BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Can banks cure their social leprosy?

Robert Peston | 08:58 UK time, Tuesday, 13 July 2010

If anything, the creation of the coalition government has made life even more unpleasant for Britain's banks and bankers - as Mark Hoban, the Treasury minister, made clear in his speech last night to the annual dinner of the British Bankers Association.

He confirmed that the government is actively looking at the introduction of a tax on financial activities and would examine the costs and benefits of such a tax on profits and remuneration.

And remember this tax would be in addition to the bank tax introduced in the Budget on money that banks borrow which is intended to raise £2.5bn a year.

What's more, Mr Hoban said that pressure would be kept up on bankers not to pay themselves excessive amounts for taking dangerous risks, by asking the City watchdog the FSA to examine what he called "further options" on all this.

Stephen HesterAll of which, in a way, underlines today's message in the Times [subscription required] from Stephen Hester, the chief executive of Royal Bank of Scotland, to his fellow bankers - which is that if the banks and bankers don't somehow improve their public reputation, they'll have policies foisted on them that they really don't like.

The resonant phrase he used is that "we have to earn the right to be heard".

And by the way, that right of audience hasn't exactly been bolstered by the FSA's damning critique of how banks provide mortgages: the soon-to-be put down watchdog is introducing tough new restrictions on the provision of mortgages, based on its findings that almost half of new mortgages between 2007 and March this year were provided without a bank demanding verification of a borrower's income.

Some may see the FSA's report as equally damning of consumers, in that they are characterised as systematically borrowing more than they can afford. Many consumers "count on future house price rises or uncertain life events to repay their mortgage and some have no plan at all", it says.

Which is all very embarrassing for the great British home-owner. But the implication is that banks are the equivalent of drug dealers, feeding the borrowing habit of feckless individuals - so the FSA is stepping in to "ensure all lenders get back to the basics of responsible lending".

So how can banks transform themselves from social lepers to pillars of the community? Well Mr Hester wasn't specific - perhaps because he doesn't want to give away valuable commercial secrets to his rivals or possibly because this is easier said than done.

The closest he came to a specific policy was that banks must never again lend so much to commercial property (in the last years of the boom, 74% of all business loans went to property, he said).

And then there was a reflection from Mr Hester that might have been aimed at taxpayers or possibly at ministers, which is that surely they wouldn't be so down on investment banking if they only knew how banks help "our country to finance its deficit and protect public services" through direct purchases of gilts and by "helping sovereign debt markets function efficiently".

Hmmm. This is treacherous territory for Mr Hester.

If the Chancellor, George Osborne, saw it as more than a statement of the bloomin' obvious and as a veiled threat, well he might be marginally less bothered if the review of the structure of banks that he's commissioned were to recommend that banks should be cut down to size, by separating retail and investment banking.

Update 1030: Today's mortgage reforms from the FSA may well be seen as killing off interest-only mortgages (along with self-cert mortgages), which have been capturing a rising share of all mortgages (30% of mortgages at the peak of the housing boom).

It says that banks must assess whether a borrower can afford an interest-only mortgage not on the basis of whether they can afford the interest, but on a "capital and interest basis" - and also whether the borrower can afford to pay the whole thing off over 25 years, even where the actual term is longer.

So interest-only mortgages would in future only be provided to those who could afford normal repayment mortgages: cash-strapped individuals would no longer have the option of an interest-only mortgage.

Comments

Page 1 of 2

  • Comment number 1.

    It seems inevitable that retail and investment will be seperated. It is the only safe way forward. The bankers do not want this but they had their chance and blew it.

  • Comment number 2.

    I don't think they can rehabilitate themselves to their previous omnipotent status - good.

    We need carefully thought out mechanisms to regulate these people to prevent them ever again causing so much harm. We also need to ensure they pay a reasonable amount of their huge earnings in contribution to society, rather than their current parasitic status.

    Regulation and contribution. This is no different than the rest of us - either small businesses or private individuals.

  • Comment number 3.

    The 'split' is a spurious distinction created by people who don't understand modern finance or technology. Norther Rock for example was a retail bank. The Dunfermline Building Society a mutual! It also fails to understnd how banking works. If a bank is funded solely by deposits - i.e. money that customers can withdraw at any time - then its ability to fund any lending, let alone long-term mortgages or medium-term business finance is constrained by the risk that it has no cash to fund loans. There is also an interest rate difference between the two. Plus, what does retail mean? is it allowing cross Europe direct debiting? is it lending to 25 year infrastructure projects? It is these reasons that forced the US Government to create the mortgage agencies Fannie Mae and Freddie Mac to provide long term mortgagae financing - which led greatly to the explosion of lower quality mortgages. Plus, I don't remember anyone advocating any of this when banks were paying huge taxes to fund public spending....

  • Comment number 4.

    Banks can only cure themselves by being honest.

    Banks are dishonest, and propagandise for their own benefit whilst claiming that it is for the general good.

    Here is a short list:

    Banks keep (and are allowed to keep, by us) what amounts to 'fake' books of accounts - they must stop doing this. All of the special financial vehicles must be consolidated into their accounts. All financial contracts that may give rise to a future profit or loss to the banks must be consolidated. They must become financially honest. (See also Basel 3 and 'marking to market' asset and liability valuations.)

    They must cease propagandising against changes that will bring an increase in economic efficiency to the general public but may hit their profits. I am thinking here of the campaign against the adoption of the Euro. Banks must campaign for financial efficiency, not for themselves but their customers. Banks are a highly privileged monopoly they must take this on-board - if they don't all of these matters should be forced upon them by the people.

    They must cease employing former civil servants or ex-govenrment ministers or politicians.

    They must have genuine business people, who make things, on their boards.

    All bank financial directors MUST be professionally qualified accountants - never again should we see traders promoted to financial director - (I'll name the bank if you want!).

    Also

    They should voluntarily break themselves up into at least ten independent banks (for the UK big 4)! (They could do this by preparing proper accounts (see above) dividing these up and creating separated companies and for each share held in the present banks issue one in each of the new ten banks.) And by the way these new banks must not be legally permitted to amalgamate!

    That's about it for this morning!

  • Comment number 5.

    Regulation involves defining activities and missing others out, what the regulated do then is ask their compliance people if it is possible to make pots of money from any unregulated activities.

    Mind the gap.

  • Comment number 6.

    Shouldn't Derivatives be sorted out while we are at it? They seem mor dangerous than beneficial

  • Comment number 7.

    The banks have never been that popular. I'm old enough to recall how brutally they recouped their 3rd World losses in the 80s and 90s by milking their captive domestic customers to the point of usery! Even if the present banks were transformed into moral, sober institutions tomorrow, it would take a generation for their reputations to be restored, such is the level of public antipathy.

    The sheer arrogance of how they arrived at the fiasco of 2008 is enough to stagger an ordinary person and, don't doubt it for a second, the same risk taking and bonus-pumping behaviour is still in full swing. Governments around the world have done little to rein the behaviour of banks and the same guys are still playing fast and loose, but this time with sovereign debt (having already broken the private debt markets). This is of course a dangerous game because once you've indebted a government beyond its limits, the taxpayer can no longer be called upon to bail them out the next time they create an unsustainable bubble.

    The worry is that this is almost inevitable. The business model and the culture of the investment banking business requires ever more extreme behaviour and risk-taking to deliver "growth" from year to year. Inevitably, men encouraged in the belief in their "superior intelligence" and "boldness" will again invent ever more elaborate ways of persuading themselves that what they are doing is correct, safe and moral until once again the little boy in the crowd finally points out that in fact their winkies are on display...and the whole thing crashes again but this time without a taxpayer safety net.

    It is vital that this government holds its nerve and move proactively to separate investment banking from retail banking, always remembering Mervyn King's wise words. "If a bank is too big to fail, then it is simply too big!"

  • Comment number 8.

    There is little to look into Robert. Re-introduce glass-steagall act and re-introduce supertax at 95% on all pay above the PM's. Job done.

  • Comment number 9.

    Can banks cure their social leprosy?
    -------------------------

    The answer is in history but people these days don't read it.

  • Comment number 10.

    Why should they.
    Bankers can stuff their pockets and laugh at the rest of us knowing if it goes wrong we will pay.

    Make money or lose it they still win.

  • Comment number 11.

    What...? Caning the banks again?

    The banks like all businesses will seize whatever opportunity they can to expand their horizons and profits. What's wrong with a business trying to be successful?

    Once again one is bound to say that with good regulation/enforcement the crisis would have been lessened.

    And only now, the great FSA is stirring from its sloth yet again, to apply rules to mortgage lending. Crikey, it should have jumped in the moment Northern Rock went under. Lending at 125% LTV in the face of a pretty obvious housing bubble? Arranging 25-30 year loans without checking the borrowers' income (and outgoings, note: no use having x income and x+y outgoings)? Allowing people to get themselves in a situation of having no money once they've made a repayment?

