If You Work for a Bank Nick Clegg Wants to Wring Your Neck

United Kingdom's Deputy Prime Minster and Lord...
Image via Wikipedia

If You’re a Banker, This Man Wants to Wring Your Neck

Nick Clegg has been digging himself ever deeper into the hole in which he finds himself.

He has now given an interview to BBC Radio Sheffield:

I am like anybody else: you want to wring the neck of these wretched people who behaved so irresponsibly and then we are now having to bail them out.

Apart from being utter nonsense (the causes of the crisis cannot simply be blamed on the banks), this is really dangerous talk. Whenever a politician starts to sneer at a class of people, and tries to blame them for all the country’s woes, you can be sure they’ve lost the plot.

Setting our people at each other’s throats is not the answer. Bankers are no worse than the rest of us. They enjoyed Brown’s boom as much as we all did.

They are now being vilified and made scapegoats for the inevitable morning after the party, by a small-minded politician who clearly has no real ideas to offer.

For the record, we didn’t have to bail out “the banks”. It was the Labour government’s decision to do so. They nationalised three banks in Britain – Northern Rock, Royal Bank of Scotland and partially Lloyds TSB (or more accurately HBOS, since Lloyds merger with HBOS, encouraged by the Labour government, is what did for Lloyds TSB).

It is blindingly obvious to all but the most blinkered commentator that Northern Rock could have been allowed to fail – while protecting the depositors, of course. It would most likely have been bought by a competitor, possibly by Virgin, who were interested at the time. The government later followed a more sensible course with Bradford and Bingley.

And what about the big two supposedly bust banks – RBS and Lloyds? Did we really need to bail out their shareholders and bondholders as we did? Remember, bailing out the banks is not the same thing as bailing out depositors.

So what was the alternative? Well, RBS could have gone into receivership. The Bank of England would have provided the liquidity to protect depositors and enable the bank to continue running while the receivers looked for a buyer for the business. In receivership, the assets could have been disposed of in an orderly way and the bank broken up and sold off. Yes, the bank’s lenders would have lost a proportion of their money. But that’s a risk you take when you lend to a company.

As it is, those lenders risks and potential losses have been transferred to taxpayers. Note the irony of a government that, when it nationalised RBS, proclaimed that it would eventually make a profit by selling it.

Gordon Brown tried to have it both ways – arguing that RBS was bust, but it was a great investment for taxpayers and he could sell it at a profit.

Regardless of all that, what of the more sensibly run banks like HSBC, which is very much solvent and thriving? Was the crunch their fault too? Was the crunch the fault of the teller behind the counter of your local Barclays?

According to Nick Clegg, it was. He wants to wring all their necks. I guess he would deny that. “Of course,” he would say, “I wouldn’t wring that teller’s neck, just the Big Bad Bankers whose fault everything is.”

But he didn’t distinguish, did he? If you work for a bank, don’t forget. We all know you work for Britain’s most successful and crucial industry, and have a right to be as much a valued part of our country as anyone else. But the Liberal Democrats want to wring all of your necks. Remember that in May.

Enhanced by Zemanta

How Much Has Gordon Brown Learned?

It All Looks a Bit Complicated

Today is a red letter day.

Gordon Brown has admitted to not one, but two serious mistakes.

First, he admitted that during his boom, he should have been regulating the banks more.

All the complaints I was getting from people was, ‘Look you’re regulating them too much’. And actually the truth is that globally and nationally we should have been regulating them more.

He said:

I’ve learned from that.

And second, he admitted that his decision to scrap the 10p starting rate of income tax was a mistake.

But don’t worry. He said about that too:

I’ve learned a lot from that, I learn all the time.

Well, it’s great that Mr Brown is such a keen learner.

Of course, people always tell the pollsters they would like politicians to admit their mistakes. And they are right. Politicians should not be afraid to admit it when they make a boo-boo.

But these weren’t just little mistakes. These were stonking great disastrous mistakes, especially the failure to regulate the banks properly. And these from the “Iron Chancellor”, the man who at the time was supposedly bestriding British politics like a Colossus.

Consider especially that the regulatory failures were a key cause of the whole credit crunch and subsequent recession. When Mr Brown admits he failed to regulate properly, he is admitting for the first time that his own errors were partly responsible for the economic crisis that has befallen our country.

Consider also that at the time that Mr Brown was setting up that regulatory system, the Tories opposed it. They wanted banking regulation left in the expert hands of the Bank of England, where it had been previously. Even now, the Tories are promising to return that responsibility to the BoE and scrap the Financial Services Authority.

But Mr Brown has refused to countenance that. He’s still committed to the Financial Services Authority.

So perhaps he hasn’t actually learnt so very much after all.

Secret Tapes Reveal Confusion in Central Office


A Cassette Tape Just Like the One that Might Have Been Used in Central Office

David Cameron has today announced plans for a new tax on banks. Sorry, not a tax, a “levy”.

I can now exclusively reveal Mr Cameron’s explanation for this move, thanks to a cunningly hidden tape recorder in Central Office. The sound quality is scratchy and it is hard to be sure who is speaking, but it sounds as if it is David Cameron who speaks first:

The nasty bankers got us into this mess, didn’t they? They really deserve to pay. We should impose a levy. We musn’t call it a tax because Tories believe in low tax. Call it a levy. The papers will love it.

