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Are banks doing enough for us?

Robert Peston | 13:14 UK time, Monday, 3 August 2009

The big question in this week of banking results will be whether the banks are doing enough to support the economy, following all the help they've received from taxpayers.

Of course, different banks have required different amounts and different kinds of aid from the state, depending on how reckless they had been in the boom.

Barclays and HSBC signsBut they've all had some succour in the form of taxpayer loans and guarantees - even those like Barclays and HSBC that didn't need to be wholly or partly nationalised.

So are the banks providing enough credit to hard-pressed businesses and households, such that the permanent damage to the economy from the recession isn't too severe?

This, I am afraid to say, is not an easy question to answer.

For one thing, more-or-less everyone is agreed - from the governor of the Bank of England to the householder struggling to keep up the payments on a 100% mortgage - that part of the reason we're in such a frightful economic mess is that banks lent far too much relative to their capital resources and to their stable domestic funding during the boom years.

So there is a consensus that they should reduce their loans - or their leverage - for the economic health of all of us.

But equally, more-or-less everyone - again including the governor of the Bank of England and those over-indebted householders and businesses - say that this is neither the time or the place for banks to rediscover the virtues of prudence.

They want banks to be like St Paul: good, or in this case less loose with their credit, but not quite yet.

So what are the banks actually doing? Well, as I've mentioned here in recent columns, the overall statistics show that there has been a sharp reduction in lending to business by banks in recent months, combined with what may be an anaemic recovery in mortgage lending.

But what about individual banks?

Today's results from Barclays and HSBC show reductions in the overall value of their loans and investments in the size of their total balance sheets.

In the case of Barclays, the value of its assets has declined from more than £2tn to £1.5tn in just six months.

That looks like a severe reduction in the amount of credit made available. But appearances are deceptive, in part.

A good chunk of that contraction in the value of Barclay's assets is due to a modest recovery in the value of sterling and also a deliberate decision by the bank to reduce its exposure to complex derivative deals.

So what about Barclays' loans to business and residential mortgages?

The chief executive John Varley says that the bank has provided what he calls £17bn of "new lending" in these categories, split roughly 50:50 between business loans and mortgages.

However, that's not the whole story.

Its overall lending to UK retail customers increased just £1.7bn in the past six months.

And as for loans to businesses, they actually fell in total since the end of last December, from £67.5bn to £62.5bn.

So how are these numbers from Barclays' official balance sheets reconcilable with John Varley's claim that the bank is doing more than its bit to keep the economy going in these dark times?

The bank says there has been a sharp drop in the use of overdraft and other lending facilities.

In other words many customers have opted - perfectly rationally, many would say - to borrow less.


Here's the great and resonant unknown of the moment.

Is the credit contraction a reflection of less demand from you, me and millions of others? Or are the banks rationing much more than they had been doing?

The answer is - probably - a bit of both.

That said, in the end we are lost if we don't trust the numbers, and the numbers say that the banks are cutting the provision of credit as defined most broadly.

It's inevitable, in those circumstances, that some creditworthy borrowers will be starved of vital finance.

But if the government were to direct the banks to lend more, it's also inevitable that some money will be lent to those who will squander it.

In the end, we have to make a choice about which losses are more acceptable: the cost to the economy today of fundamentally sound businesses that go needlessly bust because they are being starved of credit, or the future cost to the economy of weak businesses that would be propped up if government forced banks to lend to all and sundry.


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  • Comment number 1.

    Come on Robert...respond to writingsonthewall's question (post #60) on your previous blog!

  • Comment number 2.

    Please don't believe figures from the likes of RBS about lending. Their official agreement with us says they have lent a significant sum of money for one year ( obviously following the government's demands to lend to businesses). In actual fact loan has to be reduced to nothing within 12 months on a steadily reducing basis so the whole sum was only lent for 2 weeks! More smoke and mirrors from the bank

  • Comment number 3.

    So Robert what are you actually saying the banks are right or wrong ? Seems the only point to your article is that nothing is as straight forward as it seems, I am sure this page will soon be full of those with little knowledge or understanding blaming the big bad banks for either not doing enough lending or for lending too much as if it were black or white, truth is there are many shades of gray in this issue which will not be solved by sound bites from the media or politicians.
    And for all those who want banks to stick to traditional retail banking, just remember if banks were not involved in the so called casino of derivatives and other riskier markets you can forget going for your long term fixed mortgage, annuity plan, or protecting your pension and expect to pay much more for your banking, as all these either directly rely on derivatives or are subsidised by them.

  • Comment number 4.

    I think history teaches, especially during the mid to late 30's, that propping up failing business and banks will inevitably cost us more in the long run. It wasn't really until the war in which products was increased simply by a cause of demand that we really came out of the great depression. We don't another lost decade.

    [Unsuitable/Broken URL removed by Moderator]

  • Comment number 5.

    To my mind business loans should always take priority over mortgages, for obvious reasons.
    Without a healthy large and small business community our properties will be worthless anyway.
    Mortgages have busted Fannie Mae, Freddie Mac, Lehmans, AIG, RBS, HBOS, Northern Rock, Bradford and Bingley and a host of others.(not business loans). Catastrophic.
    So much for over-pricing and mis-selling property mortgages.
    In my view UK houses are still a little over-priced, and in certain areas still represent a danger.
    Banks are no-doubt being far more cautious about mortgages.
    Let's hope it lasts.
    Enjoyed the RP interview with Lord Myners.

  • Comment number 6.


  • Comment number 7.

    Could you direct to details on the HSBC loans? It's still my contention that the banks are handing over toxic assets to the government in exchange for money then sitting on it. Result: years of austerity for us. I have written a lengthy piece on it here

  • Comment number 8.

    #3 sadbloke

    Spoken like a true 'master of the universe'...they certainly have brainwashed I mean trained you well!

    'protecting our pensions' nearly had me there!
    The banking lies are beginning to be exposed by every day that passes.

    sadbloke by name...

  • Comment number 9.

    Yippee another Banking story, Thanks Robert. Finger really on the pulse of the real people again mate!!!

  • Comment number 10.

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

  • Comment number 11.

    Robert, it was St.Augustine of Hippo and not St.Paul who asked to be made virtuous but not yet.

    It is quite apparent from the previous blog that the banking sector remains in a state of denial about taxpayer support. Until such a time as they realise that we are in a new paradigm in which the taxpayer is the boss nothing much will change.

    So we now have two substantial sections of the economy; namely, the financial sector and the public sector unable to comprehend that without the collective support of the little people and their `widow's mite' they are finished.

    Let us revert to the earlier theological comment and remind all these people that is it not written that the meek shall inherit the earth? So budge over Mr. Banker and Mr Bureaucrat we are out for our inheritance.

    Perhaps Lord Myners can devise a sermon on that very topic now that he has seen the light.

  • Comment number 12.

    Are banks doing enough for us? No they're not. They've just misappropriated the interest they could have paid to depositors and transferred it to their own accounts

  • Comment number 13.

    Robert asked:

    "Is the credit contraction a reflection of less demand from you, me and millions of others? Or are the banks rationing much more than they had been doing?"

    I answer:

    The banks state that the demand for lending has fallen off in the retail and commerical sector - this is because most businesses and individuals are hastily paying it all back and not looking to extend their lending. This is mostly because anyone over the age of 35 is crapping in their pants about the imminent rise in interest rates as the Government is forced to make revenue raising (issuing gilts) ever more appealing. In addition to this they need to control inflation when either the Oil price starts rising or the printing money inflation kicks in.