    Please. Do it today, Mr FSA, once you've rubbed the sleep from your eyes.

    Many banks have proved they were perfectly in control and able to get through this crisis successfully. Let's hope the government doesn't punish them for success, keeping the money flowing through the recession.

    It seems that the government is always ready to thrash any successful organisation that makes a decent profit, drooling as it does at the prospect of raiding it for even more tax.

    As for this idiocy of breaking up retail from investment banking, the government along with many who, thanks largely to the media and politicians determined to pass the buck, have been trained to hate banks, really don't understand how the financial system works. Do people really expect yer little local "retail" bank to bail out the government when it needs money?

    You don't need to break up the banks - just good regulation and enforcement. In a fight between government and the global financial system a government can't win. Obvious.




  • Comment number 12.

    Mentioning the words bankers and leprosy in the same sentence as an insult to lepers.

    It's funny how the new coalition govt has ripped into just about every aspect of the economy (with a chain saw)...except of course the bankers in the City.

    Do not judge the snake oil politicians by their words...but ONLY by their actions....just wait and see.

    Anything short of a modern day equivalent to GLASS-STEAGALL will be a total sell out.

  • Comment number 13.

    It does not help when the Today programme gave the apologist for banks - Angela Knight an easy ride this morning.

    Banks and other key corporates will only pay attention when the governance of their empires come under statutory regulation and infringement means jail. Keeping a significant publicly owned banking player in a mixed economy will paradoxically engender greater competition. A fudge looms.

  • Comment number 14.

    There are still far too many complaints about the banks here, their honesty or otherwise, their business aims, shareholders etc.

    If people really hate banks they do not have to use their services. Plenty of other options exist for those who just want current accounts or a little bit of personal finance.

    But don't grumble about banks when you, of your own choice, submit to a 25 year mortgage through a bank - or if you can't manage your account properly and incur charges etc.

  • Comment number 15.

    It is so obvious that the banks are years behind the population in thinking they have a status in society higher than, well everyone who comes in and puts money over the counter ( through the computer these days I know)

    Then when things go wrong it is not their fault but us all for taking up their offers. There will be years of repairs and spin to bring up the reputation, let alone the fact of can they all be trusted with our cash.
    And now the start of the spin with subtle blackmail of governments.

    It will all end in a nasty way unless care is taken.

  • Comment number 16.

    "Mr Hoban said that pressure would be kept up on bankers not to pay themselves excessive amounts for taking dangerous risks"

    Who decides the risk?

    If it is based on the H&S rules of risk, we are all screwed!!!

    As for the update, we will in a couple of years time have public/govt complaining of "financial exclusion". Sorry chaps, you asked for it

  • Comment number 17.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 18.

    Re 3: Indeed if banks are broken up then the definition of what a retail bank can do has to be very precise. Most of the problem for mutuals came from the difficulty to make money on mortgages in the low interest climate so that mortgages became a low margin high volume business thus leading to more and more risky lending. There were other problems such as keeping deposit money with banks that were themselves risky and of course borrowing short term to cover long term lending. The best thing I think is for retail lenders to consider mortgage lending risky and take a bigger margin which would cushion them against bad debt and allow them to make a modest profit in a safe way.
    What is needed for the good of the economy is responsible lending to small business ie helping the company to decide if it would be wise to borrow from the companies point of view not the banks profit point of view, ie they must not force credit on companies just as they shouldnt thrust it at individuals and then when things get bad ruin the borrowers. If they worked like this then bankers would be respectable citizens

  • Comment number 19.

    Bankers have never been popular. At the moment they're very unpopular, but I expect the intensity of hatred to diminish over time. They have simply been feeding the habit of the 'great' western public for the past 15-20 years, who have been 'hooked' on inflating property prices since at least the late 1980s. When you base an entire economy on exponetial asset inflation without productivity and exporting what can you expect but trouble?

    The media reflect all this continually. Notice the howls of anguish at any fall in residential property prices. Such things are presented as an absolute outrage that must be prevented literally at any cost. I think its fair to say that the western public cares more about boosting house prices that just about anything else, including unemployment, poverty, war, homelessness, illness, etc. What a strange state of affairs?

    The fact remains that the only thing preventing a significant fall in asset prices is the policy of printing money. To pursue the addiction analogy further, 'the west' is actually now hooked on this particular drug and the withdrawal process will be horrendous.

  • Comment number 20.

    > Stephen Hester (says) that if the banks and bankers don't somehow
    > improve their public reputation, they'll have policies foisted on them
    > that they really don't like.

    Those guys! They still don't get it, huh? Can someone please tell Stephen that it's far too late to close the barn door.

    They will have our policies foisted on them, and they can like it or lump it. Frankly, Robert, we don't give a hoot about them, as long as they are impoverished and despised.

  • Comment number 21.

    Banker bashing again to deflect attention form the failings of others. Everyone was happy to take the tax on profits now they seem intent on making a virtue of banks making no profits and paying for the mistakes of us all. I worked for 38 years for a bank which did not need to be bailed out by the taxpayer, did not sell self-certified mortgages and is genesally acknowledged as one of the best run companies in the world.

    The politicians, regulators, Bank of England, etc set economic policy and are supposed to create the environment in which businesses including banks operate. As Mr cameron was fond of saying should they all not "say sorry" now and we can get back to sorting out the mess the country is in.

  • Comment number 22.

    There are two simple ideas that need to be remembered by people in business and finance - yes even by bankers.

    1) Trust takes time to build - whilst it can take only seconds to destroy, building up trust with your shareholders, your investors, the wider public TAKES TIME. So throw out the "quick-fixes" 'cos there ain't any.

    2) Once bitten, twice shy - and a lot of bank customers, shareholders and the public in general felt they got bitten.

    But dear bankers, if you're half as good as you make out you are as managers and directors, regaining the public, customer, investor and shareholder trust shouldn't be that difficult for you.

    Of course, if you've oversold your abilities and don't really have what it takes to do that, then what are you doing in your jobs?

  • Comment number 23.

    Banks took the trust built up over many many years and then began to systematically abuse that trust. In doing so they have had to be bailed out by the lender of last resort and this in turn has heaped and will continue to heap misery on decent, honest, hard working people. A cautionary tale and as we can see the real lessons have yet to be learned.

  • Comment number 24.

    @ 19. At 10:58am on 13 Jul 2010, TheNewPonzi wrote:

    > Bankers have never been popular.

    Nonsense - Capt Mainwaring may have been a pompous, overbearing, egocentric little lower middle-class twit, like most old-style bankers, but he made us laugh, at least.

    But this new breed of Sir Greedies are diabolical.

  • Comment number 25.

    Well, let's start with proper CGT on financial trading. That would help level the playing field between us and them. All thse other silly taxes are just ripe for avoidance.

    And another thing-
    My wife said last night that she was £3:65 overdrawn on her personal account. The Bank was going to charge her £31 just for telling her the news, and another £6 per day as long as she remained overdrawn (That is £200 a month. I said 'that cannot be', the banks were told they could only charge their fair costs.....? Or did we lost that one in the courts (I can't keep up with this)

    Regards,

  • Comment number 26.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 27.

    Make responsibility proportional to rewards, both of which should be long term and can be back dated by up to 10 years.

    There must be a significant national interests element in calculating bonuses/penalties and rewards/claw-backs.
    eg. GDP, national debt/credit levels, average income, crime rate, unemployment levels, currency reserves, gold reserves, inflation etc.

  • Comment number 28.

    Hester has a cheek!

    '...if they only knew how banks help "our country to finance its deficit and protect public services" through direct purchases of gilts...'

    Yes but with QE money!!!!

    '...and by "helping sovereign debt markets function efficiently".'

    Greek bonds anyone?

  • Comment number 29.

    Can banks cure their social leprosy?

    No.

  • Comment number 30.

    Implications fro the wider economy

    1. The new taxes will be passed onto those who bailed the banks out (The taxpayers),
    2. A new housing crash is in the offing.
    3. Our banks as a global force will be finished if they separate the retail and investment banking, I assume the USA gov are not doing this? This will weaken our economy.

    My prediction?

    This government will collapse in less than 2 years, david milliband to take over.

  • Comment number 31.

    26. At 11:31am on 13 Jul 2010, Jacques Cartier wrote:

    He even looks a bit like Captain Mainwaring, with his fat, jovial face and his baldness!

    Alistair Darling said he would not be "held to ransom" by the likes of Hestor, but we have a new government now, and he might try to get away with something.

    So let's hit them first, in the pocket. Better a billion quid in the taxpayers' hands than 10 billion trousered by bankers.


    If we don't get their money, we're doomed. doomed

    Better in our hands rather than in the hands of those who will be looking to raise the money to buy BP



  • Comment number 32.

    6,

    Some derivative instuments are actually beneficial, futures for example. How else could you buy a plane ticket 1 year in advance for your holiday?

    CDO's and the likes should never have been allowed.

  • Comment number 33.

