CRASH 2: Next time, I recommend we keep the bankers in the attic.

Up the wooden stairs to Bankington

This morning I posted about eurobanks lying to the auditors about their degree of exposure to ClubMed toxic debt. The letter sent by the IASB to the Sprouts (Which I’ve now read in more detail) contains a number of classic euphemisms, my favourite of which is ‘accounts chiefly remarkable for the inconsistency of reporting criteria’. How we laughed.

Now this morning from the US comes a loan sector report from Experian Automotive, a subsidiary of credit bureau and research group Experian Plc. It shows that lenders providing loans for car purchases have reverted pretty smartly to the strategy of lending to folks who probably won’t pay them back: as of last week, the proportion of car loans made to subprime borrowers rose to 40.8% – or 2 in 5 to you and me. (It hit 46.2% just before the 2008 fiasco).

“They need to make their loan books look good,” said one experienced old hand in the sector, who didn’t want to be named and (I’m afraid) failed to explain to me why or how a toxic loan book could look ‘good’. Perhaps nearer the mark as an explanation is the rapid return of sales motivation through targets. “That will never return,” said a middle-ranking personal loans agent in late 2009. Hmm.

Just so we’re clear as to how life mirrors blog gags by the way, last night’s Slogpost about blame apportionment was made flesh this morning when the Telegraph ran a piece showing that around 30-35% of the UK’s slump could be put down directly to banking incompetence, insanity, incontinence, insubordination, inane stupidity, and lots of other words beginning with ‘in’. Also this morning, the FSA reported that a whopping £215Million was paid out by UK financial institutions to customers mis-sold assurance products.

But the UK banking industry is still fighting a rearguard action against the ring-fencing of retail banking arms. And bankers generally remain implacably opposed to regulation….which, let’s face it, is all they need to be, because their opposition will be enough to have Cameron on his back and wagging his tail.

A regulatory system is a set of rules for lowlife who don’t know how to behave. Were they decent citizens, bankers would not need to be regulated. But as we have seen for over a decade now throughout the Western world, banks lie, cheat, steal, embezzle, exaggerate, underplay, bribe, threaten, blackmail and break whole nations with their overpriced, childish, perverted paper and sleazily offered advice.

But heh, nobody’s perfect.

17 thoughts on “CRASH 2: Next time, I recommend we keep the bankers in the attic.

  1. I was reading this immediately before I came to your blog John,

    Angela Knight of the British Bankers’ Association

    “Mrs Knight said in the light of the continuing eurozone debt crisis and stock market volatility, the focus for banks should be on the recovery, not on dealing with more regulation.”

    Well she would say that, wouldn’t she?


  2. OK I’m just depressed now, my Holiday in France starts in a couple of days and despite all the Euro Bollocks and pretend money propping up Continental banks. My Beer and wine still isnt going to be any cheaper !. Thats what really gets my goat


  3. Sand
    It is highly likely that before you leave France, you’ll be wiping your arse with the currency.
    Don’t change a cent more than you need to. By Friday week ’03 Vintage Krug Champagne will be £0.36p.
    Trust me, I’m a blogger.


  4. One can tell when things are getting sticky whenever the BBC let that obnoxious PR person spout her drivel on Radio 4.


  5. Aye, Sandy, it is getting wearisome living here in Italy waiting for our UK income to rise in value, but like John, I fancy patience will prove to be a virtue.

    Is it because the Chinese are, faut de mieux, still piling into the Euro?


  6. Fin de vacances,back to the office for some,it’s all so confusing,why did the market go up today,bear covering, dunno,short the banks the dollar the euro,well one of those will come right,gold you must be mad,the bubble has burst,a Russian reneged on me at Sothebys,now the top bidder has done likewise for a nice piece of St.James’s.I smell fear and a coming sell off,the politicos have COMPLETELY lost control,the market will force events, no more QE, increased interest rates,a few more riots, 1974 again, panic,and then a wonderful opportunity for those left standing.If only I was younger!f


  7. Well this worries me, but from a different perspective. Since the heady days of a Sterling /Euro exchange rate close to 1.5 my weekly booze bill has steadied at about 30 Euros ( Beer 12 and wine 18 ). I know it’s obscene but that does include the occasional (very) guests. If I was to experience a return to something like the 1.5 factor it would inevitably return to the old days and I’m not sure my Liver could stand it.

    Mark you, the mortgage (French bank) would be more affordable again but priorities I fancy, priorities. But you must buy some pretty high quality ‘stuff’ Sandy, for it to be an issue even at today’s rate closer to 1.10. Being a pagan I swear I cannot tell the difference between a good Sancerre and an avergae Muscadet after the second glass. My apologies to those who will be appalled at this, but it is the way it is.


  8. Looking at Boots debts, thanks to KKR, they have a lot in common with the Banks.
    Angela Knight represents the unacceptable face of the Tory Party.


  9. “…I recommend we keep the bankers in the attic…”

    With the recent heavy rain and flash floods, might I respectfully suggest that the cellar could prove a better place for them?


  10. The loan book quip got a full on laugh, mostly because I thought exactly the same thing….

    I’m afraid I still dont understand this fascination for “ring fenced” retail banks.
    In the UK, it was the retail banks that went bust and brought down their merchant banking halves.

    It wasnt futures trading or derivatives trading that brought down Northern Rock.
    It was a poor quality mortgage book coupled with sensible investors who realised the bank was doomed and demanded their money back.

    Much the same goes for other UK banks, who were all hit by, well, sensible investors who realised their money had to be lent to the unemployed so they could buy “executive” flats in leeds.

    Their were of course the keirvals, but I struggle to believe their losses will outweigh the losses suffered when the iPigs crack.

    I start on the “good” stuff (good being a £35 bottle of welsh) and after a couple, drop to the Tesco Value, for much that reason, whats the point of drinking the good if you’re not going to appreciate it?


  11. Were our own banks (their high street & investment arms) not seriously exposed to derivatives toxic debt?


  12. BT
    So people say, but that bomb has yet to go off.
    Our banking sector was wiped out by the “safe” retail stuff. The mental stuff might still go off and bring down the world, but that is tomorrows problem.

    Ringfencing only makes sense if the stuff inside the fence is viable, in the UK at least, that clearly has not been the case.


  13. If you’re saying that it didn’t “all start in America” as Brown proclaimed, that would place the blame for Britain’s banking problems even more squarely on the shoulders of Gordon Brown for abandoning oversight and allowing the housing market to get seriously overheated.

    I can see that w/r/t Northern Rock and even HBOS but RBS?


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