    This is what is known as a downward spiral. I won't be borrowing any more money for a VERY long time, not because I can't - but because of what the future holds. Millions of other 'credit-worthies' are joining me in paying down debts. If retail lending falls right off then there is only Government lending left. Our Government is borrowing the money we do not want to borrow - on our behalfs. It's like your son getting hold of your credit card and shopping on the internet for trainers.

    Sadly the only people in the market for credit at the moment are those businesses and individuals who are struggling. Very few SME's are looking to expand in this climate (especially as 'standing still' is effectively expanding in a contracting environment) - taking on more debt is not worth the risk.
    The same for individuals, hands up those who thinks voluntarily moving house is a good idea at the moment? Anyone?
    Those who are crying out for debt are those who are 'forced borrowers' - and these have DEFAULT written all over them and mostly the banks won't lend to these people.

    The banks will not be able to live off Government lending alone (well I presume not) and therefore there will be more job losses in the financial sector - further contributing to the slowdown. Without continued lending the banks go bust as it's their business - the Government cannot borrow more from the banks - in order to lend it back to them - because they're credit-worthyness will be destroyed.

    If this all sounds like madness - it's because it is.

    Do you need more help Robert - or does that answer your question?

  • Comment number 14.

  • Comment number 15.

    11. At 2:22pm on 03 Aug 2009, stanilic wrote:

    "It is quite apparent from the previous blog that the banking sector remains in a state of denial about taxpayer support. Until such a time as they realise that we are in a new paradigm in which the taxpayer is the boss nothing much will change."

    When the people realise that the banks own them, not the other way round, we may have a new paradigm.

    "the borrower is slave to the lender" Proverbs

  • Comment number 16.

    The economy and individuals (not all, I know) were addicted to cheap credit so now a balance must set with regards to lending that allows the addicts to gradually wean themselves off it.

    Surely we don't want to get back to lending without proper dilligence but equally full blown cold turkey would be undesirable as well

    Maybe the ambiguity in the figures show that it is currently just about right?

  • Comment number 17.

    12 Nortongriffiths

    Spot on! Stock markets doing well. Banks are doing well. Everything's hunky dory in the world of high finance.

    But only at the expense of the rest of us.

    I still don't get it. Interest rates at 0.5% What for?

    Just so they don't have to pay a decent rate on savings accounts and can charge what they like when lending out our money.

    They all feel safe in the finance world because everything and anything appears to be underwritten by the taxpayer. What a farce.

    It's a big heist for the banks aided and abetted by this government.

    If the banks are not strong enough to stand on their own feet again then we are nowhere near out of the woods. Yet everyone is behavong as if we are. We're being led up the garden path again to part us from what money we may have left. What a disgrace.

  • Comment number 18.

    Oh dear - comment referred to moderators....what did I say?

    Maybe it was the truth?

  • Comment number 19.

    Europe and Beyond
    European banks reporting this week will be closely watched for the extent to which they follow in Deutsche Banks footsteps by making higher loan loss provisions. The ECBs latest lending survey shows euro zone banks expect to continue to tighten credit conditions in the coming months, albeit at a slower pace; heftier loan provisions will make this all but guaranteed.

  • Comment number 20.

    Message 15 truths33k3r

    "the borrower is slave to the lender"

    An excellent quote, indeed.

    But there are many of us who are not borrowing from the banks, therefore that equation is not valid.

    Indeed, since the banks are actually borrowing from us on a base rate that is quite ludicrously and artificially low they should recognise their slavery.

    I note all these bankers are not complaining at this absurd base rate. No talk about the `markets' on that topic is there?

  • Comment number 21.

    Just shows how little you and many others know about the world of derivatives.
    Over the last few years many pension funds have switched from the old asset based model of protecting workers pension funds to a liability based model, the liability based model is reliant on derivatives (interest rate swaps and inflation swaps) . The whole problem with the use of assets to cover future pension payments is that you are buying oranges to cover apples, The liability of any pension fund will rise and fall due to two Main factors (outside of any change in life expectancy) and they are interest rates and the rate of inflation not asset value.
    Compare the HSBC fund and the BT Fund
    HSBC switched to a liability based hedge (derivatives) and BT stuck to assets and if you read Roberts article of a few days ago youll see which was best.
    I guess you must be like many others and think that Pensions (and many other products) grow on trees and require no financial engineering at all.

  • Comment number 22.

    In your last paragraph, you pose a question as if the future is undecided. However has the government not already answered this question and acted upon it by the substantial support (financial, underwriting support etc) to the banks, which are after all businesses?

  • Comment number 23.

    It's no surprise customers are not taking up additional loans and overdrafts ,the fees and charges are very high.The tax payers have been the "Fools of last resort",which saved the banking industry from collapse(including Barclays/HSBC).The retail customers are now paying for the banks bad debts through high charges and fees.
    We have seen the results of our current banking system and its clearly not robust and run for the self interest of the very few.Its therefore imperative that in the near future, ordinary people and small to medium size businesses have an open market (More competition than we currently have)where money can be obtained at reasonable rates.If Barclays and the others wish to continue to divert their wealth to merchant banking ,fine.But it has to be made crystal clear there will not be another bail out by the tax payer.In order to make this statement realistic the government needs to be a position where retail /merchant banking activities can be divided at a moments notice(Within 24 hours).I can't see how this can be done without having separate companies for retail/merchant banking activities.The above is not in the interests of current banks,but it is in the best interest of us - ordinary people.

  • Comment number 24.

    16 writingsonthewall - great post

  • Comment number 25.

    Slightly off topic but how many people saw the four pages of adverts in the Sunday Times this weekend from RBS stating that they were open for business and lending lots of money to business and how many people like me across the UK read that with a bitter laugh and growing anger, knowing it is so not true.

    So this morning I reported them to the Advertising Standards Authority for adverts that are nothing more than lies and propaganda.

    I would also like to ask Mr Hester while he was signing off the budget for this advertising campaign, did it even occur to him just how many business, jobs and individuals he could have helped for the price of one of these pretty colourful adverts?

  • Comment number 26.

    20. At 3:03pm on 03 Aug 2009, stanilic wrote:

  • Comment number 27.

    20. At 3:03pm on 03 Aug 2009, stanilic wrote:

    "But there are many of us who are not borrowing from the banks, therefore that equation is not valid."

    You are very wise, lucky or both to be is such a position. Pity about the trillions of debt that the government has borrowed on your behalf. My question is why do you voluntarily lend your money to the banks at such a poor rate of return?

  • Comment number 28.

    I have a small business and an overdraft. My business is performing the same if not slightly better than last year. My bank have not reduced my overdraft but even though interest rates are at an all time low they have increased the overdraft rate from 5% over base to 7.5% over base. The reason for this is claimed to be that my debt is more risky as retail is a risky category. When I asked them to review my accounts so they could see how my business was performing they weren't interested they just look at the category as a whole. It seems to me they are just trying to squeeze more money out of small businesses just trying to survive.

  • Comment number 29.

    Retail Banking made just under 270m profits. This figure is (relatively) small. I am guessing this is why there is such a large difference between lending rates and borrowing rates - more people defaulting on their debts. Therefore I do not see why people are complaining that much - Barclays are not going to want to make a loss on their retail banking, people would worry that they are insolvant without their investment banking arm.