    It is often said that bankers require such exorbitant amounts of money in wages and bonuses in order to secure the best people for the best jobs. This is clearly not happening. I was educated at an independent school and have seen many of my peers move into the banking industry since I left a decade ago.
    These people were very definitely NOT the best and brightest of my generation. In fact I can think of a number of people, now bankers, who were only allowed to stay at the school on the basis of their importance to the various sports teams the school ran, while less athletic individuals who were awarded the same grades at examination were rather uncerimoniously told to pack their bags as the school didn't want their poor grades impacting on their league table results.
    As far as I can see there are two reasons why these people now hold the positions they do:
    1) Nepotism
    2) Greed
    If the banks want people to place their trust in these institutions again I think they need to start attracting intelligent, humane people into their organisations rather than accepting the dross that is currently pumped into their work-force because of unmitigated self-interest.
    At the moment this would be difficult to do. The most intelligent of my peers have tended to gravitate towards the sciences, public service, media and technology industries as these are areas where they feel their work will bring them fulfillment as well as cash.
    I would suggest that only the criminally insane would find banking, as it exists at the moment, in any way fulfilling - I for one couldn't take enjoyment from stealing peoples' money.

  • Comment number 34.

    @ 21. At 11:20am on 13 Jul 2010, John Everson wrote:

    > Banker bashing again to deflect attention form the failings of others.

    You can't get off the hook that easily, John. Bankers still have to cough up.

    > I worked for 38 years for a bank which did not need to be bailed out by the
    > taxpayer, did not sell self-certified mortgages and is genesally acknowledged
    > as one of the best run companies in the world.

    We can take that with a pinch of salt, because you haven't even told
    us the name of this "best run company". Are we supposed to trust _you_?
    An ex-banker?!?

    > Everyone was happy to take the tax on profits now they seem intent on
    > making a virtue of banks making no profits and paying for the mistakes
    > of us all.

    They made those profits by overcharging people in the first place! It's
    two steps forward and three back with these overpaid, complacent,
    money-grubbing loosers.

    It's payback time, for bankers.

  • Comment number 35.

    As far as I can tell the banking system is merely a skimming exercise. They dont generate wealth, simply move money round and take a large cut in commission. Taxing them, is simply giving us back some of what they took off us in the first place. They are parasites on the backs of modern society. This time though, I think they have sowed the seeds of their own defeat, as they push countries towards sovereign crisis. However, they dont even seem to realise they are doing it.

  • Comment number 36.

    Yep - no question that we must separate retail from investment banking.

    There is no other way of ensuring that the investment bankers pay a properly risk adjusted cost of capital for their gambling operations.

    And the other matters still outstanding, Mr Osborne and Mr Cable, please are:

    - to bring all dependencies/tax havens that want to have any sort of link with UK (Channel Islands, IoM, Cayman Islands, Bermuda, Bahamas etc etc) into line with all UK financial legislation.
    - to get rid of the ridiculous tax subsidy of debt interest that each and every person in the UK pays to company shareholders.
    - to levy a minute transaction tax on all financial dealings to snuff out the ultra high frequency trading and the like.
    - to force all financial companies to disclose much higher levels of account information than ordinary companies

    In short, we want more openness and transparency from financial institutions (.... and, yes, less complexity), where it's easier for Joe Average (.... let alone highly qualified equity analysts!) to see and understand what they do, and we want a world where it's not just the rich people that are able to take advantage of low tax legislation loopholes.

    P.S. And while they're about it - why on earth is there an Employee's National Insurance Upper Earnings Limit?! - which is clearly a regressive element of the standard tax system.

  • Comment number 37.

    Catch 22 and then some eh? We need banks for the economy, but only if they behave? We tax them so they go elsewhere? We regulate them so they go elsewhere? We limit what services they offer so we go elsewhere? Hmmm. Tricky. Best we forget retribution as an excuse to raise tax revenue and look to the bigger global picture.
    We have not a chance in hell of beating a path to manufacturing prosperity. Not unless of course we accept living standards on a par with 3rd world norms. Not going to happen. So it’s the service sector or the work house.
    I say that as our capitalistic model is going to end in total global economic collapse in say 10 or 20 years, then we should all decide that no mater what, we should all get our hands on the crank and get it while we can and store it somewhere safe, and I'm not talking worthless government paper tokens. We need vast storehouses of ore, minerals, gas, oil, etc. If we act now, then we will ensure our future at the 'Top Table' If we don’t, then we will need to get used to living off the crumbs. The USA is already way ahead of us, but then again they always are.

  • Comment number 38.

    The financial speculators who caused the economic collapse are having a field day. They not only pay no tax on the purchase and sale of their financial trades, but they pay very little in the way of income tax because of the way they manipulate earnings to look like capital.

    The UK desperately needs a financial transaction tax on this speculative trading. It is a simple sales tax on derivatives trades. It is sometimes called a “Tobin Tax,” named after James Tobin, the Nobel laureate and economist at Yale, who was the first to suggest a cross-borders tax on foreign currency transactions with the object of stabilising currencies. Since then economists have widened its scope to mean a tax on all derivative sales. The assumption is always that it would be a universal tax backed by G20 fiat, It has never happened, largely because of the serious difficulties surrounding it, and also because of the power that organised finance exerts on major world governments. But there is absolutely no reason why the UK should not introduce such a tax for its own benefit. The main problems limiting the effectiveness of such a tax internationally lie in four crucial areas:

    1. establishing the tax base,
    2. identifying taxable transactions,
    3. setting the tax rate, and
    4. distributing tax revenues.

    These difficulties need not arise in the case of a domestic tax. Establishing the tax base would be relatively simple. Derivatives are a form of incorporeal movable property and should be defined as such, making it a sales tax.

    The tax would apply to all derivatives trades as defined by the Bank for International Settlements (BIS). The revenue potential from such a tax is huge. The BIS reported that for 2008 the annual derivatives trades were $1.14 quadrillion (a quadrillion is a thousand trillion). London is the centre of the market in these derivatives, accounting for no less than 43% of that market. The only other major market is the US, accounting for 24% of the market. There is no reason to suppose that London’s share has got less in percentage terms in 2009 and 2010 than it was in 2008.

    As far as the tax rate is concerned some economists have stated that (in relation to foreign currency transactions) “a tax rate of 2 basis points (0.02 percent) on $1.23 trillion could raise $64 billion annually. Such a small tax is likely to trigger only an insignificant behavioural response, and the static revenue estimate is more realistic for such a low tax rate.” A tax rate of 3 basis points is likely to pose as little problem as one of 2 basis points. If each trade were taxed at 0.03% of volume (about 3 pence per £100) the revenue would amount to more than £161bn in a year, rather more than the total budget deficit.

    The fourth problem does not arise because the tax would be a domestic one.

    There is another important benefit to this tax. Even if it did not bring in the amount of money it is calculated to raise, it could have a sobering effect on derivatives trades, which are about 100% speculative, but leave long-term productive investments intact.

    Such a scenario would make it possible to leave stocks, bonds and other financial trades free of tax.

    Anyone who has had to manage a sales tax in the banking and insurance industry knows that it is bedevilled by all sorts of problems. But this tax could be entirely different. Being aimed at specific transactions it could have its sales carefully and comprehensively defined and the usual problems would be eliminated.

    From the point of view of the Coalition Government such a tax would be a winner. It would reduce the need for the swingeing cuts proposed, and obviate the need for the proposed tax increases. It would make the Government hugely popular for that reason alone. But there is another reason. It would satisfy those lusting for vengeance against the speculators who caused our problems and present crisis. They would be seen to be paying for the crisis quite literally. None of this means the Government should not pursue an aim of reducing the size of Government, but it would be possible to achieve this by natural attrition and not by savage cuts.

  • Comment number 39.

    Re my post #37 - When I say the USA is already ahead of us, I mean this -
    The US has committed an act of war in deciding to embargo Iranian fuel shipments and international financial activities. The "urgency for USA dealing with Iran" is driven more by oil competition than military crisis. The US militarily occupies or diplomatically controls every strategically-located oil producer in the Middle East except for Iran. The most probable explanation for the sudden concern about Iran is likely centered over energy and the 'requirement' of growth that our economic and financial systems demand. An Iranian war has the potential to severely disrupt developed economies due to another wild oil-price spike.

  • Comment number 40.

    Curing their "social leprosy" ?

    Well they are certainly lobbying like crazy at the moment ...
    http://cityunslicker.blogspot.com/2010/07/bank-lobbying-rumbles-into-action.html

  • Comment number 41.

    All this is opointless when you consider this - Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe. So rock on Dave. Good luck with your smoke and mirrors act.

  • Comment number 42.

    It so suits the politicians to blame the banks for the financial mess we're in, thereby deflecting attention from the real cause - their own complete failure to regulate the industry and a reckless addiction to public spending. Can't believe you've all fallen for it.
    … and can someone explain in simple terms how splitting up retail and investment banks would have prevented the financial meltdown? There were plenty of examples of retail banks failing in the crisis - what stuffed HBOS and Northern Rock at the end of the day was lending money to people who couldn't pay it back, not investment bankers playing fast and loose with exotic derivatives.

