Fining Yourself

Can someone please explain to me the logic of fining the Royal Bank of Scotland? The bank has been undertaking some troublesome practices again.  The Financial Conduct Authority has found that more than half of the customers that the bank advised about mortgages, debt consolidation and the affordability of prospective mortgages were given the wrong advice. Presumably the advice was wrong for the customers but not wrong for the bank, and so the FCA has fined the bank £20.7 million with a discount of 30% if the banks pays the fine promptly.  Continue reading

Banks and Bankers – Old Habits die hard

Eight of Europe’s largest banks have been caught red handed forming cartels to fix interest rates. Two of them, RBS and Barclays had revealed the existence of the cartels and their part in them and as a result they have been spared any penalty. The others, including the hapless and hopeless state owned Royal Bank of Scotland, have been fined €1.7 billion. Continue reading

The “help yourself” bank

The Royal Bank of Scotland is one of the United Kingdom’s largest banks. A few years ago it became insolvent and by any normal rule of business, if the shareholders were unable or unwilling to support it, the bank should have gone into insolvent liquidation. However, irony of ironies, the government deemed the bank too large to fail and supported it with so much cash that the government (or taxpayers more accurately) now owns 81% of the bank. Continue reading

The Lending Policy of National Westminster Bank and Royal Bank of Scotland

I came across a case which illustrates perfectly the problems that the banking industry is continuing to cause in our economy. It is better neither a borrower nor a lender be, not just because borrowing can ruin friendships and distort them, but because borrowers in effect put themselves in the hands of the lenders and while those hands may be safe for a time eventually the lender’s greed ruins the borrower. What follows is a true story. Continue reading

Another Fine Mess the Banks have got us into

By foolish speculation with the money of their customers banks have caused many problems for most people in most economies. It seems that the bankers cannot resist a free gamble with other people’s money. Also, whilst insisting and monitoring prudence in their customers who borrow, the banks manage to borrow recklessly, leveraging their deposits into realms of what should be fantasy but is unfortunately reality. As though this damage was not enough we find that banks are not paying sufficient attention to their core business, of getting and looking after the money of the poor mugs who have to use banks. For the past week NatWest, the Royal Bank of Scotland and other banks in that group have managed to mess up what should be a simple business of recording money going in and going out of the accounts of their customers. Continue reading

Seven Great Unsolved Mysteries of Modern History

For nearly three weeks protestors inNew York Cityhave campaigned against the banks and corporate control of American politics. The key issue about the bankers and corporate investors for those that protest (and for the millions of us that do not protest) is a simple question. If the bankers brought an end to our prosperity by recklessness why were they rewarded instead of being punished? Continue reading

Who Controls Our Money?

About two hundred and ten years ago, Mayer Amschel Bauer-Rothschild, the father of the Rothschild banking dynasty said “give me control of a nation’s money and I care not who makes her laws”. His words explained the relationship between bankers and the state. That held true of the power vested in banks in 1800 and still holds true today in most nations.

But today in the United Kingdom governments are going to make laws about banks and banking. Will the banks be able to resist the laws or has their power waned? Banks are powerful creatures and their wealth and control of credit makes it hard for any government to act contrary to what the banks deem in their best interest. Banks place their own interests ahead of the national interest, like true multinational companies.

But in the United Kingdom virtually everyone, outside the banks, knows that the banks are in need of reform.

After a long and hard look at British banking, the Independent Banking Commission has reported on the measures it recommends that will help avoid the kind of debacle that banking has undergone in the past three years. No reform can be a substitute for honest, wise and prudent leadership, but the Commission’s recommendations, while not being able into insert integrity and caution into banks and their leadership will, when implemented, make things much less likely for banks to need taxpayers’ money to avoid going bankrupt.

Had normal laws and procedures been followed several years ago, at least three, and possibly four of the major U K banks would have going into bankruptcy, because they could not pay their debts as those debts fell due. Those banks would have suffered the fate of thousands of businesses and had the ignominy of being would up, their assets (such as they were) seized, and their directors disqualified from holding directorships for fifteen years.

Had Slippery Syd the Master Con Man conceived of such a delicate effective fraud as personal protection insurance he would have had is collar felt rather sharpish, but banks are immune from normal laws, and they will pay back some of the PPI money they conned but no one will stand in jeopardy of losing his or her liberty.
It is all part of the condition of British banking; insolvent crooked and treating depositors as a trough at which the banking executives directors and speculators may gorge.

Of course the banks were to blame for the state they were in, with a good helping of contributory negligence from the government of the day and previous governments which allowed the banks a free hand with our savings and assets. Fortunately for the banks, they were deemed by the government as being too big to fail, and so they were rescued with billions of support from taxpayers which they obtained at bargain basement rates while saddling the taxpayers of the future with debts and liabilities that will take many years of growth or inflation to erode. Some banks were taken into virtual public ownership.

That means we have the likes of the Royal Bank of Scotland, HBOS  and Lloyds TSB examining the affairs of their customers to ascertain whether the customer is credit worthy and whether the facilities should be continued.

For some reason the executives who did the most to contribute to these failures – the directors and traders of the big bonus culture – were let off the hook and allowed to retain their ill gotten gains and pensions, notwithstanding the damage they caused. We can speculate about the reasons but I see no sign of the likes of Fred Goodwin hanging his head in shame.

The reforms that have been recommended by the Commission are structural; banks that take deposits should have their assets and liabilities under separate corporate and management control, well away from any speculative “investment” they may wish to undertake in order to swell the bonuses of their speculators. The bank will not be able to use the widows and orphans funds as part of their leveraged speculation operations in future, probably around 2019.

The other major change is that banks must have a buffer of 10% of their domestic retail assets, rather than the present wafer thin requirements that exist or the 7% recommended by the International Committee on Banking Supervision. The biggest banks would have to keep back more than 10% in reserve.

There are other proposals which will create more competition and make it easier for customers.

Of course, the banks will object to these changes, and we will have to find out who rulesBritain; the banks or the government. I would add to Mr Bauer-Rothschild’s words of wisdom; the control of a nation’s money is only vested in a bank if the bank has lent money to that nation. In the United Kingdom the taxpayers have lent money to the banks and so the banks will have to care very about who makes the laws that the United Kingdom.