Reply to: Bankers cannot have it both ways

[Moscow Mule]

"conscience" - does not compute - do you have a definition please?

There you go.

It's all Greek to me.

[BrilloPad]

Flippin' heck - it must have been verging on the criminal to tweak a contractor's conscience!

"conscience" - does not compute - do you have a definition please?

[EternalOptimist]

Flippin' heck - it must have been verging on the criminal to tweak a contractor's conscience!

It WAS criminal

just not against the law

[cojak]

Flippin' heck - it must have been verging on the criminal to tweak a contractor's conscience!

[EternalOptimist]

True. However these people were taking part (knowingly or not) in a big scam, it is only fair they face the consequences of it even though obviously these people are not the most guilty party in this but you simply can't expect a sustainable job of a coder supporting exotic derivatives tulip that is now causing big losses.

never worked in derivatives but I was asked to develop a database module that targeted the poor and gullible for a finance company based in Leeds. I did it but did not accept an extension, I still feel v bad about the whole thing

[AtW]

A lot of it will be back & middle office peeps on small(er) salaries.

True. However these people were taking part (knowingly or not) in a big scam, it is only fair they face the consequences of it even though obviously these people are not the most guilty party in this but you simply can't expect a sustainable job of a coder supporting exotic derivatives tulip that is now causing big losses.

[Moscow Mule]

Naturally the price for this would be tens of thousands jobs lost in the City, but I am sure the whole country will their hearts bleeding for them.

slightly

But not all of those people will be traders on ridiculous salary bonus schemes though will they? A lot of it will be back & middle office peeps on small(er) salaries.

The outlook for Essex doesn't look good.

[cojak]

the banking system cannot be allowed to do whatever it might like without interference. It cannot have it both ways - complete freedom of action in pursuit of profits - and taxpayer support to cushion losses.

taken from http://www.telegraph.co.uk/money/mai...31/ccom131.xml

Looks like bankers need a taste of their own medicine to me.

Not until I spread my savings across multiple accounts...

Warning! You savings may not be safe!

[AtW]

IMO 75% should be maximum mortgague advance by law - still higher than the 60% in Germany.

Just why on Earth they used gross income for calculation of how much to lend? Clearly even if just taxation is taken into acccount then people will have different disposable income from which they pay morgage? I would have understood the gross calculation if morgage payments were tax free, but they ain't. The disaster was just waiting to happen and I don't think we have seen anything yet.

[BrilloPad]

Rubbish. The problem area with Northern Rock was obvious - they were too heavily dependent on markets to raise the money and their internal structure (most likely for tax reasons) forced them to sign new business all the time, so any issue with their ability to raise finance would be fatal.

Also, why does it require a very highly paid person to suggest that 125% morgages is not exactly a very good idea?

Apparently FSA had like 4 people dealing with NR - can you fking believe it, 4 people for a bank with £100 bln morgage book that took 20% of the morgage market last year? The mere fact that NR expanded so fast should have raised red flags immediately on quality of their customers and on exactly how stable they are.

4 sounds 4 too many. they should have just a man down the pub. "Are 125% mortgagues a good idea?". "Is just relying on the money markets(a lot more volatile than depositors) a good way of raising cash?"

IMO 75% should be maximum mortgague advance by law - still higher than the 60% in Germany.

[AtW]

So unless you pay competitive salaries, hiring more of the same calibre of people isn't going to solve the problem.....

Rubbish. The problem area with Northern Rock was obvious - they were too heavily dependent on markets to raise the money and their internal structure (most likely for tax reasons) forced them to sign new business all the time, so any issue with their ability to raise finance would be fatal.

Also, why does it require a very highly paid person to suggest that 125% morgages is not exactly a very good idea?

Apparently FSA had like 4 people dealing with NR - can you fking believe it, 4 people for a bank with £100 bln morgage book that took 20% of the morgage market last year? The mere fact that NR expanded so fast should have raised red flags immediately on quality of their customers and on exactly how stable they are.

[Tensai]

More staff will not solve the FSA issue - it is a mindset issue.

I can't be bothered to verify this, but I think it was the BBC's exonomics editor (Peston?) who I heard saying that the issue with the FSA's lack of performance was because they couldn't afford the hire the best brains - anyone good enough to spot the problems the banks were getting themselves into were hired by the banks in the first place.

So unless you pay competitive salaries, hiring more of the same calibre of people isn't going to solve the problem.....

[AtW]

I am not sure FSA does anything to be honest. They seem to be like the police - if something gets stolen the police would record crime to give you crime number so that you could claim it on your insurance, just like FSA - something screws up and they will get some bank to pay you up maybe, hardly a great example of regulation.

Or say those Russian IPOs on LSE, dodgy as heck, yet FSA cleared them just fine - those companies were mainly floating in London because they would have no chance in the USA as regulation there is much stricter for dodgy stocks like that. Yet, you'd have sasguru types who would say that this is what makes City so good, no bloody wonder - lax regulation was surely attractive to thiefs of all calibers and the City was duly taking its share only to screw up everyone and then call for taxpayer support: at least in this case the Japanese were making harakiri

[threaded]

More staff will not solve the FSA issue - it is a mindset issue.

It is in the nature of bureaucracies. More staff will actually cause more problems. It'd be funny, if it wasn't so predictable.

[BrilloPad]

and in any case such games that threaten stability of the system should not be allowed in the first place.

Good point.

Also from the article - "It was both fully predictable and yet also deeply depressing that the FSA's response to its own failure in the Northern Rock episode was to demand more staff. "

Now if the FSA had been doing its job properly - concentrateing on the ewssential nature of banks instead of nit-picking over minor regulations - Northern Rock would (should) have been spotted sooner.

More staff will not solve the FSA issue - it is a mindset issue.