    Therefore a large gap will exist until the default rate slows down!! If the bank decides to increase the interest rate for savers then the rate will have to increase for borrowers which will result in more defaults and subsequently a bigger gap...

    Well that is how I see it...

  • Comment number 30.

    #21 sadbloke wrote:

    'Just shows how little you and many others know about the world of derivatives. Over the last few years many pension funds have switched from the old asset based model of protecting workers pension funds to a liability based model...
    I guess you must be like many others and think that Pensions (and many other products) grow on trees and require no financial engineering at all.

    --------------------------------------- really have been studying up on your ALM stochastic programming models. You must be really clever.

    However, I wonder how Warren Bufet ever got by without ever 'touching' derivatives. I believed he described them as a 'the new ticking time bomb'.

    But then again...he always warned 'beware of geeks bearing formulas'.

    Suppose I guess there's still time for you to get one over on!

    We will see.

  • Comment number 31.

    21 Sad Bloke

    You criticize the knowledge of others.But I have doubts over your opinion if you think the performance between the HSBC pension and the BT pension is down to derivatives .The clamour towards highly complex derivative investments,is exactly why my pension is in a SIP controlled by me and I will bet my returns are twice as good as HSBC pension for this year.Plus I don't have to pay divvies like you in commission..

  • Comment number 32.

    Is all this profit the banks are revealing today real profit or profit in inverted commas? If it is real then the taxpayer can stop propping up the banks, let them stand on their own two feet and save ourselves the trouble of working till we are in our 70s, and suffering in the years to come with reduced public services and higher taxation.

  • Comment number 33.

    21. sadbloke

    I don't think anyone was disputing that the derivatives market allows 'so-called' future payment protection. However consider this:

    My old man retired recently and wisely took out an annuity to fix his payments until his demise to go with his small private pension. Unfortunately, due to the plummetting markets his annuity is now not paying what it should have done and the pension has taken a severe bashing and with savings rates falling fast he is faced with having to 'top up' with returning to part time work.

    However, consider the IFA and pansion fund manager (I call them leeches) who have all been paid in full for their 'expert advice'.

    All derivative trading is taking future profit from the Economy today - and as we have seen - even if that profit is never actually earned (which is why we're all scrambling around for money to fill the hole)

    I can only presume your glorification of the derivatives world, your total lack of understanding of the long term consequences and incomplete picture of where it all fits in to the collapse means that you work with derivatives on a daily basis.

    ....either that - or you work in the treasury...

  • Comment number 34.

    Robert, I have tried and tried not to be pedantic because you post the most impressive blogs.
    But please, please, it is "either or" or "neither nor".
    Just for me, please try harder.

  • Comment number 35.

    Addendum to my post #30

    The only reason why the CDS/drivatives market hasn't collapsed is because the US taxpayer has been propping up AIG with most of the bail-out money. How long can that continue for?

    We are nowhere near the bottom of this recession/depression.

    Only this weekend Roubini stated that he thinks the worlds western economies will suffer futher big falls in 2010/11 because of rising government debt.

  • Comment number 36.

    #27. truths33k3r wrote:

    "My question is why do you voluntarily lend your money to the banks at such a poor rate of return?"

    What do you suggest we do with our money? Put it under the mattress at 0% interest?

    In a period of almost zero inflation, interest of 3% on savings (and it's not difficult to get a rate of that order) is quite reasonable.

  • Comment number 37.

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

  • Comment number 38.

    25. At 3:28pm on 03 Aug 2009, smallgraycat wrote:

    "So this morning I reported them to the Advertising Standards Authority for adverts that are nothing more than lies and propaganda."

    Smallgraycat - you and I will get on like a house on fire.

    Sadly the regime that controls the ASA will reject your report and will ensure that the 'prosecutors are not prosecuted'. They are unable to handle the contradictions that are laid before them and therefore must invent a new set of moral guidance to work by - completely alien to the rest of us.

    Still, you get full marks for effort.

  • Comment number 39.

    Message 27 truths33k3r

    Yet another good point and I ask myself that question quite often. It is one of those things one must do something about but which one is too busy to focus on properly.

    The answer at the moment is that I know where it is and wonder how dodgy are the people who are offering a better rate. Time is needed for research and that is lacking as there is a recession on and work needs to be done. So it is parceled out in various safe places as I am fiscally conservative. I also prefer to keep a chunk very liquid.

  • Comment number 40.

    We shouldn't forget that these very banks contributed to the situation that everyone now faces. The great public betrayal has created a global economic slowdown. Less products bought, less products made, less profits made, less taxes collected...these things are all connected. Governments, in many countries, are encouraging citizens to save more and spend more. Only governments find that to make sense. Real income has declined, employment is unsure, niether governments nor banks can be trusted, not the best environment for economic recovery. I personaly take a bit of joy in watching the banks suffer, as they reduced my retirement account by a sizeable amount with no recourse for me or others to make a claim against their wrong doings, criminal behavior I would call it. Bargin home prices for those still making sizeable imcomes seem to be driving the current loan system and that will end when the fire-sale is over. Not sure that Prince of Nottingham is still not running the show with his band of bankers...will stay in forest with angry (no longer merry) men until circumstances for change are ripe.

  • Comment number 41.

    27 - truths33k3r

    "My question is why do you voluntarily lend your money to the banks at such a poor rate of return?"

    ...are we back to choice?

    Even though we supposedly live in a free world full of choice - what choice does Stanlic actually have?
    I have too much money in A&L and I am a little worried about the downgrading of Santander - so what should I do? Where can I go?

    If the free market no longer offes choice - what good is it for?

  • Comment number 42.


    Do you never ask yourself how bankrupt insolvent banks that have required taxpayer bailouts can suddenly become profitable?

    The fact is that their profits are created by lending money which did not exist and that they created via fractional reserve banking.

    Do you never ask yourelf how our bankrupt government which relies on borrowing for state spending can find the £1.2 trillion pound bailout of our banks?

    The fact is that the government borrows via gilt sales from our bankrupt banks. So how can this be?

    Do you never ask yourself how our bankrupt banks have suddenly found the massive increases in their reserves for lending if both the government and they rely on borrowed money and are tecnically insolvent?

    The fact is that bank reserves are nothing more than government debt that they loaned them via gilts.

    Our whole financial system has in the last 10 years of huge government borrowing become one giant 'Ponzi' scheme of money creation via debt and borrowing from itself. Unfortunately, like all pyramid schemes this one is collapsing as people can no longer afford to take on more debt, such that our debt based money creation financial system can no longer function.

    Hyper-inflation of this huge increase in debt money together with quantitative easing money printing will soon be upon us.

  • Comment number 43.

    28. crikey1

    I have a similar personal experience which seems to contradict the current situation.
    My only exposure to the stock market is a small stocks and shares ISA. The company wrote to me the other day saying the management fee was increasing.

    Increasing? on a fund which has lost 30% of it's value in less than a year?

    This is known as the BIG SQUEEZE, where banks try to claw back the bad debt of others through tiny slices of cash from the rest. of all, the initial letter was signed off:

    "This has been approved by the FSA" not expecting trouble then - I have asked them to explain the increase and if they cannot to find a way I can leave the fund without taking the loss - as they will be forcing me to do it at 'the worst time'.

    Nobody should put up with the BIG SQUEEZE - report it and fight it tooth and nail.

  • Comment number 44.

    "So are the banks providing enough credit to hard-pressed businesses and households, such that the permanent damage to the economy from the recession isn't too severe?"

