The Great Debate UK

EU stress tests: for banks or governments?


- Laurence Copeland is a professor of finance at Cardiff Business School. The opinions expressed are his own.-

Worries about Europe’s banking system go back at least to 2007, but whereas the U.S. (and UK) banks appear to have weathered the storm, there are fears that for European banks the worst may lie ahead.  Concerns centre on four areas.

First, there are obvious worries about Greece and the other small countries facing debt problems, notably Portugal and Ireland, where the local banks have lent heavily to their governments and in addition may need to make provision for a substantial build-up in the level of bad debts in their respective corporate sectors as their economies struggle through the recession.

Second, there are worries about the small-to-medium banking sector in Germany, where some of the first signs of the oncoming crisis appeared early in 2007. It is hard to tell how seriously we should treat these concerns, because the Landesbanken are closely linked to their regional (“Land”) governments, so the question is unusually sensitive.
Third, there are worries about the European giants, especially the big French and German banks.

Roger Bootle on the Future of Banking Commission



-Roger Bootle is the managing director of Capital Economics. The opinions expressed are his own.-

I was invited to join the Future of Banking Commission by John (now Lord) McFall, then Chairman of the House of Commons Treasury Select Committee, to which I have been a specialist adviser for 13 years.

Cameron tasked with changing Brits’ expectations


– Mark Kobayashi-Hillary is the author of several books, including ‘Who Moved my Job?’ and ‘Global Services: Moving to a Level Playing Field’. The opinions expressed are his own –

After thirteen years, it’s all over. The New Labour project is dead. Or is it? Tony Blair brought British politics to the centre-ground and ensured that a single party could support free-market economic policies as well as social justice.

from The Great Debate:

Drugs, terrorism and shadow banking

The trouble with moving big amounts of cash, from a criminal's point of view, is threefold. It's bulky, it's heavy and it smells.

A stash of $1 million in mixed bills weighs around 100 pounds (50 kilos). Specially-trained dogs can sniff out bulk cash in a heartbeat.

Ending the disconnect between politics and business


manwaring- Tony Manwaring is Chief Executive of Tomorrow’s Company. The opinions expressed are his own. -

Britain will soon be voting for a new government.  It should be time to discuss the big issues which will define the years ahead, notably how are we, as a nation, going to pay our way in the years ahead? Our confidence that financial services and Cool Britannia will replace manufacturing and heavy industries now looks sadly misplaced.

from The Great Debate:

Did Asperger’s help cause the crisis?

Did the financial system blow up because it was built and largely operated by people with many of the characteristics of a mild form of autism called Asperger's syndrome?

As explanations for the crisis go, it's on the extreme side but forms an interesting counterpoint to the "blame the looting bankers" story line.

from The Great Debate:

Lowering risks from large, complex financial institutions

-- Robert R. Bench, a former deputy Comptroller of the Currency, is a senior fellow at the Boston University School of Law Morin Center for Banking and Financial Law. The views expressed are his own. --

Financial institutions inherently are fragile.

As intermediaries, they are exposed to both exogenous and endogenous threats. The 2007-2008 financial crisis was caused by endogenous forces.  Simply, financial institutions were poorly governed, taking-on extreme liabilities and gambling them into high risk activities.  The meltdown of the financial system fed contractionary forces into the real economy, causing our "great recession," creating negative exogenous loops back into financial institutions.

from The Great Debate:

Welcome to the Teenies, sorry about those returns

-James Saft is a Reuters columnist. The opinions expressed are his own-

As we say goodbye to a decade so abysmal it never even earned a nickname, it is time to take bets on how the coming 10 years will shape up in economics and financial markets.

Welcome, then, to the Teenies, a word that will describe the decade as well as the small returns in financial markets and the shrinking financial sector it will bring.

Time to discuss the future of banking


New Peter Vicary Smith- Peter Vicary-Smith is the chief executive of Which? The opinions expressed are his own. -

Since the financial crisis in October 2008, a number of reports have looked at the causes and consequences of the crisis and suggested possible solutions, but they’ve all been written from the perspective of bankers.

from Breakingviews:

Whatever happened to the Russian bank crisis?

Just a few months ago, there was widespread alarm in Russia about the state of the country's banking sector.

In June, rating agency Fitch predicted that impaired loans would reach 25 percent of all loans by the end of this year, requiring at least $22 billion in additional capital. Other analysts warned that the final bill could reach $60 billion. But as the smoke clears, it seems increasingly obvious that these concerns were greatly overblown.