[At this point the voice becomes clearer and the next paragraph is definitely Cameron...]

“In America, President Obama has said he will get taxpayers back every cent they put in. Why should it be any different here? So I can announce today that a Conservative government will introduce a new bank levy to pay back taxpayers for the support they gave and to protect them in the future. No, it won’t be popular in every part of the City. But I believe it’s fair and it’s necessary.”

[And then the quality deteriorates again and it may or may not be Cameron himself who continues...]

Barack’s really cool. Just like me. And it is fair and necessary to bash all bankers equally. The ones who managed themselves properly, like HSBC, should be hit hard along with the basket cases. We need to pay back taxpayers for the support they gave. And the banks that the taxpayers supported obviously can’t afford it, so the rich ones will have to pay. HSBC have got loads of dosh. It is only fair that rich banks like them should pay. We have a deficit to close, for goodness’ sake.

What’s that you say? Gordon Brown was responsible for the mess, not the bankers? No way. It was the bankers.

Or maybe it was Gordon.

Look, it was Gordon if we’re attacking Labour. It was the banks if we’re being populist. No, no, sorry, “taking on vested interests”. That’s better.

Look, the banks are Gordon’s mates, aren’t they? Let’s tax them till the pips squeak.

No wait, wrong metaphor. Too much like Denis Healey. That would never do. I mean, he was a Socialist, right?

As I was saying, we need to tax those vested interests.

[And then there is some more that is definitely Cameron...]

“It was only when people stood up to a despotic king that our rights first became enshrined in Magna Carta. And it was only when Parliament stood up to planters, merchants and ship owners that the slave trade was abolished.”

[The rest is hard to make out, but might have been as follows...]

Those nasty bankers are just like those other ne’er do wells – farmers, merchants, ship owners. Scum of the earth. They should be made to pay.

Look, we just need to keep on reminding everyone that the recession is Gordon’s fault. Nothing to do with the bankers.

After we’ve won, well, it’s a great excuse to impose a new tax after all. Geoffrey Howe did it when he was Chancellor under Maggie, didn’t he? A windfall tax on banks.

What’s that at the back? The banks were making huge profits then and they’re struggling now?

Ah well, that’s all Gordon’s fault, after all. Nothing to do with me, mate.

[The next words are definitely not Cameron - they sound like an ordinary Tory activist who was unaccountably present...]

Sorry, David, pardon me, I thought

LABOUR = HIGHER TAXES
TORIES = LOWER TAXES?

[The reply sounds like vintage Cameron...]

Not under me. Tax is cool. We need to mend Britain’s broken society. That’ll cost money. Lots of it. The bankers can pay. Gordon’s trouble is he’s too reluctant to tax them. All this bulls**t about international agreement. Let’s just tax them hard right away.

It’s not really unfair anyway. It’s not just the banks. They’re only the first. Everyone else’s pips will be squeaking as well, with me as PM. And the beauty of it is, I can blame it all on Gordon.

Must remember to send him a condolence card after I’ve won. His sacrifice will not have been in vain.

Government Threatens to Tear Up Bankers’ Employment Contracts

 

The City Minister, Lord Myners (as usual with this government, an unelected member of the House of Lords) has announced a new Financial Services Bill. One of the measures will be to give powers to the Financial Services Authority to strip bankers of their bonuses if they are “excessive” and to “cancel” pay packages that appear to reward risk-taking.

Lord Myners himself is rich enough to have given £12,700 to Gordon Brown’s leadership campaign in 2007.

Of course, the government has been notorious for giving huge bonuses to top civil servants – the civil servants who are presiding over the failing and debt-ridden disaster zone that is Britain’s public sector. No matter. To the government, they are selfless paragons of virtue.

The government want us to believe, on the other hand, that bankers are all dirty bastards.

The Financial Services Authority was heavily implicated in the regulatory failures that led to the credit crunch. Its current head, Lord Turner, has even made it plain that he actually wants Britain’s financial services industries to shrink.

Lord Myners said, “We are going to make it very clear that contracts which contain bonus clauses which will add to risk or contracts which guarantee bonuses for several years are no longer acceptable and, if those contracts are written, they will be voided under law.”

So it seems they are going to vet the contracts of bankers. They are then going to void any contracts that seem, in the lofty opinion of the discredited incompetents who run the FSA, “unacceptable”.

If the government really was going ahead with these proposals, they would probably fall foul of their own Human Rights Act, so they are unlikely ever to be put into effect. The general election will probably intervene anyway to stop the proposals ever becoming law.

In any case, the public are not fooled. The main culprits for the financial crisis are the government and its agencies, including the FSA, and governments in other countries, especially the US.

The “bankers”, we should remember, are actually Britain’s most successful industry, crucial to Britain’s national interest, and they do a lot more than just banking.

The government’s attempts to make the public despise “the bankers” really won’t work. Largely because they despise Gordon Brown a lot more.

Government Considers Hitting the Banks Again

 

The government’s appetite for other people’s money seems to know no bounds.