    Credit to 'hard-pressed businesses' - the directors of same scared stiff the banks will foreclose if they can't make that money pay!

    Yup, and taxpayers' reward is they are allowed to borrow from the banks. And having gotten us into this mess (G Brown, some banks) it is now beholden on us that run businesses to haul the UK out of recession without so much as a 'by your leave'. What cheek!

    Do Brown and his Treasury THEMSELVES have any ideas to make money or will it still fall 'Keynesian style' form the trees?? Presumably it will continue to fall from the trees which is why 'hard pressed business and households' will face BIGGER tax bills in the years to come! Now, where is my brown envelope..?

    Nothing is what it seems! Life is good! Is this stuff straight out of 1984? Or like something dreamed up by head of Germany's WWII Propaganda Ministry?

    Another groundbreaking report from Comrade Peston, Banking Broadcasting Commission, Republicj of Westminster.


  • Comment number 45.

    Speaking to my accountant yesterday he said that the businesses that he looked after with the largest capital balances were getting calls on a monthly basis from their banks offering them loans. Those with little or no capital that desperately need the banks help mysteriously had not been contacted at all. I suspect that this process of the banks offering companies that they well know need no finance is widespread and a very convenient way of inflating their figures of what they have offered in new loans to small and medium sized businesses. It is a complete disgrace.

  • Comment number 46.

    #36 rbs_temp

    "In a period of almost zero inflation, interest of 3% on savings (and it's not difficult to get a rate of that order) is quite reasonable."

    Classic - but which measure of inflation are you using?

    You say zero inflation
    I say Fuel inflation
    You say near Deflation
    I say asset Deflation

    Britans got talent - it's a BANKING TALENT.

    All I know is I haven't seen prices coming down in the shops - except for luxury and non-essential items.

    When you need food to survive you really don't give a monkeys about the falling cost of a DVD player.

  • Comment number 47.

    39. At 4:20pm on 03 Aug 2009, stanilic wrote:

    "The answer at the moment is that I know where it is and wonder how dodgy are the people who are offering a better rate. Time is needed for research and that is lacking as there is a recession on and work needs to be done. So it is parceled out in various safe places as I am fiscally conservative. I also prefer to keep a chunk very liquid."

    Ahhhh - the investors dilemna.

    I hear Madoff is starting up a fund in prison - offering great rates of return - about 11% - no questions asked though eh?

    I recommend heavy investment in pitchforks and knotted rope - they are going to go through the roof once the lynching starts...

  • Comment number 48.

    42. neoSpeaktheTruth

    Very good.

    However don't expect Robert to ask questions - he is a JOURNALIST.

    They do not ask questions anymore, but simply read press releases off the teleprinter.

    (she demostrated how you should speak to ministers in her public humiliation of Phil Woolyass)

    It's only going to take one journalist to stand up and state "we have been screwed over" - and the floodgates will open.

    It's the time when legends will be made Robert - stand up and drink from the chalice of truth.

  • Comment number 49.

    38. writingsonthewall

    Maybe the ASA won't do anything, but I also sent an email to Mr Hester and Mr Ibbetson telling what I have done coping in various newspapers, BBC and of course Mr Peston.

    I might not have the money to buy big press adverts infact I don't have any money after RBS turned down my EFG loan request after 4 months of messing around so now I don't have a business to work on I am going to try my hardest to highlight the lies of banks and government that they are really trying to help businesses

  • Comment number 50.

    Interesting you should hold Mr Bufet up as an example, wasnt he responsible for a little crisis himself ??
    It is a fact the the HSBC pension fund was switched to a liability based hedge (Derivatives) and that BT still uses an asset based strategy and If you look into the performance of both funds you will find HSBC has benefited enormously from the switch.
    I am sure you can pick better performing assets than many fund managers, I too am not a great fan of some of the so called professional fund managers myself however my point is that using derivatives takes away the need to be a great stock picker. The value of your assets may well increase but if they do not increase at a greater rate than inflation you will still be out of pocket and if long term interest rates fall the amount of money you put away today will have to be greater to cover future payments.
    I am not going to argue about pension fund managers, their instance in continuing to use out of date models has caused many of the funds problems many should have switched to Liability based models a lot earlier.
    As for the annuity, the only way you would have been able to protect that would have been to enter into some form of derivative while rates were high.
    I do not GLORIFY the derivatives world, I just like to see both sides of the story published many have benefited from the derivatives market without even knowing it. So many products that seem simple need derivatives to work, people were/are very willing to ignore the derivative while it is working in their favour in their capped mortgage, savings product that gave them a guaranteed return or that locked in a beneficial exchange rate.
    As for my profession retired managing my own pension fund and the long term consequences they will be as much about peoples attitude, blaming derivatives is a bit like the bad workman blaming his tools, if only some people had taken a little more notice of what they were getting themselves into in the first place this problem wouldnt be half as bad.
    Im afraid there are far too many lazy people out there looking for the easy buck, all too willing to blame it on someone else when it goes wrong, forgetting that they never bothered to find out what they were getting into in the first place.

  • Comment number 51.

    44. guycroft

    Guy - you're becoming's not a Communist conspiracy as there would not have been a penny taken from the public sector to hand to the private (in Communism it goes the other way from Private -> Public)

    This is a sign of Feudalism coming back, soon (if we're not there already) we will have to rent the land from the landowners (banks) in order to make a living and feed our families. Regardless of your harvest there will be a minimum tariff and failure to pay will result in your being kicked off the land.

    Luckily you can still graze your livestock on common land so at least some things have moved on since Feudalism.


    Aye sire.

  • Comment number 52.

    What's this moderator?

    Criticise Robert and get referred?

    Where is my explanation?

    Don't close ranks now- it won't bode well for you in the future...

  • Comment number 53.

    If the real economy is shrinking, where are the banks' billions of profits coming from ?

  • Comment number 54.

    The division ran too deep. The fatcat trained middle class administered the inevitable. How is it the "experts" didn't see it coming and "non experts" did? Investing in the poverty of the poor was not only morally reprehensible it was stupid.

    At the very end of the day electronic money is worth less than worthless paper money. You can't wipe your R's on electronic money.

    I don't want your credit from debit from debt. Interesting to see the profit from selling safes is up. All that bank information going to the USA. Nosey or what! They don't see into my safe.

  • Comment number 55.

    We need change...

    Let us assume that most people believe that the market is a reasonable way to establishes prices. If that is the case one must ask the inevitable question is there a market in banking and financial services?

    The only rational answer has to be NO. We have 4 banks. Entry to the bank market is extremely restricted. These 4 banks constitute a cartel.

    Solution: break up the banks.

    So how many banks should we have to create the conditions of a market and at the same time have few enough so large deals can be financed.

    My guess is 20. I.E. No bank with more than 5 percent of the market.

    So break up Lloyds, Barclays, HSBC and RBS into 20 banks....

    If we don't do this, we will inevitably be run by, and for the sole benefit of, the banks and this is unacceptable....

    All this stuff about outrage at the way the banks act comes from the monopoly position of the banks and is inevitable and will inevitably continue for so long as the monopoly continues!!!!

  • Comment number 56.

    So Cry Inflation
    Across the Nation
    This thing has gone so bad
    Everyone is going mad

  • Comment number 57.

    Robert asks "Are banks doing enough for us?".

    I don't think so.

    A brief scan of the news media tells me that at every level of society, individuals, companies and public sector organisations are slipping inexorably towards insolvency. The mainstream media reports below make my point. Please stick with the list and check each link (assuming the BBC Censor doesn't, er, censor them) because the message is unsettling.