  • Comment number 43.

    Stricter regulation on banks is clearly desirable and may go some way to "detoxifying" their reputation. A much greater degree of self-retraint when it comes to financial reward for bankers would make a difference too. But the real problems for banks, and for the economy more widely, is that we are far too dependent on debt at all levels. And this didn't start yesterday - it started decades ago.

    The real problem we have in our society is that far too great a proportion of our national wealth is in the hands of a very small proportion of the population. This has resulted in far too large a proportion of the population taking on too high a burden of debt. It is all very well to say that individuals have responsibility for their own finances, but the biggest source of debt has been caused by spiralling house prices, and people do need to have a roof over their heads. Moreover, as that small proportion of society with lots of money got ever-wealthier, this was interpreted to the world at large as "the nation getting ever-wealthier". This resulted in an expectation among the plebs that we could "share" in this booming wealth through luxuries such as holidays and electrical appliances.

    And throughout it all the banks urged us on. They took little care to ensure that the debt being racked up could be afforded - as long as the very wealthy could get ever-wealthier. One imagines they lose track of money when their income gets into the millions.

    We need an economy where disposable wealth is much more evenly shared. If we are to base our economy on people buying and selling things, then more people have to have more disposable income to buy things. Placing an ever greater proportion of national wealth into the hands of those who have more money than they can ever spend, while tying up the wealth of the rest of the nation in debt repayments - especially mortgage repayments - will smother economic development, not enhance it.

  • Comment number 44.

    Leave the financial sector alone, or give it all our support and hope that it will give us some fat to live off in the future as we are about as prepared for "no growth" as is a fish to walk on land. All our current claims systems, the credit outstanding, including government debt, our pension expectations, our savings, our hopes and dreams, are mostly focused on a "there will be more tomorrow" mentality. Should this "more" disappear, which of course it must in a finite world, we will likely not just see small implications, but rather a disruptive destruction of both perceived wealth and security, accompanied by the shattering of hopes and dreams, the perception alone which might cause further trouble in our highly complex societies. Lets get real and deal with these mind blowing problems eh?

  • Comment number 45.

    Banks perform the function, necessary in a capitalist system, of borrowing on a short term basis from depositors, or from other banks, which happen to have excess liquidity at a particular time, and lending on a medium or long term basis. This is inherently risky, but someone must do it, unless we are to rely entirely on governments and large scale corporations to collect small sums as taxes or profits on individual transactions and accumulate them into large chunks of capital.

    This function is a mechanism whereby the money supply, controlled and limited by central banks, is levered up by bank credit to facilitate the distribution of the goods and services that the real economy can generate and ensure investment for production in the future. When this mechanism breaks down, as it did in 2008, the economy is seriously damaged.

    If, for safety's sake, this activity of banks is to be limited in the future, then governments must do more, by for example using central banks to increase the money supply by not funding deficits.

    The prospects, particularly in Europe, including the UK, are very bleak as the banks, very naturally after the trauma of the crunch, restrict their lending, and governments are misguidedly obsessed by the idea that austerity is the solution to our problems. Tax, particularly the banks, and spend would be a much more effective medicine at the moment.

  • Comment number 46.

    #32. JavaMan

    ++++++++++++++++++++

    Thanks for that. I had lumped CDOs in with all derivatives in my naivety.

    It does seem as if some of these instruments are sounfathomable due ti their compexity the no banker, regulator or rating agency can understand them. They should be outlawed on that circumstance alone. I believe some sort of exchange has been mooted for such instruments.

  • Comment number 47.

    Nero, Rome ,Fiddles, Burns, Whilst. Put these in the right order and the position of the government and the banks both here and on a global basis becomes clear. Remember the threat to remove tax havens? Why is that now so far off the radar ? A minor tinkering has left the world still exposed to a system of opaque products traded in secret in offshore vehicles far from prying eyes and regulation. Yes derivitive trades are supposed to net off but who guarantees this? With a value well over ten times global GDP who guarantees this? Just who are the winners and losers in this over inflated casino? How much of our savings are used to fund these gambles and are they being treated as risk capital in a game from which we are excluded? How much of our tax revenues both now and in the future are committed to supporting this unregulated betting? I could go on and on but I would just bore myself as it is clear that our leaders do not want to address the real issues and would rather oppress the low and middle income earners for the next decade or two with their faulty economic policies (who really believes that a 25% or greater cut in public spending without a corresponding reduction in taxation is nothing more than a massive increase in the burden of taxation?). The circular process of pacifying the banks who 'support' the sovereign bond markets by giving them 'confidence' in repayments so that they can charge us 'lower' interest in supporting the debts they helped create whilst funding their ability to speculate against currencies, either themselves or via those they chose to trade through by proxy,with virtually 'no cost' taxpayer funding and guarantees against their own (past folly) trades has to stop. Only then will confidence and trust return. The alternative is that trust and confidence will evaporate totally and anarchy will ensue at all levels. History tells us that great civilisations collapse for faily basic reasons. For us it may all boil down to a lack of trust caused by too much fiddling !

  • Comment number 48.

    Bank regulators plan to release results of the Bank Stress Tests, covering 91 large European banks, on July 23. Lets see how the results will affect the decisions now under discussion. (The types of tests were in themseleves very interesting!)

  • Comment number 49.

    The bank of England have printed and lent a lot of money to the 'kaput' banks. The BOE are charging very low interest rates to the banks, who in turn are charging high interest rates to their lenders.

    Now in a act of christian, Judaism, Muslim or Hinduism kindness, Why doesnt the bank BOE and the government lend the money straight to first time house buyers, at the low rates, to the P.A.Y.E. tax payers. They can retrieve their money through the tax system. There would be no lies about earnings because the government already have that data, you can cut out the banks and free up the rented property that the kids are now currently occupying.

    It rules out the self employed at the present (they are the main earnings fibbers ) But what a leg up for the young people of this country....The clever ones might even stay !

  • Comment number 50.

    I am unemployed and have spent the last few hours looking at jobs advertised. I looked at job of mortgage advisor and it reminded me of a big problem in retail banking. The job is not mortgage advisor but that of salesman, the person will be paid a relatively low salary with bonuses for how many mortgages they can sell. The blurb in advert said that the bank offering this job was aiming to be helpful and sustainable, but the requirment for the job was to be good at selling things. This is not the right attitude it goes hand in hand with irresponsible lending

  • Comment number 51.

    The banks created a worldwide financial crisis and economic stall with their unethical (criminal) dealings and now cry about attempts to curb these activities. Of course the very people who facilitated their gambling in governments are now trying to distance themselves from the bankers and the bankers see this as being disloyal as they believe the interest of the people should be secondary to their interest. The powerful think differently. The bailout funds were placed in the bank's accounts and loans were not made to small business as promised, but bonuses were paided. It is like a bank robber demanding a high paying job because he was living the high life on his stolen money and feels he should not suffer for his crimes. They have been dishonest and wish to continue being dishonest. Never trust a bank. Old Chinese saying: Wholesale thieves start a bank.

  • Comment number 52.

    I'm quite amused by the expectation of bankers that, one day, hopefully soon, they're going to wake up one bright day, and the public will have forgotten the biggest theft of all time and they'll be welcomed back to civilisation with open arms.

    It isn't going to happen, not in their lifetimes.

    There's a reason why economic crimes on this magnitude are seen to be a 'once in a century event'. It's called living memory.

    If you're a banker and you don't like the heat, then jump off the money train and do something productive and useful with your life while you still can.
    If you're lucky, your children, or your childrens' children can grow up to be bankers and try the same racket all over again with the next lot.

    No-one this century is going to trust banks again.


  • Comment number 53.

    1. At 09:24am on 13 Jul 2010, Toldyouitwould wrote:
    It seems inevitable that retail and investment will be seperated. It is the only safe way forward. The bankers do not want this but they had their chance and blew it.

    -------------------------------------------------------------------------
    If it happened, how would you let a retail bank minimise its risk? If it happened, would you offer state support to an investment bank when business was quiet or non-existent?

    It should not be forgotten that the sub-prime crisis started in retail banking, the credit crunch brought the downfall of a retail savings &loan bank that had been (over)trading in the 'paper' market.

    You can separate and regulate all you want, it will still be possible for a very narrow financial business to get into trouble for a variety of reasons.

  • Comment number 54.

    34. At 12:31pm on 13 Jul 2010, Jacques Cartier wrote:

    It's payback time, for bankers.
    ------------------------------------------------------
    Which bankers? There is more to banking than just 'skimming' or 'moving money around'.

    And why just the bankers? There were other 'guilty' parties to the sub-prime crisis, credit crunch and recession. Should not everyone be brought to book?

  • Comment number 55.

    Leprosy used to be terminal. Maybe the bankers do have a way out.

