Originally posted by Cyberman
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: Bank bosses innocent
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Bank bosses innocent"
Collapse
-
Originally posted by Bagpuss View PostYou must firstly ask yourself why they needed the money? Why did for example The Nationwide not need a loan from the BoE?
Would that be because they work on a traditional credit multiplier lent on reasonable credit checking, income muliples and due dilligence?
Wheras the NR followed all of those poorly and hence was a disaster waiting to happen.
Do you have proof that they didn't ? You are so naive, Bagpuss. After the Northern Rock saga HMG brought in rules to ensure that future borrowing from the BofE was kept secret to protect from a further bank run. Rumours had already caused one run and did not want another. You will never know whether Nationwide sought funds.
Leave a comment:
-
You must firstly ask yourself why they needed the money? Why did for example The Nationwide not need a loan from the BoE?
Would that be because they work on a traditional credit multiplier lent on reasonable credit checking, income muliples and due dilligence?
Wheras the NR followed all of those poorly and hence was a disaster waiting to happen.
Leave a comment:
-
Originally posted by Cyberman View PostRegardless of what the Spectator says, if you cannot get money you are bust, and that does not matter whether it is a pound or a billion pounds, so lending levels are irrelevant, if you lend more than deposits.
All banks had the same problem and the downfall of the Rock was that it was the first to request a loan from the BofE, who refused. That was plainly incompetent at the time and history surely has proved to even the most stupid folk that its demise was not the Rock's fault, but the fault of the BofE wo initially failed to provide the necessary liquidity.
:EXASPERATED
You are a poor troll if your pathetic argument is that Northern rock was a well run business.
Either that or your IQ is an outlier on the left hand side of the Gaussian curve.
Leave a comment:
-
Originally posted by Bagpuss View PostFrom the Spectator
Northern Rock’s rapid expansion in pursuit of market share was financed largely out of money-market funds rather than retail deposits. It certainly raised eyebrows. However, the board seems to have overlooked how rapidly money-market attitudes can change.
So in essence bad management, the lender of last resort is exactly that i.e. when bad practice cripples a bank.
Regardless of what the Spectator says, if you cannot get money you are bust, and that does not matter whether it is a pound or a billion pounds, so lending levels are irrelevant, if you lend more than deposits.
All banks had the same problem and the downfall of the Rock was that it was the first to request a loan from the BofE, who refused. That was plainly incompetent at the time and history surely has proved to even the most stupid folk that its demise was not the Rock's fault, but the fault of the BofE wo initially failed to provide the necessary liquidity.
:EXASPERATED
Leave a comment:
-
Originally posted by Cyberman View PostThey would make no difference unless all banks lent less than they had in deposits. If you had this scenario the economy would dry up because companies would not get loans and overdrafts.
Whether a bank lends one billion more than deposits or 100 Billion, if the moneymarkets are dry, and if the BofE refuses to lend, the bank will go bust as it has zero liquidity. The Rock only wanted 10 Billion but banks now are getting multiples of that from the BofE.
This was the big flaw in the HMG & BofE's policy last year.... they refused to lend and leaked this to the BBC to appear strong, and caused a run on the bank!!!! They are thus culpable for the demise of the Rock.
From the Spectator
Northern Rock’s rapid expansion in pursuit of market share was financed largely out of money-market funds rather than retail deposits. It certainly raised eyebrows. However, the board seems to have overlooked how rapidly money-market attitudes can change.
So in essence bad management, the lender of last resort is exactly that i.e. when bad practice cripples a bank.
Leave a comment:
-
Originally posted by Bagpuss View PostThe Basel accords define how much you should lend based on deposits. NR lent far in excess of that and were heavily reliant on the money markets, much more so than other banks. The money markets dried up, but they needed emergency funding from the lender of last resort due to their own stupidity. Lending in the manner they did led to their own downfall i.e. loss of public confidence. Do you not understand that the banks in trouble are those who have been ignoring well established/prudent banking business practice?
They would make no difference unless all banks lent less than they had in deposits. If you had this scenario the economy would dry up because companies would not get loans and overdrafts.
Whether a bank lends one billion more than deposits or 100 Billion, if the moneymarkets are dry, and if the BofE refuses to lend, the bank will go bust as it has zero liquidity. The Rock only wanted 10 Billion but banks now are getting multiples of that from the BofE.
This was the big flaw in the HMG & BofE's policy last year.... they refused to lend and leaked this to the BBC to appear strong, and caused a run on the bank!!!! They are thus culpable for the demise of the Rock.
Leave a comment:
-
Originally posted by rootsnall View PostBTL.
A mate who worked for them at the time told me 2 or 3 years ago they would go under pretty quickly once the property market turned. Makes you wonder why the people supposedly in charge didn't know this :confused:
Leave a comment:
-
To sum up the market choas..
Short term thinking without contingency planning leads to disaster.
Leave a comment:
-
Originally posted by Bagpuss View PostIt doesn't matter if they followed Basel or not, they are under no obligation to IFAIK. Whatever you want to call it general good practice dictates you need to have enough in reserve to cover liabilities. NR was raising money through international markets to fund 125% loans and BTL et al. Therein lies the demise. Other more sensibly run organisations have weathered the storm the badly run ones have gone cap in hand.
Leave a comment:
-
Originally posted by Moscow Mule View PostBasel I (roughly) says you should have a minimum Capital Ratio of 8%. Basel II only applies to banks operating internationally (I'm not sure this applies to NR). I doubt that NR were outside the minimum 8% and they still got ****ed over.
So, increasing Capital Ratios is the answer, but sticking to the letter of Basle isn't.
6.5/10.Last edited by Bagpuss; 14 October 2008, 13:48.
Leave a comment:
-
Originally posted by Bagpuss View PostThe Basel accords define how much you should lend based on deposits. NR lent far in excess of that and were heavily reliant on the money markets, much more so than other banks. The money markets dried up, but they needed emergency funding from the lender of last resort due to their own stupidity. Lending in the manner they did led to their own downfall i.e. loss of public confidence. Do you not understand that the banks in trouble are those who have been ignoring well established/prudent banking business practice?
So, increasing Capital Ratios is the answer, but sticking to the letter of Basle isn't.
6.5/10.
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: