British Politics’s Blog

The ravings of an individual, UK voter frustrated with our politicians

Posts Tagged ‘Lloyds TSB

Bradford & Bingley nationalisation, is it a good deal?

with 2 comments

As I have said, not for the first time, I am no financial expert, but I am a little confused about the ‘part nationalisation’and ‘part sell-off’ of the Bradford & Bingley deal. I accept that there is probably still more detail to come about, but from the little that is available, I find myself wondering, whether the government, on behalf of the hard-pressed taxpayers of this country, worked out a good deal.

In the past, building societies received deposits, in order that they could then use that money to offer mortgages and loans to others. The saver would receive interest on their money, the mortgage payer would pay interest on their borrowings and the building society would take a commission in return for the introduction and managing of the arrangement. Although this model has been turned on its head, with the wholesale trading of these mortgages, the principle should still be sound.

Therefore, if the government have taken on all of the mortgage debt of the Bradford & Bingley, estimated to be some £50bn, why not retain the deposits as well? Instead, they “sell”, the ambitious Spanish conglomerate, Santander, some £20bn of saver deposits (2.7 million people), for the miserly some of £612m. How can this be a good deal for the taxpayer? How can the government be so sure that the savers interests are protected, given we don’t really know that much about Santander. In fact, if the government were responsible for the sale of these customer deposits and something were to happen to Santander, would the government be culpable or liable, given it was they who negotiated the deal?

This particular arrangement can’t be good for the employees either, because Bradford & Bingley employed some 3,000 people and operated 197 branches. Does anyone imagine that a foreign owned bank, will give a toss about these employees? No, from what I can see, the UK government has passed over the profitable side of Bradford & Bingley to the Spanish owned bank ‘Abbey’, whilst leaving the British taxpayer exposed with just the bad mortgage debt. What was the point in getting rid of depositors money which has traditionally been used to offset mortgages? Looks like a very poorly thought out deal to me and somebody needs to explain why? Santander must be rubbing their hands with glee at the at the apparent naivety of the UK government.

I would not normally be a supporter of nationalisation, although in this case, as in the case of Northern Rock, there was probably no palatable alternative. However, I do believe that the government is responsible for driving home a decent deal for the taxpayers, they have a duty of care to the public purse and a responsibility to the taxpayer. No matter how urgent the problem, they should not lose sight of this. Yet here, from what I can see and perhaps against the views of many other observers, I fail to see how anyone, other than Santander would be considered to a be a winner.

Advertisements

Gordon Brown criticises companies for off-balance sheet activities

with 2 comments

What a hypocrite Gordon Brown is, this man lauded for his so called economic competence. In an in interview with Sky News, Gordon Brown criticises companies for running “large off-balance activities”. He then goes on to say, “We cannot excuse the irresponsibility that took place in a number of institutions. And, you guessed it, he did this with a straight face and no sense of irony.

So, this is the same man, that to be certain that he did not break his own golden rules, ensured that the cost of the Private Finance Initiative’s (PFI’s), were not included on the government’s own books. These are calculated to cost the tax payer some £172bn between now and 2032. This is the same man that forked out £110bn of tax payers money in loans and guarantees for Northern Rock, once again, ensuring that it was not included on the government’s balance sheet.

Then there is a further £1.7bn that the government must pay for Metronet’s debts, this figure is also excluded from the governments balance sheet. There is also a further, estimated £790bn in government pension deficits, this is another liability that is excluded from the government;s balance sheet. Now I accept that this may be ‘legal’ but it is morally wrong and serves only to deceive us all into a false sense of security. Some would argue that the game that these large companies and institutions alluded to in Gordon Brown’s interview did nothing more than he has.

Now, Gordon Brown has says that “It’s got to be cleaned up and its got to be cleaned up quickly.” I would hope, that when he is considering these words, he will consider his own actions, because their are many in this country that would consider his own actions as “irresponsible” and “inexcusable”. Enough said!

 

Google Groups
UK Politics
Visit this group