    There would be a price to pay.

    Just as back in the days before 1997, it was usual to only lend upto 3 times salary and for you to verify who you were, where you worked and how much you earned. This produced lower commissions and higher staff costs, than today. How things have changed!

    Gosh, imagine if Bankers became human again and went back in time, there would be increased employment in the Banking sector (and less bonuses) and the nation might have more in the kitty!

    Bankers used to command some respect in those days. Now look. Even Angela Knight of the Bankers Association looks and sounds inept these days, trying to defend the indefensible.

    Bankers have to face the facts, they are morally (and some perhaps financially) corrupt.

    In wrecking a nation's economy such as ours, they are a real threat to our future security - the jobless, the no-hopers and dispossed sadly all too often become recruting grounds for dangerous elements in society. Terrorism, a very real threat to our every day security, is harshly dealt with and rightly so.

    Perhaps Bankers and the whole of the Financial Sector, requires a similar level of scrutiny and punishment, before they eventually completely destroy us, through their ineptitude and selfish greed.

  • Comment number 56.

    33. At 12:20pm on 13 Jul 2010, tossacoin wrote:
    It is often said that bankers require such exorbitant amounts of money in wages and bonuses in order to secure the best people for the best jobs. This is clearly not happening. I was educated at an independent school and have seen many of my peers move into the banking industry since I left a decade ago.
    These people were very definitely NOT the best and brightest of my generation. In fact I can think of a number of people, now bankers, who were only allowed to stay at the school on the basis of their importance to the various sports teams the school ran, while less athletic individuals who were awarded the same grades at examination were rather uncerimoniously told to pack their bags as the school didn't want their poor grades impacting on their league table results.

    -----------------------------------------------------
    And that is exclusively true of banking? Are you trying to tell us that not just from your school but all schools, those sort of pupils went into banking? That is the implication of your above statement.

    And did they go straight into a banking job (I wonder doing what - tea-boy, stationery clerk, trader, mergers & acquisitions, counter-clerk?) or did they go to Uni and get a degree first?

  • Comment number 57.

    All Private Pension Schemes should be wound down over the next 40 years
    and ended. The State should then pay Pensioners directly from Taxation a decent State Pension equivalent to £200 p week ( a todays prices.)

    Retirement Income and planning is too important to Individuals to be left to the VAGARIES of the Stock Market.

    (Remember the disgraceful Private Pension sales introduced by Mrs Thatcher when many a Worker left then safe Company Pensions and were subsequently ripped off.)

    Take Retirees and the Elderly out of the "Fly Boys" clutches completely.

  • Comment number 58.

    there are two reasons to understand why banks cannot cure, on their own, their social leprosy.
    first, the most important force to promote growth and therefore wealth in a society is the power of money.
    but the power of money is in the hands of a few people.
    these people control the central banks all over the world. and their prominent aim is to make people suffer through wars and lack of opportunities.
    that is why, in addition to controlling the central banks, they control commercial banking, industry,mining, agriculture and trade world-wide.
    besides, the major asset under the control of the lord of capital is the control they assert on the bosses of the traditional political parties.
    and through the control of the political parties. our world-lord, the Lord of Capital, controls every State.
    in other words, the executive, the legislative and the judiciary "powers", in every nation, are also powers answerable to the lord of capital
    as does the federal reserve bank, the bank of england,the european central bank and the bank of china, for that matter.
    ¿do we envisage taming the banking sector?
    let us deprive the lord of capital of his privilege to run all central banks...let us put the power of money at the service of "goods & services producers" and a new world would just emerge from the ashes of this crisis.

  • Comment number 59.

    “It so suits the politicians to blame the banks for the financial mess we're in, thereby deflecting attention from the real cause - their own complete failure to regulate the industry and a reckless addiction to public spending. Can't believe you've all fallen for it.”
    Your thinking too small. There has been exponential growth of debt since Nixon abandoned the gold standard in 1971, (the last controlling factor). This is a direct result of the fact that money is loaned into existence, and the fact that debt will always exceed the monetary supply. It’s a fundamental flaw in the monetary system. The politicians failing, along with the banks, is not spotting the exponentially growth problem. In fact they still don’t realise it exists. This is why they will not be able to “fix the mess were in” as they are trying to fix the problem by being bound by the rules of the system.

  • Comment number 60.

    FSA regulations on mortgages seem likely to freeze even more young people out of the first-time buyer housing market; good move?

    Banks - need to remove cash bonuses from the rewards packages. In most cases they are undeserved.

  • Comment number 61.

    What social Leprosy?
    It seems that only those of us with eyes can see the battlelines being drawn.
    The media, the Law, the state and the oligarchs all joining forces to impose the cuts to pay for their crimes of apathy, incompetence and downright stupidity.
    This morning the 'HEADLINE' (I kid you not) on the BBC was that they have managed to find a teacher, in Britain, who did a good job and was paid £200,000 in one year for it (although they disguised the fact that some of this was back dated pay and bonuses for good results)

    ...and yet 3 years ago bankers were carving up multi-million pound bonuses for doing nothing more than skimming

    If we're going to have a debate about wages and salaries - then we must be all inclusive. This is nothing more than a PR game by the ruling elite.

    As for the changes in mortgages - well this opitmises exactly what I have been talking about for months now

    The changes are well overdue - and are welcome, the problem is the Economy is now built (and expectant) of 'returning to the pervious norm'. However with imposed restrictions on lending - this will never happen. This is what I mean by there are no solutions - the morally right actions will take us further into the mire, the immoral actions will alleviate this, but only for a short time. The politicians actually believe their own hype and are convinced they can steer their way through this multi-layered storm without any navigation equipment - and they're not even experienced sailors!!

    Look at the HIPS, good idea to remove it (well that's what estate agents thought) - and less than a month after they were removed, the British homewoner demonstrates what a rabid sepculator he/she is and throws their houses back onto the market (now that the very small barrier to this has been removed)
    Great idea morally perhaps - the consequences will be dire I'm afraid.

    Watch this video - I know a lot of you have already seen it / or very similar - but what this shows is that it no longer matters what this tiny insignificant land mass just North East of mainland Europe does anymore - We are now but a dinghy in the rough ocean.

    http://www.youtube.com/watch?v=eb1n1X0Oqdw

    The observant of you will notice I even get a special mention from Ron Paul (although I think he's referring to my american brother 'hand')

    As all good De Niro fans will know - "When you can't see the angles no more.....you in trouble" - and those angles for Government, Business and the people to escape this are all but gone.

    At least the American people know their second revolution has begun - shame the people of Britain are still hiding in their holes hoping that either:

    a) It will blow over
    b) 'someone' will sort it out
    c) 'Someone' will make sure I'm ok.

    Another point of note is you can see the cracks appearing all over the shop. We in London have a mayor who has proudly announced that he is "waging war" on chewing gum on our streets. Now whilst this is certainly an irritating problem, I kind of think not having a job in London for the next 3 years might take precidence.
    Only when you're desperate to divert attention from the real problems do you find an insignificant problem and start making a lot of noise about it.

    I also noted that whilst the Government hopes that the public will roll over and accept the cuts - it seems that #1 - Education building cuts - have not really gone to plan.

    Good old 'Gove-ner' hasn't even got them out of parliament yet and he's riled councils and MP's alike. This was merely phase a of part 1 of appendix i - and it's all gone wrong - god help them if they can't get the easy cuts out and accepted in a pre-aggressive environment!

    In the meantime - when we're dicsussing salaries - shall we discuss the BBC staff who are now 'contracting' their services to the BBC?

    This allows all sorts of legal tax avoidance - so the very same people presenting the scandal of the bankers are in fact not contributing to the 'clean up' themselves by not paying their full tax.

    Of course moderators, and other PAYE minions are all subject to the same unavoidable taxation - they're all paying for it whilst others bemoan the problems and yet contribute nothing

    There is too much happening at the moment I can't keep up - there are shenanigans going on in the market (or rigged game to quote Celente) - almost like they're all positioning themselves for something big.

  • Comment number 62.

    The banks seem to be starring in their own remake of The Great Escape. They came very close to causing the total meltdown of the global economy and have left us with recession, unemployment and fiscal crisis. Yet it is already back to business – and bonuses – as usual. Tough regulatory reform recedes into the distance. While BP is having to pay for the damage it has caused, the banks are escaping their responsibility for clearing up their mess.

  • Comment number 63.

    @ 56. At 1:52pm on 13 Jul 2010, Up2snuff wrote:

    > And did they go straight into a banking job (I wonder doing
    > what - tea-boy, stationery clerk, trader, mergers & acquisitions,
    > counter-clerk?) or did they go to Uni and get a degree first?

    Tea boys and stationery clerk are useful. The rest are socially
    use, according to Lord Turner. Are bankers unique in working thier way
    down in the world?

  • Comment number 64.

    For crying out loud, is that all, a new TAX, Proof of income, scrapping interest only mortgages?! I mean BIG DEAL!!