    Is it just me, or is the country running out of credit and cash? And if so, where are we heading? Perhaps Mr Peston could enlighten us in one of his fine Blog postings? Certainly, this matter bothers me greatly.

  • Comment number 58.

    Robert, the correct answer to your question in the case of Barclays and HSBC is Yes. In fact Barclays has remained profitable and contributed to the economy throughout the recession and has not used any of the Government help available.

    It looks like Gordon Brown has done a right number on readers because they blame the banks in entirety instead of also blaming the Government regulators who did not institute the necessary regulatory capital controls on Northern Rock and the other failed banks. Obviously the same goes for other regulators in the USA and Europe.

    Interesting that all the bank websites warn clients about using highly leveraged products but they failed to heed their own warning.

  • Comment number 59.

    The banks are back in profit big time, house prices are rising again, the stock market is up up up, the pound is at a 10 month high!

    What is up with you grumpy lot.

    We are all saved!

    To celebrate I am going to buy grapes flown in from Chilli, some Lamb chops from New Zealand, all washed down with some wine shipped from Australia and some mineral water driven over from the Italian Alps, served using plates and cutlery made in China cooked using gas from Russia on a cooker made in India.

    Of course I will throw 30% of the above consumables in the rubbish bin as they will stay in the fridge beyond the expiry date. Furthermore I will not worry about how many non renewable resources have been burnt bringing them to my worthy door or about the fact that non of it will actually make me feel 'happy'.

    I will pay for the above on my Barclaycard, because I dont have quite enough cash to pay for the celebration of the upturn in the economy at the moment, but I am sure I will do soon with property markets, the pound and the stockmarket on the 'up' again.

    let the good times roll again!! Who ever said this could not go on forever was surely a fool.

    Hurrahh the banks..Gordon was surely right to publicly thank them on behalf of the nation while he was chancellor.

    These guys must be amazing, masters of the universe in fact to turn a sows ear into a silk purse so fast..

    Or could it be that I am missing something here?

    Surely not! The knights of the realm in the boardrooms of than banks can be relied upon for their integrity and public spirited would they get knighted by the queen otherwise for their services to society, this recovery led by banks profits must be genuine?

    I read an interesting article on Russia recently, they think the only difference between the west and Russia is that in the west they are more subtle about how they control the population. The west preferes the approach of allowing the populus to believe they are free when they are not, Russia just tells it how it is.....

    Champagne on M Medelevs Yacht anyone this summer break?

    George Osbourne perhaps, how about Lord Mandelson?

  • Comment number 60.

    Seize the banks.
    Write off debt.
    Restrict the issue of new debt.
    Prevent leveraged speculation.

  • Comment number 61.

    Are banks doing enough for us?
    Savers get that the City boys can load up their pockets again.
    Does this question really need to be asked, or does it answer itself?

  • Comment number 62.

    Why does Peston always use such sensationalist language blaming the big nasty banks for everything? Why not take a more realistic, holistic view and represent reality? Sure, some banks have lent too much without capital resources. But there should be a responsibility accepted by the individual who has requested and accepted this level of lending: "the householder struggling to keep up the payments on a 100% mortgage" should have considered the reality of a 100% mortgage when making an application. Our society could hugely benefit from taking responsibility a bit more - and Peston should feel responsible for writing articulated journalism instead of tabloid statements.

  • Comment number 63.

    You should always be suspicious when someone tells you that they can't decide between two possible causes because it's "a bit of both". Of course it is possible for two things to just coincidentally happen at the same time: but in a crisis such as this, which has hit with such speed and correlation, it's highly unlikely.

    In this case there's a much simpler explanation for the fall in lending:

  • Comment number 64.

    At 5:37pm on 03 Aug 2009, John_from_Hendon wrote:
    We need change...

    ... and how about the following solution from a recent post:

    Separating the banking infrastructure (payment / money transfer system) from the loan making / risk taking activities. If water, gas, electricty and telecommunications can be separated in this manner (network & retailer), then so can banking.

    This way it would be perfectly feasible for "retail banking" in its purest form to be a practical reality.

  • Comment number 65.

    One of the results of the financial crisis has been that the bigger beasts in the financial jungle have had themselves a bigger share of their respective markets due to the misfortunes of some of their competitors.
    The news that these banks are cashing in lending money to governments and large corporations in turmoil is not reason for celebration, and does not symbolise any 'green shoots', quite the opposite. It demonstrates that those who have become to big to fail are ever expanding.
    I echo the sentiments of virtualsilverlady, the prospect of everybody clambering back on the money-go-round is quite depressing. A system that allows an industries profits to be privatised and it's losses nationalised, is morally bankrupt on the most fundamental level.

  • Comment number 66.

    Surely, the question is not 'What are the banks doing for us, so much as what are the banks doing TO us?

    Nelson's Column and Pigeons came to mind

    What they are doing is simple: They are robbing us blind and the Government are complicit in the robbery

  • Comment number 67.

    In a belated response to "sadbloke" Blog #3 would we all be so dependent upon fixed term mortgages and annuity schemes providing pension cover if the Thatcher government had not declared the "home ownership for all" and "independent pension insurance schemes" on the unwitting public. In good Tory fashion people were forced from secure tenancies into a "gold rush" of unaffordable house purchasing, forcing house prices skyward until the mimi-crash induced by a later Thatcher government changing the rules on joint ownership. So property value hikes that large numbers of financial gurus had declared unsupportable. Added to this the "carpet-bagging" of the Building Societies into banks by quick profit merchants stripping mortgage assets into their back pockets and passing home ownership into the grey area of derivitive banking. To ice the catastrophic malstrome of greed the relaxation of banking regulation set in place by the monetarist Reagan and Thatcher governments the bonus/greed culture that prepared the way for banking collapse of a global scale.

    While the warning shots of the insurance default that closed so many with profits endowment schemes now trickles onto the annuity markets. The courts deciding that monies held in reserve for employees' pension was an employers plaything, to have payment holidays to inflate balance sheets to increase personal bonuses; to be placed into bancrupcy pots by administrators extracting large fees before any individual creditor, with the pensioner who had contributed for their working life, in whose name the contracted benefit of the pension fund was set in place, getting the crumbs after all and sundry.

    Do we really care that we would lose the spiv culture of bonus greed banking and insurance systems? Let us by all means return to the stability of mortgage institutions restricted to loaning what they have in the coffers to those clearly able to pay, with no vested interest in mis-selling any product. Let us return to the days of contracted pension payments towards stable pension futures - indeed why not make the whole process government controlled, holding the pension funds centrally, with legal obligation to contribute defined amounts, monitored by government agencies (i.e. inland revenue) to ensure what is contributed covers future need.

  • Comment number 68.

    Thanks to everyone who replied to my question of keeping money in banks - sorry for the delay - just back from a painful trip to the dentist.

    Writingsonthewall there is always choice in the market place with what to do with your money.

    1) Buy some gold and silver - I think that there is a real risk of inflation with so much QE and people may start to lose faith in paper fiat currency.

    2) Buy some defensive stocks - real businesses paying real dividends

    3) Give some to the Salvation Army - helping real people that our "welfare state" leaves behind.

    etc etc

    My view is that leaving large sums of cash in banks, because we do not see any alternatives is narrow thinking. If you do, what you cannot do, is then complain that bank x pays y % interest and lends at z %. You are helping the fractional reserve lending fraud to continue.

