Almost £4b more in cuts coming in the budget.

[foxy lady]

Oh dear, what a lack of basic understanding.

 

It was nothing to do with governments, except that they deregulated the banks (in the 1980s) assuming they could be trusted.

They couldn't.

Certainly the banks were casting around for the next big thing, and that was credit. They couldn't give it away fast enough if you remember. The last untapped market for credit was the poor, who had not been considered creditworthy up to this point. The people who sold it to them pocketed huge bonuses knowing they would be long gone when it all went tits up.

 

Actually it happened in 1997 when Gordon Brown deregulated the banks and set up the FSA to have a light touch. This was shortly followed by the failure of Northern Rock. A few years later a few more were to follow.

 

http://www.bbc.co.uk/news/business-13032013

 

Gordon Brown has admitted he made a "big mistake" over the handling of financial regulation in the run-up to the banking crisis of 2008.

 

The former prime minister told a US conference he had not realised the "entanglements" of global institutions.

 

He said: "We set up the FSA [the City regulator] believing the problem would come from the failure of an individual institution. That was the big mistake.

 

"We didn't understand just how entangled things were."

 

Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.

[I1L2T3]

Actually it happened in 1997 when Gordon Brown deregulated the banks and set up the FSA to have a light touch. This was shortly followed by the failure of Northern Rock. A few years later a few more were to follow.

 

http://www.bbc.co.uk/news/business-13032013

 

Gordon Brown has admitted he made a "big mistake" over the handling of financial regulation in the run-up to the banking crisis of 2008.

 

The former prime minister told a US conference he had not realised the "entanglements" of global institutions.

 

He said: "We set up the FSA [the City regulator] believing the problem would come from the failure of an individual institution. That was the big mistake.

 

"We didn't understand just how entangled things were."

 

Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.

 

And here is the problem: regulators still don't know how to regulate the banking sector. The banks are still enmeshed into each other. Operations are global. Much of the activity around non-traditional financial instruments is carried out in the shadow banking sector which is almost entirely unregulated.

 

Osborne is in no stronger a position than Brown was. The whole thing could go pop any time.

[ricgem2002]

Actually it happened in 1997 when Gordon Brown deregulated the banks and set up the FSA to have a light touch. This was shortly followed by the failure of Northern Rock. A few years later a few more were to follow.

 

http://www.bbc.co.uk/news/business-13032013

 

Gordon Brown has admitted he made a "big mistake" over the handling of financial regulation in the run-up to the banking crisis of 2008.

 

The former prime minister told a US conference he had not realised the "entanglements" of global institutions.

 

He said: "We set up the FSA [the City regulator] believing the problem would come from the failure of an individual institution. That was the big mistake.

 

"We didn't understand just how entangled things were."

 

Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.

 

didn't Georgie boy want them to go further thou

[foxy lady]

didn't Georgie boy want them to go further thou

 

Yes. He wanted Miliband to apologize too.Which he did.

 

http://www.dailymail.co.uk/news/article-1353636/Ed-Miliband-says-sorry-Labours-role-financial-crisis.html

 

Ed Miliband finally apologised yesterday for Labour’s failure to regulate the banks properly ahead of the financial crash.

 

The new leader – who worked closely with Gordon Brown at the Treasury for years – said he was sorry for the loss of jobs, the near- collapse of Northern Rock and nationalisation of the bank.

 

The move will put pressure on his Shadow Chancellor Ed Balls to do the same, particularly as he worked alongside Mr Brown on regulation first as an adviser and then as a Treasury minister ahead of the near-meltdown of the banking system.

[JFKvsNixon]

A fundamental difference in the USA is that most states allow homeowners to simply walk away from their mortgage. The CMOs/CDOs driven off sub-prime loans quickly lose their income source when large numbers of sub-prime borrowers walk away. In the UK it is very different. Hand the keys back and the debt still follows you. It is less likely that financial instruments based on UK sub-prime loans could cause a systemic problem on the scale of what happened in the USA with the subsequent take down of a big chunk of the global financial sector.

 

I think that you're not quite getting my point.

 

It was the trade in the American subprime mortgages that put such a strain upon our banking system as well. Our banks were in it up to their necks as well, in what was up to the crash an extremely profitable businesses.

 

I do have a certain amount of sympathy for the banks, because their shareholders would have seen the other banks making huge amounts of money in the trades of mortgages and their derivatives, that sooner or later they'd probably have replaced any senior management that would have refused to join in on the party.

 

Hypothetically, even if there was some sort of cautious investment large bank who shied away from risk, it would have soon be taken over by their rivals because of their failure to expand.

 

So as I said at the beginning of my input on this thread, I feel that the blame lays squarely on the shoulders of those who instigated the deregulation arms race between between the City and Wall Street's regulators in the battle for financial supremacy.

[I1L2T3]

I think that you're not quite getting my point.

 

It was the trade in the American subprime mortgages that put such a strain upon our banking system as well. Our banks were in it up to their necks as well, in what was up to the crash an extremely profitable businesses.

 

I do have a certain amount of sympathy for the banks, because their shareholders would have seen the other banks making huge amounts of money in the trades of mortgages and their derivatives, that sooner or later they'd probably have replaced any senior management that would have refused to join in on the party.

 

Hypothetically, even if there was some sort of cautious investment large bank who shied away from risk, it would have soon be taken over by their rivals because of their failure to expand.

 

So as I said at the beginning of my input on this thread, I feel that the blame lays squarely on the shoulders of those who instigated the deregulation arms race between between the City and Wall Street's regulators in the battle for financial supremacy.

 

I understand your point well enough. I'm just explaining what created the tipping point for crisis. Yes you are right that British banks were up to their necks in the CMO/CDO trade. They will have been trading financial instruments based on sub-prime lending in the USA. They will have been creating their own CDOs/CMOs. The CDOs/CMOs all need a constant feed of money flowing into them and the point I'm making is that the ability of US mortgage holders to just walk away from their loans is what caused that flow of money to slow down. It was the tipping point for the financial crisis. Financial instruments based on British mortgages could not implode in quite the same way because there are two solid backstops: firstly the fact that if you hand back the keys you are still liable for the debt and secondly UK governments have a massive appetite for propping up the housing market.

 

So, you are right about regulation not being good enough to prevent the explosion in the creation and trade of exotic financial instruments. But no regulation anywhere in the world was good enough, basically because none of the regulators understood precisely what the banks had done. Nobody was racing to make it easier for the banks to take down the economy. IMO in that respect the banks are culpable too, very much so, and bankers have been prosecuted and jailed in other countries for the same activities our bankers got up to. Even today the regulation is not good enough, particularly in the UK where bankers are still behaving in much the same way and have mostly escaped prosecution for what happened in 2008.

[El Cid]

I received a letter from the West Yorkshire pension fund, stating that I will be paying £10.70 more per month as a result of the last budget, I dont recall that being big news at the time.

£10.70 more per month if you earn £15k, more if you earn more, I earn around £12.5k