The Telegraph reports that Cabinet ministers and senior Downing Street officials are pressing the Chancellor to impose a windfall tax on the banks’ profits.

The report notes that Sir Geoffrey Howe, then Conservative Chancellor of the Exchequer, in 1981 imposed a windfall tax on banks’ profits. But the situation was, of course, different then. The banking system then was not then just recovering from near collapse.

If the government were to impose an extra tax on banks now, that would of course further weaken them. And that in turn would reduce further their capacity or desire to lend money to businesses, which would make the recession worse.

Two of the big British banks are already in State ownership. The Telegraph report suggests that Barclays would be the main target of the new tax.

Of course the government has not forgiven Barclays for having the audacity to borrow the money the government said they needed from Middle Eastern investors, instead of from the government itself. And now they want revenge. Better still, they want to attack Barclays until they get an opportunity to take that bank, too, into public ownership.

And of course the money will be needed by Brown, so he can pour it into more Labour government waste.

At this rate, when Labour are crushed in the general election next year, the Tories won’t take over a country. They’ll be taking over a basket case.

Blame the Banks, Blame the Tories but Don’t Blame Us

 

Alistair Darling has made his speech to the Labour Conference.

After saying on Sunday that Labour had “lost the will to live”, he said today that Labour should be “proud” of the way it has handled the economic crisis.

He said the banks had shown “greed and recklessness” and “endanger[ed] the global economy and the lives of millions of people”.

Excuse me, Mr Darling, but if the banks have been reckless, they were reckless under your government. If the regulators failed to rein them in, they were your regulators, appointed under the regulatory system you yourselves set up.

He said the Tories had “failed every test” over the economy over the past two years.

Excuse me, Alistair, but the Tories have not been in government over the last two years – or even the last twelve. You have. Your government has presided over an astonishing collapse in the public finances, an almost unprecedented economic recession and the near-collapse of the banking system. The Tories can’t be blamed for that.

He thinks the banks are to blame, and the Tories are to blame, but Labour should be “proud”.

Excuse me, Alistair, but if the boom that this “reckless lending” created was unsustainable, then why did your government spend the last decade proudly telling everyone that “there would be no return to Tory boom and bust”? Now is the time for Labour to be humble, not proud.

He said that “we must keep the public finances on a sustainable path”.

Excuse me, Mr Darling, but let’s try and remember just how unsustainable is the path you are now on. This year, on your own figures, you will borrow £175 billion. That’s more than the total being spent on our schools and the NHS. The Institute for Fiscal Studies reckons that £100 billion of that is “structural” – in other words, it will still be there after the recession ends. So do tell us – when are you going to make the £100 billion in cuts needed to put “the public finances on a sustainable path”?

It isn’t as if they weren’t warned. The Conservatives, as well as many other economic commentators, have been warning of the impending disaster for years. It is not just hindsight that leads us to criticise Mr Darling and the rest of Mr Brown’s reckless and incompetent government.

Labour truly have presided over an economic disaster. It is even worse than that presided over by the last Labour government under Jim Callaghan.

But Mr Darling thinks they should be proud. The rest of us think it’s time they were out of office.

Time to Stick Up for Bankers

Recently the authorities in the UK have been falling over themselves to attack the City of London.

We had Lord Turner suggesting its profitability, already hit by the financial crisis, should be deliberately further reduced with a new tax, because apparently it has “grown beyond a socially reasonable size”. Lord Turner is Chairman of the Financial Services Authority, which has been charged by Parliament with “maintaining confidence in the banking system” and “promoting public understanding of the financial system” as well as consumer protection and reducing financial crime. Only he knows how he reconciles those comments with his statutory duties.

We had the G20 summit. The French and Germans, predictably, wanted much tougher regulation – after all, it’s in their national interest to undermine the City of London, so that Paris and Frankfurt can compete more effectively. But our own Prime Minister joined the attacks, putting his name to a letter in which the leaders of the three countries promised to work together to find ways to limit bonuses, and complained that, “The abatement of financial tensions has led some financial institutions to imagine they can return to the same modes of action prevalent before the crisis. This is not an option”.

We had the Chancellor of the Exchequer proposing mandatory five year deferrals on part of bankers’ bonuses, clawbacks on payments if long term performance declines, and bans on guaranteed bonuses.

The key people charged with regulating our financial services industry have thus been using their position to attack it.

They need to think about the purpose of financial services regulation. For the avoidance of doubt, it is not to punish naughty bankers. The purpose is to strengthen and stabilise the industry, and protect investors and customers. There is no conflict between these objectives, since investors and customers have an interest in the stability of the system.

I have no connection with the City of London. But I remember many years ago as a kid reading continually how “invisibles” had rescued our balance of payments. All through my life the City has been a tower of strength in our economy.

In 2008 financial services contributed more than £38 billion to our balance of payments. It provides more than 1 million jobs. This is one of our few truly world class industries, and a vital part of our national interest.

Excuse me, Mr Brown, Mr Darling and Lord Turner, but defending Britain’s national interest is part of your job. You should be batting for Britain, not taking pot-shots at the industries upon which our country depends.