    *truths33k3r is not regulated by the FSA to give investment advice and his views should not be seen as encouragement to invest in any asset or investment vehicle. The value of your investment can go down as well as up. blah blah blah.

  • Comment number 69.

    Yeah, we know, Robert, all the banks are bad and it's even worse now that they are in danger of making profits instead of losses ... and it's not just greedy bankers to blame, but men in general ... please wake me up when you get something reasonably sensible to tell us ... zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.

  • Comment number 70.

    What we need the banks to do is quite simple. We need then to lend sensible amounts of money on sensible terms to those who are creditworthy and we need them to avoid pointlessly indebting those who are not.

    What they are actually doing is lending conservative amounts on significant margins to those who are very very obviously creditworthy (margins only made to look reasonable by the all-time low interest rates). Then they try to lend to those that are averagely creditworthy at ridiculous margins and often at APRs that would look steep in almost any market conditions.

    I'd like to think they were not so stupid as to do this as it will make the recession deeper in the long run. But bankers have not exactly done much to show us they can focus beyond the ends of their noses.

    I typed ficus then by mistake which is probably quite apt since in interviews bankers seem to be grasping at any fig leaf that will spare their blushes and make them seem cleverer and more reasonable than they are.

  • Comment number 71.

    If the banks lose money, they're bad; now a couple have made a profit, that's bad. Make up your mind. 67. Thatcher didn't force anybody into the housing market, she gave us all the chance to buy our own property ; nobody forces anyone to pay extortionate house prices, in fact if the people who pay these extortionate prices laid off the market, the price would drop to an acceptable level. Unfortunately human greed being what it is, people will always take the risk of buying what they can't afford in the hope it won't come back to haunt them, or someone else will pay the piper.

  • Comment number 72.

    All those City staff who are hoping to walk straight back into vast bonuses should remember the word "sacrifice".
    Almost the entire country is being forced into making sacrifices to wet-nurse the whole banking system back to health.
    Savers are making a sacrifice.
    Pensioners are making a sacrifice.
    Taxpayers are making a sacrifice.
    And all users of public services will be making sacrifices in the future.
    In the name of fairness in society, and community spirit, City bank staff should follow suit.

  • Comment number 73.

    ....or the future cost to the economy of weak businesses that would be propped up if government forced banks to lend to all and sundry.
    er , like the weak banks you mean?
    Also how can I see headlines saying there has been a writedown of £32B of bank assets...which sounds suspiciously like a loss to me..and then have "profits" of 1/10 that?
    And that makes it allright then!

  • Comment number 74.

    Stevewo - I am not sure that "sacrifice", "fairness" or "community spirit" exist in the city vocab. That is why they should not have been bailed out. Capitalism is for grown-ups.

  • Comment number 75.

    No, banks are back to their greedy habits. My son is trying to finance a new car under the government scrappage scheme. He's a 25, single with an honours degree in maths earning over £20k with minimal outgoings. The garage tried 3 finance firms and he was refused by all 3. Because of this he was advised to check Experian. His check showed no problems and when he paid extra to get his credit score it was 890+ making him VERY creditworthy. He then applied to his bank (Halifax) and was granted 80% of the £5K he asked for at an interest rate of 28% APR. This when base rates are the lowest ever. What a rip off and what thanks for the taxpayer bailing them out

  • Comment number 76.

    #36 rbs_temp wrote:

    'What do you suggest we do with our money? Put it under the mattress at 0% interest?'


    ...NO!...stick it in oil company shares...oil, as a commodity, is disappearing fast...and they pay reliable dividends as well!

    Remember...oil companies...unlike banks...operate in a monopoly environ ;o)

  • Comment number 77.

    Mr. Peston - You have a responsibility as a journalist and self-proclaimed expert regarding the financial sector to be truthful, complete, honest and respectful of your audience. The issues you choose to comment on and stories you choose to follow frame the debate and influence millions. You therefore have a grave responsibility.

    How can it be then that you appear not to know the difference between an investment bank and a commercial bank, the difference between wholesale and retail banking, between risk taking and risk management?

    Your reporting adds credence to the notion that investment banking is gambling. Surely you know better. Why then do you add your informed voice to this populist view.

    There is no question that the financial system is broken and needs serious help, but your reporting is deflecting attention from the real issues facing the financial sector and focusing it on what are perhaps easier issues to understand (and vilify) such as bonus payments.

    Sadly, those in the know are watching the debate in the UK and laughing their socks off. All of the negative commentary will amount to nothing and the city will go on paying huge bonuses to their staff because it's not really the issue and there is no legal way to do anything about it. Were the focus on the real issues, then the banks would be scared. You would see them complaining - and the are not.

    You should credit your audience with more intelligence and a deeper understanding of the issues. Those who care about these issues would rather have an intelligent evaluation of the sector and developments within it. Many month ago when hedge funds were in the ascent, you attended a conference for hedge funds and commented on how their efforts to be cool and trendy fell short. But when you started the piece, you asked the question "what is a hedge fund" and then admitted that you didn't know. A flip comment to lighten the report, perhaps, but shocking all the same. How could you not know what a hedge fund is and does? In light of the collapse in the international financial sector and the role hedge funds played in it, don't you thing you should have been more informed and done a better job in informing your public?

    You have a unique position and a unique ability to get the train back on track. To get the debate focused on the real issues and to put relevant and probing questions of the players in the sector. I encourage you to step up and live up to your potential. I ask you, do you want to be remembered as the man who didn't know what a hedge fund was or do you want to be know as the journalist who made a difference?

  • Comment number 78.

    #73 wha you have to realise is that "write down" is not "write off", the assets written down now can return in a few months with a higher value so even more "profits" are made... a bit like a house you buy for $200,000 and it is now only worth $150,000 so you have written down the value of the asset by 25% ..if you do not sell the asset, its value is of no two years time the house may be worth $220,000 it then appears to be a 20% profit... it is all smoke and mirrors and you can be rest assured the only winners will be the banks whose are on a one way bet....

  • Comment number 79.

    stevowo and truths33k3er...

    Both of your posts remind me of a phrase I used to tell a mate down the pub...

    Marriage is about compromise!

    Parenthood is about sacrifice!

    Banking is just pure vice!

    Life is so great eh!.....

  • Comment number 80.

    #60 FrankSz


    FrankSz for the new president of the UK Republic!

  • Comment number 81.

    It vexes me no end that the public as a whole has jumped on the tabloid notion that it's the taxpayers that have personally bailed out the banking industry.

    As a taxpayer myself I have not given a single penny to bail out a single bank.

    No, the governments of the world have merely added a small amount, relatively speaking, to the public debt. Which, as it happens, is the principal way in which capitalist economies simulate 'growth' in the first place, in an otherwise closed financial system. Don't believe me? Check out - the pattern is not hard to spot.

    So please, the next time a catchy phrase involving the taxpayer comes to mind, please stop and think again. Remember that the banking industry is a service industry. The alcoholic should not blame the bar staff.

  • Comment number 82.

    "...we have to make a choice about ...sound businesses that go needlessly bust because they are being starved of credit, or ...weak businesses that would be propped up if government forced banks to lend to all and sundry."
    Can we conclude that banks are no longer capable of choosing winners? If they are that useless, how come they are paid so much? As an engineer, I often regret my choice of career.

  • Comment number 83.