    This is just fiddling whilst Rome burns and is completely avoiding the real issue! Namely, what are you going to do, Mr Hoban, to make damned sure us Taxpayers don't bail out bankers ever again????? None of your proposals deal with this!

    The best rules that get banks to do banking properly would be ones which "engineer out" the requirement for a Regulator, because the rules are so clear that bankers wouldn't dare cross the line.

    One way to do this would be to make sure if bankers ever needed a bailout in the UK that they would lose EVERYTHING, all their own Personal assets! It is fundamentally disgusting that all their multi-million pound rewards are to the upside, but they never lose when things are on the downside! With that level of security they do not need nor deserve million pound salaries, bonuses etc Where's the RISK!??!

    The answer?? - Yes folks UNlimited share liability! And some proper LEGISLATION. Bankers need telling, you fail again and you are OUT!

    Wake up Hoban!!!

  • Comment number 65.

    there are two reasons why banks cannot cure, on their own, their social leprosy.

    The power of money is in the hands of a few people who control the central banks all over the world.

    for instance, they operate the federal reserve bank, as well as the european central bank, the bank of china, the bank of england...they constitute the "world monetary authority". that is why we may call them "the lord of capital".


    secondly, the major asset under the control of the lord of capital, for the past two hundred years, are the bosses of the traditional political parties. which is why through the control of the political parties our world-lord controls every State.

    in other words, the executive, the legislative and the judiciary "powers" in every nation are powers answerable to the lord of capital.

    thus, we may ascertain that the State has supplanted the nation, in favor of the Lord of Capital.

    in addition to controlling the central banks, the lord of capital controls commercial banking, industry,mining, agriculture and trade world-wide.

    now, since the most important force to promote growth and therefore wealth in a society is the power of money...

    let us deprive the lord of capital of his privilege to run all central banks...and all nations...and a new world would just emerge from the ashes of this crisis.

  • Comment number 66.

    Their spokesperson Angela Knight isn't helping their case much, if this morning's Today interview is anything to go by.
    She still appears to be totally in denial about the crisis that the banks caused back in 2008

  • Comment number 67.

    At 1:52pm on 13 Jul 2010, Up2snuff wrote:
    And that is exclusively true of banking? Are you trying to tell us that not just from your school but all schools, those sort of pupils went into banking? That is the implication of your above statement.

    And did they go straight into a banking job (I wonder doing what - tea-boy, stationery clerk, trader, mergers & acquisitions, counter-clerk?) or did they go to Uni and get a degree first?

    -------------------------------------------------------------------------

    Your first point is valid - I did not mean to say this was exclusively true, just that anecdotally my own experience of whom amognst my peers went into the industry suggests this. All industries contain good and bad employees, but, from the outside looking in, it appears that the majority of bankers fall into the latter category. If there was an abundance of workers in the banking industry who deserved our respect and trust why isn't the industry trotting these people out to try and reassure their customers that they are not being fleeced? Instead all I can see, as a customer, is a vast moral vacuum. Malorum est cupiditas.

    I'm not entirely sure what point you are trying to make with your second comment is. Only a handful of my peers didn't go to university, and only a handful did a course that was even vaguely connected to the means of employment they went into afterwards.

    Those who did go into banking went straight into the industry (from university). Admittedly many did have to spend a year as a glorified tea-boy (as one said to me, he was completing his mandatory 'gimp-year').

  • Comment number 68.

    It's hard to keep up with the changes and restructuring going on around us as the new coalition forges ahead with sorting out the country's finances.

    The banks have had two years and billions of taxpayers money in which to sort themselves out but as they appear not to have done so then government will have to do it for them.

    We now seem to have new banks with good old fashioned ideas ready and willing to go so the casino banks will be surplus to requirements before long unless they are willing to split themselves into good retailing and 'other' types of banking.

    The only 'sacred cow' left to deal with is the property market.

    Much of the huge personal debt is held against 'equity' hence the reluctance of the previous government to allow house prices to fall naturally as they would have done in any other recession and then balancing out as the economy improved.

    This has resulted in the taxpayer not only subsidising the banks but also homeowners with unaffordable mortgages based on ficticious salaries or high multiples of salary who lose their jobs and have their mortgage interest paid by the state.

    The FSA are now stepping in to stop this exploitation of mortgage borrowing but this should never have been allowed in the first place. It only encourages people not to find lower paid jobs as they are better off not workimg.

    With the number of properties now coming onto the market and new restrictions in lending the property market should at last fall into line with the rest of the economy.

    If the banks have not recapitalised themselves to withstand the writedowns by now then they deserve to be left to go down the pan.

  • Comment number 69.

    11. doctor bob wrote:

    "The banks like all businesses will seize whatever opportunity they can to expand their horizons and profits. What's wrong with a business trying to be successful?"

    Well, Bob, those who consider themselves to have been shafted by others who 'successfully' made loadsamoney in bonus payments might just think there is plenty wrong with some businesses trying to be successful.

    It all depends on who makes what and who loses what and how lied to you feel about it all.

    I would think there was a lot wrong with your business being successful at my personal expense.

  • Comment number 70.

    Things are quickly going back to business as usual. We can see that in terms of the persistent bonus culture which is still going on largely unchallenged. The goalposts are being moved on capital ratios as a result of the G20, whilst here in the UK the bank levy will raise far less than the one-off windfall levy on bankers' bonuses imposed by the previous Labour government. It will do very little, if anything, to change the culture of excessive bonuses which fuel excessive risk-taking. Meanwhile Goldman Sachs remains on the list of government advisors, despite pledges by both of the coalition's members to strike it off, following the fraud charges filed by the US Securities and Exchange Commission.

  • Comment number 71.

    Leprosy: Leprosy or Hansen's disease (HD), named after physician Gerhard Armauer Hansen, is a chronic disease caused by the bacteria Mycobacterium leprae and Mycobacterium lepromatosis. Leprosy is primarily a granulomatous disease. Left untreated, leprosy can be progressive, causing permanent damage to the skin, nerves, limbs and eyes. Contrary to folklore, leprosy does not cause body parts to fall off, although they can become numb and/or diseased as a result of the disease (from wiki).

    In areas where there is no easy access to drugs those suffering from the infection are segregated to the leper colony.

    Like leprosy, I don't think the bankers will be forgotten. Millions have lost their jobs, their homes, their belongings and their futures thanks to the bankers and their mates. Many will never have a decent home, or reach their potential thanks to the band of greeies.

    It isn't marketing they need it is re-education, restiction and a dose of poverty that will cure them of their ills.

    While there is no effective treatment via strict regulation and 'so small you won't bother us if you fail' doesn't exist (the cure), then segregation is essential.

  • Comment number 72.

    Banks and finacail institutions did not learn anything as they have been spared any pain. I know I am in a minority but I feel that we should have let them go to the wall if they were not viable. Or if they were viable we should have nationalised them. All the big pensions and shares should have gone. This is the only way we will get a banking industry that measures risk and carries out due diligence before gambling on a get quick rich scheme.

    As far as them, the banks and bankers being social lepers I don't think that they care one way or the another. They still are getting exorbitant salaries and morally unjustifiable bonuses.

    Do they care, No!

  • Comment number 73.

    57. At 1:56pm on 13 Jul 2010, honestgradgrind wrote:

    "Retirement Income and planning is too important to Individuals to be left to the VAGARIES of the Stock Market."

    I totally agree - however the rich don't like that because they know that they can use their accumulated (and inherited) capital to ensure their retirement plans give them....say £1000 a week instead of your £200.

    Then they start bleating about 'dis-incentive' and 'freedom' thinking these are necessary for them to live their lives (note freedom mean 'my freedom' not your freedom, or 'all our' freedoms).

    I mean seriously - when was the last time you saw a rich man do a hard days work?

    I've never seen one - not ever - and I've seen a lot of rich men (and women of course)

    Most people think that making money is 'hard work', but actually it's easy work - it's only hard work for the simple minded. What is hard is 'understanding where the profit comes from' - which most 'money makers' never even bother trying to work out.

  • Comment number 74.

    15. At 10:32am on 13 Jul 2010, barry white wrote:
    It is so obvious that the banks are years behind the population in thinking they have a status in society higher than, well everyone who comes in and puts money over the counter ( through the computer these days I know)


    Unfortunately they now form a global network and do control a lot of what happens in the world, capped only by investors in what's loosely called "the markets". One problem with the "free market" over which no national government has control is that anyone can move their money to wherever in the world it suits them best. Similarly, multinational corporations can buy and sell assets anywhere in the world - matters such as people and their jobs are irrelevant in the search for better investment and profit. That's how it is.

    Unless some kind of world order is created by national governments, those national governments cannot control multinationals in a free market. If we keep caning banks based in the UK those banks will eventually move their operations to more empathetic countries. Then, yes, you'll be left with your little retail outfits - but will they do better in a crisis than the retail arms of multinationals? I doubt it.

