http://www.guardian.co.uk/business/2010 ... it-warning
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| Quote: Britain's biggest banks will warn the chancellor that up to £1tn is poised to be drained from the financial system, hampering economic recovery and depriving households and businesses of loans and other forms of credit. The bank bosses wrote to George Osborne shortly after he took office are to meet him to express their concerns about the impact of regulatory changes which require banks to hold bigger capital cushions. These changes are coming at the same time that the Bank of England withdraws liquidity schemes designed to help banks during the financial crisis. The banks, through the British Bankers' Association (BBA), intend to tell the chancellor that when the Bank of England pulls the plug on these liquidity programmes some £400bn will be withdrawn from the UK's banking system. The schemes were put in place to help get money flowing between banks after the credit crunch, but are due to end in 2012. The banks have also calculated that demands by international banking regulators in Basle that they bolster their capital will require the UK's banking industry to hold an extra £600bn of capital that might otherwise have been deployed as loans to businesses or households. The banks are drawing on research conducted by PricewaterhouseCoopers, some of which was used to appeal to G20 leaders ahead of last month's meeting to delay regulatory changes, in setting out their concerns to the chancellor. The research claims that two percentage points would be sliced off UK economic growth because of proposed regulations, driving the country into a double-dip recession. | |
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And if they go belly up then we still end up being £1 Trillion down the drain. They will go belly up because the banks are insolvent and they still have huge hidden potential liabilities in housing and commercial real estate. That is ignoring the sovereign debts that they may hold, or those of other banks, particularly German who are vulnerable to a greek default.
Also where is this supposed growth to come from? The government expect it to come from exports but our main export markets are in austerity mode with the objectives of exporting to us! Then the private UK householder is the most indebted in the world and needs to clear those debts either through bankruptcies, or simply paying it back. If they do that then the economy will struggle for more than a decade. At least we did not have the bubble that the Japanese had. They are still trying to work that one off twenty years later.
As for reforms cutting credit, there is no credit except to the best customers. Banks are cutting bank lines of credit to everyone. They are de-leveraging like the rest of us should be. So these reforms would have absolutely no impact but our stupid leaders will not realise that. I am not excusing Labour. They should have done something while in power to curtail bank leverage. They failed as well.
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| Quote: It is also expressing its concerns to Vince Cable, the business secretary, who is in discussions with banks about ways to stimulate lending to businesses, particularly small and medium-sized enterprises, and generate growth for the economy. | |
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Vince seems to be out of touch in this. The banks will only lend to the safest prospects. The banks are also short of capital so they can lend. Even with the huge subsidy that the banks are getting in low interest rates, they are struggling. As far as they are concerned it is business as usual.