    81. At 9:12pm on 03 Aug 2009, disingenous wrote:

    "As a taxpayer myself I have not given a single penny to bail out a single bank." - no the government has promised them your, and your childrens' rising tax take.

    "No, the governments of the world have merely added a small amount, relatively speaking, to the public debt." - if so small why are the IMF concerned? he stimulous is bigger than the New deal and WW2 in real terms and still we haven'y youched the side.

    "Which, as it happens, is the principal way in which capitalist economies simulate 'growth' in the first place" - er....only if you follow the criminal Keynsian model. Real wealth comes from production and savings.

    Please do not present your views as the only "truth" - it irritates me.

  • Comment number 84.

    You talk as if you understand what is going on at grass roots level. I ask you to provide your own factually obtained evidence (you know like proper journalists do).

    Try chatting with a few bank staff (and I don't mean the upper echelons that you normally rub shoulders with, I mean the guys and girls at the sharp end) or even better their customers (again I don't mean the CEOs and MDs that you normally go sipping champagne with) and you'll get a true understanding of the help being provided.

    And when you've finished doing that, why not have a chat with your Dad and ask him what the Government were doing whilst it raked in the largest tax bounty this country has ever known. In fact don't bother, I'll put you out of your misery, they weren't saving it. No, they were spend, spend, spend, just like the average Joe.

    Stop believing your own hype and start researching properly.

  • Comment number 85.

    Are banks doing enough for us?

    Well no of course not - but that's not why they are there as their 'raison d'etre' is to use 'us' to make money for themselves and hopefully their shareholders - not for Britain, British, taxpayers and not to be generous or philanthropic - this is frequently over-looked and I am afraid a lot of the discussion is naive as they will not alter course unless forced into this by legislation, regulation - a good smashing up!


    For one thing, more-or-less everyone is agreed - from the governor of the Bank of England to the householder struggling to keep up the payments on a 100% mortgage


    Everyone is a Greed? That's a bit strong Robert - I thought that it was just the Banksters?


    The current position of the UK economy is that not one single politician seems to have a FULL clear vision on the way forward with overall UK banking/ finance sector structure, regulation and legislation although the Tories could probably do a lot better than the Goondog Trillionaire Brownites and even Vince Cable is holding back with proposals although I think that this is politicallly tactical on his part.

    Even I have to agree with Gordon Brown on one thing - and that is the UK is now in such a mess in relation to the global economic mess that many of the problems can only be solved internationally e.g. tax haven issues.

    The REALITY is that the government should either take more financial pain now and put in a strong radical set of reforms and have a more sedate but more stable UK banking sector OR hope that the UK government bank bail out/minor changes put in place are helped by some sort of global recovery.

    The banks will not change unless they are forced to do so and they have the courts on their side as existing banking and financial law is inadequate from the UK taxpayer's position - banking regulations are one thing - the law is another - new laws are needed as part of the regulatory reform otherwise nothing materially will change. The laws cannot be changed until a new banking structure is decided on - and then has to be agreed at EU/EEC level and this may be intractable and take a several years to sort out on past/current EU performance.

    In other words the current banking/economic crisis is intractable without these critical changes - I can't see these measures being discussed or implemented and our best hope is for a change of UK government next year. The problem is that all major political parties are scant on detail of any legislative changes and e.g. as to who would be personallly responsible for steering the UK banking sector/economy and being responsible and with power to effect changes very quickly, in a new banking structure.

    This should be LED by the Prime Minister and Chancellor, BoE, Treasury etc but one thing I think is clear - the UK economy is completely rudderless at the moment! Even the structure does not matter in absolute terms - we need someone to say this is what we are going to do and spell it all out in full detail in their general election manifesto and let the country decide asap.

    I'm afraid that much of the debate about banking/ lending /national debt is superficial, impertinent and ineffective - I wrote last December that the UK economy would be in the doldrums for at least five years and maybe as long as ten years unless radical changes are put in place - I still hold that view.

    Just because some or even most of the big banks are making profits does not mean that the UK economy is improving overall - many of the profits and trades are generated internationally for the benefit of spivs, speculators, non doms and vultures.

    The UK is highly exposed on fuel, energy, natural resources and heavily reliant on imports. The argument that the banks pay taxes in the UK does not matter if a good proportion of that tax money is being wasted by the government and not re-invetsed in the non-banking sector/ sustainable UK economy.

  • Comment number 86.

    #50 sadbloke

    Thank you for replying to my posts in a rational may be right about most posters not knowing much about this subject...but for the last 2 years I have learnt a lot about finance and become ever more incensed with the financial industry.

    As for me... I'm just a simple, middle aged engineer, trying to make sense of it all. As far as I am concerned the whole finacial industry is full of crooks.

    What you have said does make sense.

    The one thing this whole debacle has taught me is to never trust anyone, other than yourself, with your own money!

    You had the fortune to understand this before you retired!...however, the way things are going, I just hope you get to enjoy your retirement fund....things are beginning to get very serious!

  • Comment number 87.

    >> 83. At 9:27pm on 03 Aug 2009, truths33k3r wrote:
    >> The stimulous is bigger than the New deal and WW2 in real terms

    The irony in your choice of the word "real" is delicious.

    >> Real wealth comes from production and savings.

    Care to explain where the money to pay for these products comes from? Certainly not from anyone's savings.

    >> it irritates me.

    Sorry about that, I'm just expressing an opinion - in much the same way as yourself.

    At the end of the day the banks were bailed out FOR the taxpayer, not for the bankers - surely that's a "truth" that you can't dispute?

  • Comment number 88.

    For once you were nearly accurate in your assessment. But what Varley was able to do was to cover up and not mention the fact that the major part of the profit made came from all the Salaries saved from the number of bank staff who lost their jobs. Average wage of those workers £18,500 - £24,000 x 2200 = £528000 approx. closure of branches and uk underwriting centres (Assetts) another £500,000. I know as a broker for 20 years and a former banker the number of young people at Barclays alone under the ages of 35 who have lost their jobs just so the directors and the few at the top can keep their high salaries and bonuses.They also made a killing on not paying any interest to us on our Savings Accounts - in my case 0.09% for almost a year. So lets be realistic not all of us are innumerate - you cannot give the Premier league clubs the overdraft facilities when they are nearly bankrupt - go begging for £6billion from Dubai and tell us that Barclays have suddenly in 6months found a Magic formula. HSBC are making thousands unemployed and closing branches - it is the cost cutting that they are hiding from the media - and you Robert Peston was had by Varley.

  • Comment number 89.

    I critcised John McFall many months ago (probably a year ago on this very blog)!

    I'll now admit that he is beginning to gain my respect. Keep up the good work Mr McFall. You have raised your game.

    If you manage to secure a UK equivalent of the US Glass-Steagall law, then please consider your job done!

  • Comment number 90.

    To echo your comment that we are lost if we don't trust the number....well...


    What is hidden off-balance sheet? Without knowing that how can we have any faith in the company and, what's more, value their shares?

  • Comment number 91.

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

  • Comment number 92.

    87. At 9:53pm on 03 Aug 2009, disingenous

    Yes you are right it is ironic given that fiat currency is virtual.

    ">> Real wealth comes from production and savings.

    Care to explain where the money to pay for these products comes from? Certainly not from anyone's savings."

    Real wealth is something tangible i.e. gold, oil, etc etc. When you talk about money do you mean currency i.e GBP? From my perspective wealth does not come from the printing press, otherwise the government could print us £10Bn each and we could buy the world.

