UK News

At last — decisive action

Newspapers generally praised the government move to shore up the banks, saying that whatever the prospects for the success of the “stability and reconstruction plan,” to have done nothing would have been infinitely worse.

They noted how fleeting the effect of the far larger U.S. bank bailout has been so far and called for the UK plan to be accompanied by cuts in interest rates by the Bank of England and concerted action on an international scale.

This weekend’s World Bank/IMF meeting in Washington needs to take a stand-back look at the entire post-war structure of global finance, some suggested.

“This is the right course of action,” the Financial Times  says of the package. “By recapitalising these banks, the government is making a strong statement to the markets that existing British banks will not disappear and will continue to meet their obligations.”

The wages of sin

  ***For full coverage of the crisis click here***

British newspapers were united in their scathing condemnation of high finance now laid low and the failure of regulatory authorities to rein in what they see as the greed-fuelled excesses of the banking sector. 

Only Hank Paulson, the man who said “no” to a Lehman Bros bailout emerges with any credit in the eyes of the leader writers — along perhaps with legendary investor Warren Buffett who in 2002 condemned the derivatives that lie behind the current crash as “financial weapons of mass destruction”.

Stop clock ticking on bank charge rebates

Britain’s largest banks and the Office of Fair Trading remain locked in a case management hearing in court over the thorny issue of current account default charges, but the judge has already indicated that the banks will be given the green light to appeal the ruling against them. The appeal — on at least part of Mr Justice Andrew Smith’s ruling, which relates to “fairness” and the rights of customers to sue banks — is a hammer-blow to scores of consumers whose claims for compensation have been put on hold while the matter trundles through the courts.

The issue could now go to the Appeal Court and the House of Lords before the full case goes to court — and that could take two years or more. In the meantime, the Financial Services Authority has put on hold customer complaints and court cases relating to the charges, putting the brakes on any compensation payments. And, as the legal process rumbles on, the banks continue to rake in vast sums of money by hitting consumers who go over their overdraft limit or write a cheque that bounces with exorbitant charges. Analysts have estimated that that banks make up to 3.5 billion pounds in overdraft charges every year: by delaying the case, they could amass some 7 billion pounds.

Bank charges show far from over

Consumers might be one step closer to being able to claim back billions of pounds in bank changes following the High Court ruling this week that paved the way for the Office of Fair Trading (OFT) to assess bank charges for fairness. But it’s not all rosy in the garden for bank customers.

The show is far from over, and dragging the process out is costing consumers 111 pounds per second, according to consumer group Which? Based on the OFT’s estimate that banks make up to 3.5 billion pounds per year from unauthorised overdraft charges, the amount the banks have made since the start of the test case on Jan. 14 at 10 a.m. will hit 1 billion pounds just before 5 p.m. this Sunday. That is the equivalent to 110.98 pounds per second — or 399,600 pounds per hour.