Fraud Helps Stimulate the Economy

Lloyds banking group, which includes the Halifax and the bank of Scotland, has increased its provisions for its previous shameful activities. The provision for selling people payment protection insurance, which has been more akin to an old style confidence trick that it has to an activity that you would expect from a supposedly reputable bank, has been increased by £1.8 billion to almost £10 billion and the provisions for compensating businesses for selling them interest-rate hedging products has been increased by a mere £130 million. The latter seems suspiciously low figure.

One famous BBC commentator, Robert Peston, has argued that the payouts have actually helped stimulate the economy. I suppose by the same logic we should encourage crime because the prosecution and defence of criminals, caring for them in prison, and all the attendant expenses of keeping law and order help stimulate the economy.

2 Responses

  1. Corporate fraud is almost immune to suit, using money that does not really exist, and ignorance is no defence.

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