Help me to understand.
We are told that the financial crisis started because of the sub-prime mortgage business in the USA (so not Gordon's fault?) and this contagion spread around the world.
Now the solution offered by Sir John Vickers & Co is to segregate Investment and Retail banking and thus put outside the realms of state protection, the 'casino antics' of investment banking.
Presumably, mortgages will fall into Retail banking and thus be protected? So if a bank has a 'run' on it or has insufficient funds Sir John & Co expect that ignoring recent history, this will hit the investment side and not the retail side?
Remember, Northern Rock was a building society (Mutual) as was Bradford and Bingley. Both of these effectively went bust, VERY early on, in the financial crisis, and had to be rescued.
I don't recall hearing anything at the time that they were indulging in investment banking.
I do recall hearing that Northern Rock was handing out mortgages based on six times a single earner and on 125% of property value. Tell me that that isn't irresponsible lending - some might say casino practices?
Hey though! The solution has to be to pander to those that look on the UK's financial sector with envy and anger, and instead impose a 'solution' that won't address the underlying issues (when does a committee ever do so?) but does impose additional costs for the consumer (there's a surprise!)
Comments?
We are told that the financial crisis started because of the sub-prime mortgage business in the USA (so not Gordon's fault?) and this contagion spread around the world.
Now the solution offered by Sir John Vickers & Co is to segregate Investment and Retail banking and thus put outside the realms of state protection, the 'casino antics' of investment banking.
Presumably, mortgages will fall into Retail banking and thus be protected? So if a bank has a 'run' on it or has insufficient funds Sir John & Co expect that ignoring recent history, this will hit the investment side and not the retail side?
Remember, Northern Rock was a building society (Mutual) as was Bradford and Bingley. Both of these effectively went bust, VERY early on, in the financial crisis, and had to be rescued.
I don't recall hearing anything at the time that they were indulging in investment banking.
I do recall hearing that Northern Rock was handing out mortgages based on six times a single earner and on 125% of property value. Tell me that that isn't irresponsible lending - some might say casino practices?
Hey though! The solution has to be to pander to those that look on the UK's financial sector with envy and anger, and instead impose a 'solution' that won't address the underlying issues (when does a committee ever do so?) but does impose additional costs for the consumer (there's a surprise!)
Comments?
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