The banks are a joke, but where's the punch line?

for PM...............

Couldn`t agree more Mike, frustrating isn`t it !!!!

Seconded Phil.

What a terrific blog - you have said so eloquently what I hear from clients and aquaintances day in day out.

It's the no shame and the disconnect that leave people mouth agape and stupified. We're all simply gobsmacked at what the bankers have done - we don't mean the men and women working in retail banking, they're not bankers anymore, they're administrators, bean counters, salespeople and tellers.

Within the industry we're utterly bemused (it's a polite way of stating it) at what the regulator has said and done - and more importantly, not done.

You couldn't just write a book about this, you could fill a library. And if you did, you would have to include Mike's excellent comments.

here here

The only thing that I can see that's fundamentally changed is that there are now fewer banks, more concentration, less competition ... which sounds like a great environment in which to be a banker.

No! No! Do we or don’t we live in a capitalist society? Sure the banks may be irritating but the issue is that interference in pay and anything else is the start of the slippery slope. Lord T is a Patrician of the Old School, just like his Scottish mate Gordon. Absolutely convinced that they know better than anyone else. The very idea of a tax on trades is an idea straight out of Gordon’s toy box. Who will be next?

Sure we are miffed at bailing out these wunch of bankers, but the solution in my view is that:

a) High street banks and investment banks should be separate – like they were before Clinton repealed the act. (Another Socialist who didn’t understand what he was doing).

b) There should be strict walls between high street banks and investment banks – so that the latter can’t flog weird stuff to the former.

c) Solvency of the high street banks should be increased to a level where if the effluent does hit the ventilator your 'man in the street’ isn’t stuffed.

d) As for the rest – let’s keep it capitalistic. They should be allowed to fail and if they do the directors and senior managers will also become personally liable. This means if the bank does go down – they loose their shirts. That will control risk pretty well I would guess. Oh and no non dom directors. (Are you paying attention Mr Sandler?)

No taxes no bureaucratic meddling – just good old fashioned capitalism.

So please – less histrionics about bankers. Lord Turner – please go back to lecturing spotty youths and remember – we are NOT social workers. There are plenty of occupations that have no or little social value and some that do are heavily curtailed and regulated. (Prostitution??) Indeed one could argue that the present government not only does not have any social value – it is actually socially detrimental.

Great article. Brilliantly expressed the current frustrations with our essentially corrupt system.

Can we please add more competition? That is another good free market measure. It was the awful combination of poor oversight and implicit government backing that gave the false impression to some that competition was a bad thing.

Well said. I was employed by RBS from Dec 07 to Apr 09 (big mistake, I know) right through the whole crisis period.

The culture of arrogance in that institution was breathtaking - and the FSA were again found out to be not fit for purpose.

There is no grand plan masterminded by the bankers, politicians and regulators, other than more ineffectual red tape in the future

I regularly read these blogs and rejoice at the observations and comments made as by and large they are spot on. It occurs to mer that the bloggers are preaching to the converted and those that should be ashamed to be the object of derision either are not reading or hearing these thoughts or are they simply totally thick skinned and oblivious to common sense.

Just an observation on Harry's call for capitalism to rule unconstrained, I'm no defender of Gordon Brown but I do find it offensive that one person thinks he is worth a single payment of £100,000,000 for his services and contractually so too. How can that equate to fair reward?

They should be small enough to be able to be rescued but large enough to provide finance to decent size businesses.

Trouble is some are too large already so maybe need breaking up.

I agree about investment banks being seperate to normal banks.

The way rating agencies operate with banks also requires change.

As far as our side of the industry and banks go, even FOS is getting concerned about the advice they are giving and complaint levels, still nothing is being done, banks and governments are far to cozy to be healthy so no politicians should be allowed to have seats or ex politicians on bank boards or consultancy roles.

Forward this to number 10....

It seems common sense and decency has been taking out of our pseudo-democracy to be replaced with greed.

What a fantastic country we used to be.

I imagine we are looking less and less attractive to immigrants seeking asylum........ maybe thats the plan all along?

Great blog :thumbup:

I agreed with the article, but I also agreed with Harry.

Taxing bonus payments is the start of a very slippery slope. Is there much you can do in this country these days without someone saying 'you can't do that' or 'if you want to do that, then we want some of it'?

The one overriding aspect to that is the 'they'. Who are 'they' who say what's what?

'They' won't let you do this', 'they' won't let you do that. 'They've' stopped people doing that!

Well who stops the 'they'? Who taxes the 'they'.

Civil Servants, that's who 'they' are. Politicians complaining that bankers take bonuses! What next, we'll be having Dawn French complaining that people in this country are getting fat and something should be done!

Let's get a sense of perspective. Our pensions depend on banks, but I agree with a point Phil Castle made a while back. Why can't banks just return to being banks?

Lastly, let's not forget where this all started. The good old US of A.

Yep the Banks fouled up with off balance sheet vehicles that turned out to really screw things up, they brought in genius's to make up new and ever more complex financial instruments. Lots of profits and lots of taxes to the state.

The public went buck mad with property - the trend is upward and never a bust to be seen. Well..............

At the end of all of this the UK banking sector have the rest of us by the throat and are strangling good businesses and individuals. But hey don't worry cause US the taxpayers are keeping them in business whilst they shut the rest of us down.

Steel, Coal, Agriculture and Engineering are history but its jobs for the Elite and their mates.

You have said what everyone in the real world is thinking. Very good.

I have come to the conclusion that Regulation by the FSA in it's present format is no better than legalised extortion.

It is a failed regime time and time again and has overseen the biggest financial crisis in our history.

The banks hold all the power and are so large they form some 13% of our GDP. The adviser sector has no power or influence at all so we can rant and rave but until the powers to be listen we will merely be like a mouse fighting an elephant.

Harry Katz, you're spot on. Separation of retail and commercial banking a la Glass-Steagall to ensure that systematically necessary banking and riskier models don't overlap, more appropriate capital ratios in retail to ensure there are no runs (and held in cash, not other, riskier assets) and let the market do the rest, including letting them go down in flames as and when they fail. There's no reason why both models can't be owned by the same holding company so long as there are no cross-company guarantees or funding.

The banks work, and have worked, within the rules and regulatory structures set by the people now castigating them. Sure, wholly unregulated banking isn't anywhere near the answer, but those answers must be determined by the market (which includes both suppliers and consumers, remember) and not by politicians and Whitehall mandarins with their own agendas.

My favourite part of the whole piece was Turner's assertion that parts of the city are "socially useless" as if that were the standard by which they should be measured. It isn't.

Firstly, whilst I agree with Harry that we need to keep things "capitalist", we should not pretend that this is a free-market banking system - it's a state sponsored fractional-reserve system, based on Government fiat money (i.e. pretend money), which has enjoyed 'regulatory cover' to leverage itself to the extreme.

The solution to these insolvent banks was simple. Instead of bailing out failed banks, they should have been pushed into receivership over the weekend and restructured.

Private depositors up to a certain level should have been protected whilst Bond Holders should have been given a 'hair cut' in exchange for equity. In other words, the books should have been made to balance, the existing shareholders wiped out and the failed management dispatched to oblivion.

These banks could then have re-opened on Monday morning as solvent and under new management...not a penny of taxpayers money, or indeed FSCS levy-payers money subsidising them.

In this country, we have been trying to regulate an inherently unstable fractional reserve banking system at least since Peel's Bank Charter Act of 1844. The truth is that it cannot be done, and whilst using the current Treasury positions to slice up these banks into smaller chunks would certainly have it advantages, it does not tackle head-on the ability of banks to create credit out of thin air - even when nobody is saving!!