Hanging 20 bankers at the end of the street won't help, says Blair

GoTeam, surely it was Labour that bailed out the banks pre-Tory coalition ...

GoTeam, the repackaged subprime mortgages were by and large not sold to the general public but to sophisticated investors. They had information they needed to evaluate the risk in the mortgage pools in the prospectus. They did not do so, just relied on the rating assigned to them by the rating agencies. The very few that did delve into the individual loans in each pool saw the writing on the wall and won big when they bet against the sub-prime market.

It was not the 'bankers' that rated the repackaged loans triple A, it was the rating agencies. But of course to many on this thread that distinction is probably irrelevant because it is all one amorphous interchangeable 'them' that caused this mess.

Edgar, packaging 'sub-prime' loans with a tiny amount of 'good' loans and labelling them triple A is illegal, because it is a lie.

Blue, the Tory led coalition told a Sheffield based steel maker there was not enough money to loan them £10m, then bailed out banks to the tune of fuck knows how many billions.

I don't think they speak with one voice, but some seem to have one eye shut, and some seem to sing from one hymn sheet, the one about 'services to banking'. Some seem to stand on one leg with one parrot on their shoulder and one patch over their eye,. Some seem to have a 'lighter touch' than the Artful Dodger, and when it comes to regulation, some seem to have one hand tied behind their back.

"Especially from an industry that had spent 30 years telling everyone in other sectors that they had to live by the market, that we couldn't prop up 'failing' businesses. Suddenly the rules changed when they were in trouble..."

Who the hell is 'they'? Do 'they' speak with one voice?

"\There has been wholesale wrong doing and considerable illegality in the banking sector,for which everyone in this country (and many others) are paying."

investment in US sub-prime was by and large legal.

the way those mortgages were sold was also legal.

the duopoly of the two companies selling them was legal.

so what are you talking about?

It was bank money when it was going well, suddenly transformed into public money when they lost it. Nice trick. Especially from an industry that had spent 30 years telling everyone in other sectors that they had to live by the market, that we couldn't prop up 'failing' businesses. Suddenly the rules changed when they were in trouble...

Thank God for the US. Without them, I think the LIBOR rigging would probably not have come to light.

quite, ttosca.

cote, did you really think I meant the whole concept of banking was an entirely bad thing? I suspect you knew perfectly well that I was talking about the way banks have been operated in the West and especially the UK.

The idea that it's all fine and non-bankers should move along now, nothing to see, is clearly ludicrous. There has been wholesale wrong doing and considerable illegality in the banking sector,for which everyone in this country (and many others) are paying. Of course there's a public interest in sorting this out - and in allowing public scrutiny of the way financial services operates. Although it seems our politicians and regulators are so pathetic we'll need the US to prosecute the worst wrong-doers.

'It just sounds like a daily mail rant'

In the interests of fairness, I feel I must point out that there is no such thing as a Daily Mail rant, but there are rants against the Daily Mail and this thread contains a few too many!

By the way, the Daily Mail whipped up this Nazi salute thing, but it wasn't a Nazi salute

www.telegraph.co.uk/sport/olympics/9436019/German-anger-as-dignitary-accused-of-performing-Nazi-salute-at-opening-ceremony.html

" They gambled with public money and lost, "

actually it was bank money at the time :)

though frankly this isn't the first time - the dot com bubble to name but one crash before there..markets inflate sometimes, and then burst...

there is already regulation to limit damage... but here's the thing: those few individuals didn't do this on purpose. far from it. they probably thought it was a relatively safe investment - mortgage debt generally is (as it is secured in something concrete). lack of homework there - yes. lack of willingness to make a profit - no!

sometimes i think people believe this was deliberate - it wasn't - it was yet another burst economic bubble, in a cycle of many.

the proposed compartmentalisation of banking into retail and investment wouldn't protect us in the way people believe it would - the system is tied up in itself (unavoidably) - so that if there is a cold going around...all banks catch it...

blue-

I don't see it as terribly complicated.

The financial crisis if the culmination of neo-liberal ideology which has taken hold of the West since around 1980. It is the idea that if you just tax the least, regulate the least, and don't interfere with 'the market', then this will promote the greatest good for all.

We've have 30 years of this, and it hasn't promoted the greatest good. It has promoted stagnating wages and the largest wage and wealth inequality for nearly 100 years.

There is no conspiracy here, and no conspiracy is necessary. Neo-liberal ideology is obviously perceived to be helpful by businesses and the richest, who want to be free to do as they please without regulations and without borders. In the same way that people who work for a wage for a living share a common interest, so do the wealthy elite.

There is no need to 'scapegoat' anyone or anything. It's not entirely down to the bankers - I said that in my previous post. The problem is systemic. The actions of the bankers are the symptom, not the cause. If we had proper regulation, they would not have been able to commit fraud on such a massive scale, or put the entire world economy on the brink of collapse.

ttosca, I am slightly confused as to what to make of your last post.

It just sounds like a daily mail rant drawing seemingly unrelated elements into one conspiracy theory.

Granted individual bankers have a lot to answer for, along with the other participants in this financial crisis, I can understand why you are frustrated. As to how this happened, there are a lot of complex reasons which I have attempted at explaining.

You won't find the answer in any convenient scapegoat.

blueshoes

Ttosca, certain bankers are to blame,

Actually, it's not really about individual bankers. Of course people are always morally responsible for their actions, and those bankers who knowingly and willingly made decisions which caused the crisis and actions which were otherwise illegal are entirely morally culpable, and should be legally culpable as well.

The problem is we had a system which allowed this to happen. How did this happen? How is it possible that the entire economy is brought to its knees because of the actions of large investment banks? The problem is systemic.

together with politicians who relaxed regulation which allowed the separation between retail (or 'utility') and investment (or 'casino' if you wish) banking to be removed so that banks could grow to the current size with its inherent conflicts of interests, because it suited the politicians to be seen to increasing the wealth in the economy. The regulators who fell in thrall with this thinking.

Well yes, and that's really my point. What we are experiencing now is the culmination of 30 years of neo-liberal ideology of deregulation and privitisation. And of course politicians relaxed this regulation - many of them are millionaires themselves and are constantly lobbied by businesses and finance to continue to deregulate.

They're really all in this together. The banks, politicians, the media. It's all about money. Democracy has been completely subverted in the interest of Capital. Look at how the Olympics is being run. As Zita Holborn says:

"1.Compulsory purchase of land 2. businesses closed/moved 3. missiles 4.media hijack of homes 5.black media banned 6.poverty pay 4 workers 7. no pay 4 workers/artists 8.brand police 9.gentrification 10.policing local community 11.overpriced tickets 12.free speech ban 13. unticketed events fiasco 14.G4S 15. Nazi salute 16.race/gender discrimination 17.disruption/delays 18. threats/fines. Olympics 2012-still counting"

And don't forget the man in the street who gorged on easy credit.

The man in the street took on easy credit because his wages have remained stagnant in real terms since 1980, whilst the cost of living has inexorably risen. The average man in the street is actually poor than he was in 1970.

Edam, I can understand your anger.

But you are reading like a tabloid with your pat solutions and sweeping statements.

Well said,
edam.

cote

"The banks are a negative force in this country"

Edam, you are becoming more and more extremist on these threads and funny sentences like the above are damaging your credibility imho.

Banks are an integral part of any economy, even truly socialist ones.

I think she or he meant the way British banks have been run, rather than the principle of banking per se.

If you eliminated them, they would need to be immediately replaced by something identical, arguably with a different name to calm the feathers of villagers with torches & pitchforks like you who have grown rather allergic at the word "bank".

It's quite appropriate to be angry at the banking sector. They gambled with public money and lost, they committed fraud, they award CEOs millions of pounds for failure - from public money, no less, and they received tens of billions of pounds in bailouts from public money.

Are you saying that people shouldn't be angry?

Looks like you can get segments on

Sadly I get rights restrictions too, which is a real shame.

Cote, at the height of the crisis we were within hours of the cash machines running dry, and chip and PIN machines failing. How is that not a collapse of the international financial system? The whole thing broke, was patched together but the patch isn't a long term or reliable solution - just look at the Euro.

Of course the banks are a negative force - are you going to pretend the Libor rigging was a good thing? That laundering drugs money is a good thing? That taking down the whole economy is a good thing? That starving business of investment is a good thing? That mis-selling PPI, and pensions, and endowments, and thousands of other products are all good things? That pissing away billions upon billions of pounds magically created by quantitative easing is a good thing? All those billions called into creation, at the cost of peoples' savings and pensions, and it's done sod all for the real economy.

The industry is rotten to the core and needs root and branch reform. We need a a financial system that supports the economy, not destroys it. That helps to create jobs and services, not destroys them. We can't keep stumbling along pretending it will all be fine as long as we keep handing over the cream to the fat cats.

Earlybird, I cannot click into your pbs link due to regional rights restrictions.

There is already the growing and largely unregulated 'shadow' banking system, that is filling in the gaps left by the banks and in some cases replacing them ...

To regulate banks now is in a sense closing the stable door after the horse has bolted.

"The financial collapse and the subsequent recession, which is the worst since the 1930s, was caused by the banks and financial sector"

As someone said, that is lazy populist Daily Mail analysis.

For one thing, it's not a collapse but a crisis. If it collapsed, I think we would all know it from the 1000% hyperinflation.

Also, the crisis started in the US in subprime mortgage market, where the mistakes were evenly shared between politicians (short-sightedness & greed), bankers (pure greed), and consumers (idiocy and greed). It is very unreasonable to put the blame exclusively on the shoulders of "bankers", the vast majority of whom have been working within legal framework (bad legal framework, for sure).

"The banks are a negative force in this country"

Edam, you are becoming more and more extremist on these threads and funny sentences like the above are damaging your credibility imho.

Banks are an integral part of any economy, even truly socialist ones. If you eliminated them, they would need to be immediately replaced by something identical, arguably with a different name to calm the feathers of villagers with torches & pitchforks like you who have grown rather allergic at the word "bank".

The financial collapse and the subsequent recession, which is the worst since the 1930s, was caused by the banks and financial sector. It's really not lazy to assign most of the blame on to them.

how could a financial collapse be caused by something outside the financial sector?

i suppose there are some things that could tip it (like Hurricane Katrina, which was a contributory factor) - government interference (or lack of it, in this case the US governments lack of regulation over mortgage sales and the duopoly in he US mortgage market) - but then you are always back to internal factors, the fact the financial sector bought into the sub-prime debt as an investment and got burned, resulting in massive loss of confidence in the market such that even banks still turning a profit and worth no less saw their shareprices plummet...leaving some of the banks to be bought at less than their real book value even when the subprime loss was taken off the balance sheet...

but for a country to weather it better or worse is still the politicians responsibility. Not every country faces Greeces difficulties, or has Germanys advantages...