constitution, External Affairs and Culture, replied: “It would have been slightly different, it would have probably been done in co-operation with other countries…we would have done it in partnership with everyone involved.” Now perhaps the ECB might have helped and perhaps the Nationalists could have rustled up some cash from

Thursday

Martin Bright

The RBS Bailout

A friend has just pointed out this extraordinary quote from The Times article on Fred Goodwin (I have stripped him of his knighthood as the government should). “The handout means that RBS will have received more than £45 billion in public funds, equivalent to a penny on income taxes for more than a decade” I had to read this several times and then kick myself, rub my eyes and then kick myself again. Can we please ensure that Fred Goodwin walks away with no pension as a starting point?

Tuesday

Martin Bright

Peter Mandelson’s Funny Bone

I’m still recovering from Lord Mandelson’s deeply peculiar behaviour during his interview with Nick Robinson on the Ten O’Clock News. He was talking perfectly calmly (too calmly) about the row over his plans to sell of 30 per cent of the Post Office. Nick Robinson made the perfectly valid and uncontroverisal point that it may seem odd to people that the government is planning to part-privatise a public service while nationalising the banks. For Mandelson this was a real side-splitter. I thought he was going to fall off his chair. Sorry to get all sanctimonious about this. But did anyone else find this funny. Mandelson was arguing that the “taxpayer” could not

Monday

Martin Bright

Can The Government Dig Itself Out ? (2)

From the response to the last post on this subject I get the impression that people around here don’t much care if the government can did itself out or not. Some readers of The Bright Stuff have asked how I can justify wanting Labour to win the next election? But more of that later. First I want to examine the horror of the situation a little. I have finally read the Independent on Sunday’s interview with HBOS whistleblower Paul Moore. Jaw-dropping or what! It’s always wrong to leave the Sindy till last in the weekend reading pile because so often it punches above its weight. It would be one of the