    "At the end of the day the banks were bailed out FOR the taxpayer, not for the bankers - surely that's a "truth" that you can't dispute?" - I do, but in the end of the day history will prove one of us to be correct.

  • Comment number 93.

    It seems to me that the two named banks have been making one hell of alot of hay while the sun shines - and obviously when it doesn't. Also, this new wave of bonuses for bank staff is NOT acceptable.

    I have Premier account with one of the banks. They pay me a rediculous 0.75% on my savings, and 0.25% if I make a withdrawal. They are happy though to take 15.2% on a personal loan - This amounts to legalised loansharking! Mind you, it seems that the banks in general have been reading 'Orwel' in their training sessions - Animal Farm springs to mind.

    Tell you what - how about we all let these people fleece us for another year. If anyone needs the so-called credit scoring process, it is THE BANKS - We should decide whether we trust them, and not the other way around.

  • Comment number 94.

    was it not the over lending by banks etc that created part of the problem, so is it wise to get banks lending greater amounts during this period of decline.
    people will spend more if they can obtain a loan they will use it but with unemployment on the rise it creates a false reading on any recovery.
    the government pushing for more loans shows all they want is good figures to please the voters but the overall cost could cripple people for years.
    people should during these times live within their means and be frugal rather than obtaining loans to spend.
    sadly this governments concept will cause the overall problems to last much longer.
    our leaders seem happy to see the people of this country up to their ears in debt, unemployed and on anti depressants (for witch there will be a 20 pound charge per visit to the doctors).
    the people of this country deserves and need a solid government working for the people not what we have at the moment.

  • Comment number 95.

    Following my previous comment - We, the customer, are being held to ransom by these ONCE but not now respected institutions. You visit a branch, they look at you like you've just risen from Hades, look you up and down, and then decide if they want to help??? What these people don't seem to realise is the fact that WE, the customer, actually pay THEIR salaries.

    These Instituations needs to be Institutionalised! They take the Credits on a daily basis, invest overnight and weekly for their own profitability, then say "here you are - here's your pocket money - £7.30 on a £16,000 investment" Yeah Right!! I don't think so!!

    These sharks need to realise that they cannot just sit on their whatever, and not lend to small/medium business/companies - sorry - they do - at an extortionate rate of interest! NATIONALISE THE LOT!! Give us what we're owed NOW!

  • Comment number 96.

    Come on Robert you have got to be joking the banks are one hundred percent - absolute - only interested in themselves I appreciate this may look like an economic story but it is very political so here is a political perspective to - balance the arguments

    When we especially those of us who think they have some sway with them and those who think they have some money with them wake up to find they have no influence and no money then they will realize how they have been pillaged by the locusts before they moved on.

    Playing on the words of Mark Twain - only one word changed-.

    If you pick up a starving dog and make him prosperous he will not bite you
    This is the principle difference between a dog and a banker.

    We have the most stupid corrupt government in modern history and they have lead us blindly and many still singing into an horrendous trap I hope we never wake up because the reality of where this country has been dragged to is going to be too harsh a reality for most who have been complicit in supporting these witless politicians and the numerous unselected peers of the cabinet.

    Why cant people take a deep breath of fresh air before listening to Mandelsson and his mates something to clear the head so the devilry of his words become clear and he is the rule not the exception in this cabinet that rule us when they should serve us.

    WAKE UP people this is our country and our childrens future they are playing fast and loose with for there own perverted glory- fifty hours of fame on a DVD set for the grand children.

  • Comment number 97.

    #93 i too am a "premier" customer with probably the same bank...i was amused to receive a letter offering me a loan £10,000 at 12.50%.... can you imagine how stupid they think i am to borrow my own money and pay them more than ten times what they give me for lending my money out.. no wonder they can make such huge profits, quite frankly with these margins only an idiot could lose money...(oh i just noticed the 57% fall in first-half net profit! )

  • Comment number 98.

    The "good" banks results are simply the taxpayers injected cash coming out now on the other end as banks' profits. It is ridiculous: it is a downright theft.
    It is the right time the government put a fraud squad to deal with the financial community. There is already a document published by the Treasury Committee that justifies this. Just read it. It is lengthy but very clear. This crisis is a result of a fraud and this fraud continues:

  • Comment number 99.

    When people start investing, spending markets go up, good all round... Equity investors start making 20% returns in return for risk. So put £100 with risk of some loss and can make £20. Wait a minute though, there are some who start making millions in bonuses that too taking no personal risk, as though there are ingenuous reasons why they made money (as a whole industry). And what is the value addition to community? Nothing (unlike retail banking)! Industries make money for making contribution in some form to society, I wonder how gambling with no output contributes to the society?

  • Comment number 100.

    Jolo suggest the differential is "profit" shows a rather naiive view. I Suppose you, like a number of correspondents have very little understanding of the position which is being sensationalised for one purpose and one purpose only - Headlines! There are significant costs in running and providing retail banking surely you would be first in the queue to complain if your bank decided to close the branch or outlet nearest to you, enough do when it happens. It's certainly not as simple as you portray in the example you use to influence others (typical by the way, with how the press report it)

    Every business is there to do one thing ..provide an income for its owners, whether it be shareholder or individual owner/ partner. To do less means eventual insolvency.

    Yes the word has changed, or has it ?

    Base rate used to be traditionally 20/30/ 40 years ago averaged 10% over a period of a decade and cheapest lending available at that time only exceptionally was less than 13% pa and even then just to PLC's and that's not the APR(higher) - savings rates at the time were 2.5% at best and inflation varied between 2 and 20%.

    Businesses didn't go bust paying those rates,or not borrow, well only if they were badly managed, directors put up personal guarantees as an expectancy to support their company borrowing. The reality is that over time many have not had it so good and now the cycle has turned they look for someone to blame other than themselves - you hear nothing much from those who have benefited greatly from recently reduced rates, why should they put their heads over the parrapet when they are "coining" it. Directors relying on ever appreciating property values to support their borrowing - well the world has changed .....values have been lower in case you hadn't noticed.

    Credit has always been subject to assessment and not a right, the reasons for lending or not over the years have always been tweaked according to the economic cycle, yet there were very few complaints until it became made sensationalist headline in order to sell papers or provide a "news" service.

    Everything is ramped up today like it's major even very minor road works get portrayed as " expect delays " on local travel news when the likelehood is you'll suffer nothing of the sort..but it does keep the travel correspondent in a job .....and this goes on all across the wasteful BBC in the guise of a publicly funded service. Who pays for that? I couldn't care less if I'm held up for 30 seconds at traffic lighhts whilst the council repair a man hole cover, but the BBC worry for me, by repeating it regularly avery 20 minute so and carry on even when its fixed, so soon the great gullible british public think, ooh better not go there we might get caught in a delay.

    Right back to the real story

    Yet as other writers have said , who was it who fuelled the demand for credit, was it the big bad banks who willingly offered it or the public at large who demanded to keep up with the rest or even overtake their neighbour. Many have lost the ability to be prudent, including bankers perhaps, but to whinging businesses, individuals et al (journo's) it's about time you got use to the new order and learn't how to cope with things when they are not in your favour and work with the system as it is, no wonder the Aussies grabbed the handle whinging poms! I now see where they are coming from.

    Many read the created headlines and form their opinion, irrespective of what lays behind it whether fact or fiction. Everyone is manipulated by others in some shape or form - it's just sad to see sometimes it's from those that just don't understand, especially those that don't get what they want or feel THEY deserve.


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