The Great Debate UK
Rachel Mason is public relations manager at Fair Investment. The opinions expressed are her own.
A recent survey by Moneysupermaket.com has found that the zero per cent introductory offers on credit cards are getting longer while the rates that kick in once the period is over are getting higher, and now consumer groups are arguing that banks should be held accountable for luring poor innocent people into debts they cannot repay.
Yes, the banks should be more sensible, because this is exactly how they got themselves into a mess the last time, but what happened to taking responsibility for our own actions? Just because someone offers you ‘credit’ doesn’t mean you should take it – if you don’t have the money, don’t spend it.
Sadly, it is the same everywhere – we live in a blame society. If something goes wrong, it must be someone else’s fault.
Lloyds seems to be taking a leaf out of Vito Corleone's book: if you need someone to do something that they don't want to, you have to make them an offer they can't refuse. For the mafia boss in The Godfather, that meant decapitating a horse. For Lloyds, the UK bank whose logo is a black horse, it means threatening to cut off interest payments on your own debt.
Lloyds' plan is to convert subordinated debt into 7.5 billion pounds of contingent capital. These new-fangled securities pay out fixed coupons, but can be converted into shares in times of need. The exchange is part of Lloyds' efforts to avoid the government's asset protection scheme. Lloyds is likely to pull off this deal, but the jury is still out on whether this kind of capital will be widely used by other banks.
from The Great Debate:
Chinese banks are like enthusiastic runners on an accelerating treadmill. The weakening economy means poor lending decisions are threatening to catch up with them, but the banks are sprinting ahead by expanding their loan books ever faster. They cannot keep this up for ever.
For now things still look fine. China Banking Regulatory Commission (CBRC) this week claimed that Chinese banks were managing credit risk sagely, pointing to record low non-performing loan ratios. Given the massive increase in the number of loans outstanding -- up 24 percent since the start of the year -- it's not surprising that the proportion of them that are non-performing at large commercial banks, which accounts for 60 percent of the lending, has declined from 2.4 percent to 1.8 percent in the past six months.
Having averted a disaster, cartoon superheroes typically revert to their bland civilian identities. With the recession loosening its grip, Ben Bernanke is trying a similar trick.
After a period of heroic boldness and creativity, the Fed is determined to be dull. Wednesday's statement from the Federal Open Market Committee may well be calculated to bore.
The expenses crisis is well and truly engulfing Westminster, with equal anticipation and dread about future revelations. Labour was quite reasonably aggrieved that the initial stories all seemed to be about their MPs.
Barclays’ hasty deal to sell iShares in April served its purpose. The $4.4 billion price-tag boosted the bank’s capital, thereby allowing it to dodge the government’s insurance scheme. Barclays should now seek better terms on the deal.
from UK News:
Melanie Bien, director, Savills Private Finance, is a guest commentator. The opinions expressed in this commentary are her own.
It is too early to say whether the latest bank rescue plan will have the desired effect of persuading the banks to start lending again. But it is a step in the right direction and we welcome it as a positive move as it may just remove the remaining stumbling blocks to getting the credit and mortgage markets functioning properly once more.
Clearly, something further had to be done. October’s £37bn bank recapitalisation did little to persuade banks to regain their appetite for lending. Credit continues to be difficult to come by – unless you have a large deposit or equity in your home and a clean credit history.