    No use saying you'd get better service. I well recall the appalling behaviour of a couple of building societies who really did lord it over their customers, long before de-mutualisation. It could even be that they lost customers to the banks when the latter were wooing customers in the mid-1980s.

  • Comment number 75.

    66. At 3:31pm on 13 Jul 2010, bohodotcom wrote:

    "Their spokesperson Angela Knight isn't helping their case much, if this morning's Today interview is anything to go by.
    She still appears to be totally in denial about the crisis that the banks caused back in 2008 "

    Ms Knight is the epitomy of the problem of our nation, read her CV and you will see her bouncing from corporation to Government and back again. The lines are indistinguishable - just as they are for most people.

    The Chief Exec of the BBA is an ex-Tory MP - let me guess what she thinks about regulation.....

    http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=153&a=7992

    If you as a reader can't see the conflict of interest here then you are either one of them - or you're already a zombie.

  • Comment number 76.

    60. At 2:38pm on 13 Jul 2010, ARHReading wrote:
    FSA regulations on mortgages seem likely to freeze even more young people out of the first-time buyer housing market; good move?

    Banks - need to remove cash bonuses from the rewards packages. In most cases they are undeserved.


    The idea of a cash bonus is that it doesn't form part of pensionable salary, thus keeping the pension liability down. It's that simple. An alternative to the cash bonus is giving it as a raise in salary but with the pensionable salary capped (as is now happening in the BBC).

  • Comment number 77.

    @ 54. At 1:46pm on 13 Jul 2010, Up2snuff wrote:

    >> 34. At 12:31pm on 13 Jul 2010, Jacques Cartier wrote:
    >> It's payback time, for bankers.

    > Which bankers? There is more to banking than just 'skimming' or
    > 'moving money around'.

    I don't mind paying computer programmers - those guys are smart. But bankers? Pull the other leg, it's got bells on. They do "banking" precisely because they can't do anything socially useful.

  • Comment number 78.

    The metaphorical use of leprosy, likening the social repercussions on bankers to having leprosy has caused some debate in the office.

    Leprosy is of course a completely curable disease, a disease of poverty. Poverty, malnutrition, overcrowding and unsanitary living conditions are at the heart of diseases like leprosy. It is interesting to see it used in relation to such extreme wealth as surrounds the UK banking sector.

    The social exclusion that results from myths surrounding this disease is completely unnecessary and something that health and rights organisations are working hard to eradicate.

    Leprosy is after all just another curable disease. Is there a cure for our sick economy?

  • Comment number 79.

    Before you consider curing leprocy - you should concentrate on the flesh eating disease (called debt) which is currently eating us all.

    Here's some maths for you folks - it's called 2 + 2

    First you get this:
    http://www.telegraph.co.uk/finance/markets/7884272/Secret-gold-swap-has-spooked-the-market.html

    ...then you get this:
    http://news.bbc.co.uk/1/hi/business/10613250.stm

    Now remember, I'm not saying these are connected in any way - espcially as this would be highly illegal

    ...but since when do Governments adhere to the laws they create? Isn't our one always in the high court being told how it must follow the law? Only a few weeks ago it was told it cannot meddle with the public sector redundancy levels - so it's looking to change the law to get around that.

    Join the dots and you will see the face of collapse - the desperation of the 'elite' is showing through as their actions become more and more absurd and more and more obvious to the rest of us.

  • Comment number 80.

    66. At 3:31pm on 13 Jul 2010, bohodotcom wrote:
    Their spokesperson Angela Knight isn't helping their case much, if this morning's Today interview is anything to go by.
    She still appears to be totally in denial about the crisis that the banks caused back in 2008

    -----------------------------------------------------

    Look into my eyes - not around my eyes - into my eyes.
    Fannie Mae and Freddie Mac are your elderly relatives
    There is, and never was, any such person as "Fred Goodwin"
    Bankers need enormous bonuses to incentivise them for the good of the country
    The economic meltdown was caused by greedy firemen and nurses with gold-plated pensions
    You're back in the room.

    This has been a Government Information Bulletin from the Ministry of Truth.

  • Comment number 81.

    56. At 1:52pm on 13 Jul 2010, Up2snuff wrote:

    "And did they go straight into a banking job (I wonder doing what - tea-boy, stationery clerk, trader, mergers & acquisitions, counter-clerk?) or did they go to Uni and get a degree first?"

    Haven't I told you before? - the most common degrees in banking are the classics and psychology. Don't think the banking elite are actually relevantly educated.

    I had to 'dum it down' so I got a job in a bank once - they don't like smarties showing them up!

    Put it this way, if the power went off then there would be no more market. This isn't because the market cannot function without power (in fact it can) - but now these clever bankers cannot make money without a functioning computer telling them how to rebalance their portfolio to maintain their target benchmark.

  • Comment number 82.

    Maybe a national registry would work. All top banking and financial services firms would be required to register upper managment and board of directors like a sex-offender does. Very similar in willingness to take advantage of others with offers of rewards.

  • Comment number 83.

    52. At 1:40pm on 13 Jul 2010, warwick wrote:
    .....
    No-one this century is going to trust banks again.


    Not true. I and many others like me, trust my bank. They make the terms perfectly clear. If I break those terms by abusing the service then the penalties have been spelled out. Most people hate banks because they imagine them to be a free service at the beck and call of customers; or imagine that poor account management should be overlooked. When they realise banking isn't free they get upset.

    When you open a bank account of any sort the terms are spelled out. If you don't like them take your business elsewhere.

    However, I admit that in today's almost cashless system, it's more difficult to keep track of balances with the risk of overdrawing. In former times you'd turn up at a bank, draw a cheque. You'd then buy things with the cash - so it was easy to know when it was running out and if you could afford a purchase etc. No so, now, with bits of plastic. Unless you're wired up to internet banking, checking a balance means phoning or going to a cash machine (that usually only gives the balance on a current account). Forgetting an upcoming direct debit or something might throw you into overdraft... but then, direct debits are allowing others to take control of your account. As the Direct Debit oufits boast: we take control of your customers' payments. (And don't forget Direct debit is another middleman who expects payment for their bit of the service).





  • Comment number 84.

    69. At 4:13pm on 13 Jul 2010, Sutara wrote:

    "Well, Bob, those who consider themselves to have been shafted by others who 'successfully' made loadsamoney in bonus payments might just think there is plenty wrong with some businesses trying to be successful. "

    Any business which fulfils a genuine need is succesful - regardless of whether it makes a profit or not.

    That is the failing of all business, they are judged - and allow themselves to be judged, on their ability to make a profit. This is why the banks took risks (even though their success is actually their stability and their stabling influence on the Economy), it's also why BP took risks with their drilling (when their success is actually their ability to stay clean and make as little environmental impact as possible) - and why the airlines were so keen to fly through the ash cloud - even though they had very little idea of the dangers (their success should be based on the cleanliness and safety of their airline)

    This is why corporations will always put their profits first - there is no escaping it - and until this system is changed, this will be the ultimate goal and eventual downfall of our Economies.

  • Comment number 85.

    51. At 1:33pm on 13 Jul 2010, ghostofsichuan wrote:
    The banks created a worldwide financial crisis and economic stall with their unethical (criminal) dealings and now cry about attempts to curb these activities.

    Ridiculous. The "worldwide financial crisis" started in the subprime market - mortgage salesmen selling to people who knew they couldn't afford to repay. It looked good with America's fed rate so low except no one could make any money from actual lending so they took it in fees, commissions, you name it. Then insured the debt with Fanny and Freddie thus freeing more funny funds for more subprime lending. Of course, many homeowners couldn't pay back, especially when interest rates started to rise so the thing went belly up. Those mortgage debts were bundled up and sold on by unscrupulous Americans, subprime along with AAA-rated risk but was then reclassified as AAA in total. They're the CDOs that people talk about.

    So, as the homeowners started defaulting, the lenders started calling on their default insurance... by which time it had got lost. Banks started worrying - soon it was realised that no one knew who actually held the insurances for individual debts. Result: banks distrusted each other. They couldn't tell how badly other banks were exposed to this system. They refused to lend to each other via the money market (wholesale funding). And those banks that DEPENDED on borrowing from the money market to lend elsehow were in trouble. They'd been trying to juggle money: borrowing more to pay back other borrowing.

    Northern Rock was a prime example.

    So the crisis was actually started by naughty mortgage brokers throwing money at people they could never repay. And the regulators who did not understand CDOs and other derivatives, relying on the issuer/seller to delare what the risk % was. Talk about lunatics running the nut house.

    But there it is. Not every bank succumbed to this nonsense - some merely allowed themselves a flutter knowing they were adequately capitalised.

  • Comment number 86.

    There are several issues that would have to be resolved before the public have respect for bankers.

    a) banks no longer become too big to fail. Whilst this is the case the moral hazard remains and that's one reason why bankers are disliked so much - because the public know they can be bailed out with tax payers money if they mess up. Glass-Steagall may be necessary, but the real issue is that it should be possible to allow them to go bust.

    b) bankers pay - the market rate is too high and sustained because in the banking environment so much money is made. The public would respect bankers if their pay was limited to say 200K max and the rest of the money that would have gone in remuneration/bonuses be used to pay down the deficit. I understand the issues to do with staff retention, but am simply stating that pay should refect not their market value, or the amount of money they earn for a bank but their value based on skill level as compared with non-banking sectors where many would I sure be able to do the same job, and with respect some even better. A brain surgeon's level pay might be suitable, but it shouldn't be simply down to market forces. I guess until there's global meltdown or global regulation this will never come about.

    c) Connected with the pay, the impression we get is that they are 'masters of the universe'. I think nothing could be further from the truth. It's simply that they have chosen banking to make money. I don't have problem with that as long as it's proportionate to their real worth as compared with other sectors of the economy. How this change comes about I don't know.

    Primarily the banks need to pay down the UK structural deficit but are also having to support the economy too. They're balancing the two but that makes it a very protracted business and I don't see an alternative, except for the remuneration issue to be tackled as part of splitting the banks up under a tough global re-structuring, which I can't see the impetus for.

    For all that's happened we need the banks (currently) for the taxes they generate.

  • Comment number 87.

    54. At 1:46pm on 13 Jul 2010, Up2snuff wrote:

    "Which bankers? There is more to banking than just 'skimming' or 'moving money around'."

    like what?

    One banking activity which is not a parasitical skimming please - just one, I'm not fussy...

  • Comment number 88.

    78. At 4:59pm on 13 Jul 2010, Nicolette Dawson

    Leprosy a disease of poverty! Don't be daft, it is a bacterial infection. Just like syphilis it doesn't check out your bank balance before it decides to pick on you!

  • Comment number 89.

    Robert:
    " So how can banks transform themselves from social lepers to pillars of the community? Well Mr Hester wasn't specific - perhaps because he doesn't want to give away valuable commercial secrets to his rivals or possibly because this is easier said than done."

    ==================================================================

    Honesty, decency, integrity - Ethical banking -


    a different incomprehensible language? - different everything maybe?

    we are on the very edge of 'biblical times' (just see the size of the population and see what that portends!) and we already suffer a world wide pestilence ('something morally corrupting - a plague') of greed

    ================================================================
    11. At 10:21am on 13 Jul 2010, doctor bob wrote:
    What...? Caning the banks again?

    "You don't need to break up the banks - just good regulation and enforcement. In a fight between government and the global financial system a government can't win. Obvious. "

    ================================================================

    so we - our history, our countries, our families, our wants and hopes and desires - are worth nothing then?
    we wait to be told what to do, by the very rich banker or investor who knows best?

    I do not agree!

    I believe honesty and decency and openness and thinking differently can change things big time, starting realistically in small. These things are very powerful they cause great things, greed just consumes its victim. Which has always been the way through our history. And here is a small example of thinking differently:

    http://www.cbsnews.com/stories/2010/07/12/earlyshow/living/money/main6669837.shtml?tag=cbsnewsSectionContent.11

    Maybe we will find ways not to use banks, now that is a fresh start..

  • Comment number 90.

    61. At 3:05pm on 13 Jul 2010, writingsonthewall posted the link

    http://www.youtube.com/watch?v=eb1n1X0Oqdw

    I just watched it 'phew' a slow, awful train wreck - and we are on the train.

    I would recommend it to any who has not seen it, then look at Roberts question.

  • Comment number 91.

    The Banks aren't Lepers....

    Nor are the Investment Bankers or dodgy traders.

    Lepers do not choose their affliction, corrupt Traders do.
    Lepers have a physical malady, corrupt Investment bankers and Shortsellers have a mental affliction.

    Two different things.

  • Comment number 92.

    The Banks are subject to any legislation that is past by Parliament or congress, etc.

    Banks cannot win against Gov't, if, that Gov't really means to Win.

  • Comment number 93.

    And people forget so quickly how a certain Investment Bank and a Trader profited hugely from selling dodgy poor quality Bonds around the World.

    The Bank sold the Bonds to them , the Trader then bet (shorted) them to fail.

    Like Bradford & Bingley, sold rubbish Bonds (GMAC) then shortsold to hell, whilst British Pension Funds, Pensioners(PIBs holders) were robbed.

    Shameful decision by Mr Clokey. No place in Valhalla for him.

  • Comment number 94.

    Hmm, Market makers still marking up share prices on low volumes.

    Sensible Share gamblers would stay away from a rigged table.
    Non sensible ones would be better waiting til the FTSE hits 4000 yet again.

    But it your money, enjoy it for two years or give it to the Bankers up to you !

    Evil Bankers ! I wouldn't have them around to tea.

  • Comment number 95.

    Can't believe that some continue to defend the indefensible.

    Blaming it on the regulators does not absolve the bankers of obscene greed incompetence and a fundamental lack of integrity.(Something their Tory leader chum might call Personal Responsibility)

    The fact that the sub prime debts were packaged by others in whatever form is irrelevant. Our extremely highly paid investment bankers are supposed to be intelligent and should surely understand what the hell they're investing in, shoe due diligence, assess risks etc etc otherwise how on earth do they even begin to attempt to justify those hugely bloated salaries.

    Honest to god, if it was white and Barclays told you it was black, it would be black wouldn't it?

  • Comment number 96.

    Torydems + OBR + FSA = Dim + Dimmer + Dimmest = Recession

  • Comment number 97.

    72. At 4:28pm on 13 Jul 2010, Chris London wrote:
    Banks and finacail institutions did not learn anything as they have been spared any pain. I know I am in a minority but I feel that we should have let them go to the wall if they were not viable. Or if they were viable we should have nationalised them. All the big pensions and shares should have gone. This is the only way we will get a banking industry that measures risk and carries out due diligence before gambling on a get quick rich scheme.

    As far as them, the banks and bankers being social lepers I don't think that they care one way or the another. They still are getting exorbitant salaries and morally unjustifiable bonuses.

    Do they care, No!
    ----------------------------------------------------------------------
    Disagree. Banks are always learning. But three years on, seven years on, ten years on, the people who were working and learning in one area, say, selling commercial loans will be managing securities trading and someone who was managing the credit card division will be taking regional board resposibility for wealth management.

    All the knowledge accrued from before, during and after the credit crunch and the recession will be with them in their new responsibility. All the practice notes will be in no longer read manuals, covered in dust at the back of a cupboard somewhere.

    It is likely to happen again, from the banks standpoint, because the knowledge moves (and leaves) with the people.

    To an extent, the same is true of regulators, politicians, etc ...

    And they have taken a hit like everyone else - more so in some cases. Remember Lehman Bros? One or two have been fined, remember! (Should probably have happened to quite a lot more but that may, or may not, be a work in progress.)

    Banking remuneration reflects what happens elsewhere in business. I suspect you have been slightly blinded by the salaries and bonuses paid to traders, top level wealth managers and M&A people. Banking at the bottom end is less well remunerated now than teaching and nursing.

  • Comment number 98.

    87. At 6:00pm on 13 Jul 2010, writingsonthewall wrote:
    54. At 1:46pm on 13 Jul 2010, Up2snuff wrote:

    "Which bankers? There is more to banking than just 'skimming' or 'moving money around'."

    like what?

    One banking activity which is not a parasitical skimming please - just one, I'm not fussy...

    -------------------------------------------------------------------------
    Do you work for a business? It could be that their bank is stopping that business from stopping business!

  • Comment number 99.

    81. At 5:17pm on 13 Jul 2010, writingsonthewall wrote:
    56. At 1:52pm on 13 Jul 2010, Up2snuff wrote:

    "And did they go straight into a banking job (I wonder doing what - tea-boy, stationery clerk, trader, mergers & acquisitions, counter-clerk?) or did they go to Uni and get a degree first?"

    Haven't I told you before? - the most common degrees in banking are the classics and psychology. Don't think the banking elite are actually relevantly educated.
    ------------------------------------------------------------------
    Next time you go to your GP ask him if he went straight to med school or, if not, what his or her first degree is in! You may be surprised.

  • Comment number 100.

    77. At 4:44pm on 13 Jul 2010, Jacques Cartier wrote:
    @ 54. At 1:46pm on 13 Jul 2010, Up2snuff wrote:

    >> 34. At 12:31pm on 13 Jul 2010, Jacques Cartier wrote:
    >> It's payback time, for bankers.

    > Which bankers? There is more to banking than just 'skimming' or
    > 'moving money around'.

    I don't mind paying computer programmers - those guys are smart. But bankers? Pull the other leg, it's got bells on. They do "banking" precisely because they can't do anything socially useful.

    -------------------------------------------------------------------
    In the absence of kevinb, I have to ask what you do for a job? How socially useful is it?

    Do you own your own home? Are you buying on mortgage? Do you rent? If the answer is not the first, then your bank is helping you. Want to scrap the banks now?

 

Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.