Britain at Risk of Another Financial Crisis, Bank of England Chief Warns
THE DAILY TELEGRAPH: Britain risks suffering another financial crisis without reform of the country’s banks, the Governor of the Bank of England warns today.

In an interview with The Daily Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”.

Mr King urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.

He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he says.

The Governor criticises the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.

Mr King expresses regret for not sounding a louder warning over his concerns before the last banking crisis.

The Governor’s remarks are a warning to George Osborne, the Chancellor, as a government commission considers whether to force high street banks to sell off their investment banking arms. Continue reading and comment >>> Robert Winnett, Deputy Political Editor | Friday, March 04, 2011

Let the Banks Collapse!
THE TELEGRAPH: More taxpayer support is needed to ensure global financial stability despite the billions already pledged, the International Monetary Fund has warned, as banks remain the “achilles heel” of the economic recovery.

Lenders across Europe and the US are facing a $4 trillion refinancing hurdle in the coming 24 months and many still need to recapitalise, the Washington-based organisation said in its Global Financial Stability Report. Governments will have to inject fresh equity into banks – particularly in Spain, Germany and the US – as well as prop up their funding structures by extending emergency support.

“Progress toward global financial stability has experienced a setback since April ... [due to] the recent turmoil in sovereign debt markets,” the IMF said. “The global financial system is still in a period of significant uncertainty and remains the Achilles’ heel of the economic recovery.” Banks' $4 trillion debts are 'Achilles’ heel of the economic recovery', warns IMF >>> Philip Aldrick, Economics Editor | Tuesday, October 05, 2010

THE TELEGRAPH: Warren Buffett says in future Wall Street chiefs should go broke - and their wives: Warren Buffett, the billionaire investor, has hit out at pay practices on Wall Street, attacking the lack of reform despite two years passing since the financial crisis struck. >>> Richard Blackden, US Business Editor | Tuesday, October 05, 2010

Banking Bailout Was Unfair, Mervyn King Tells TUC
Bank of England Governor Mervyn King said he believed it was vital the Government set out a clear plan for reducing the deficit. Photograph: The Independent
THE INDEPENDENT: The Bank of England governor Mervyn King today described the huge banking bailout as "unfair" and appeared to sympathise with calls for multibillion-pound tax evasion to be tackled when he spoke to union activists.

Mr King told the TUC Congress in Manchester that he understood the strength of feeling over the size of bankers' bonuses and said "radical reform" of the UK's financial system was needed.

The 62-year-old faced minor protests from some banner-waving delegates and a walkout by the Rail Maritime and Transport union delegation, who retreated to their exhibition stand to watch children's TV.

He was also told bluntly that bankers were "greedy bullshitters" and that he had failed in his job.

As he waited to speak, delegates called for a high pay commission to investigate the "out of control" wages of executives and other high earners.

The Communication Workers Union said a commission should examine the difference between the highest and lowest pay in leading companies.

General secretary Billy Hayes said: "The blatant double standards in pay for those at the top of companies compared to those at bottom is outrageous and leads to dissatisfaction and a divided society of haves and have-nots." >>> Alan Jones, PA | Wednesday, September 15, 2010

Nouriel Roubini: Forget Sub-prime Mortgages. It's the Sub-prime Financial System We Need to Fix
THE TELEGRAPH: Here's an exclusive extract from Nouriel Roubini's new book.

For the past half century, academic economists, Wall Street traders, and everyone in between have been led astray by fairy tales about the wonders of unregulated markets and the limitless benefits of financial innovation. The crisis dealt a body blow to that belief system, but nothing has replaced it.

That’s all too evident in the timid reform proposals currently being considered in the United States and other advanced economies. Even though they have suffered the worst financial crisis in generations, many countries have shown a remarkable reluctance to inaugurate the sort of wholesale reform necessary to bring the financial system to heel. Instead, people talk of tinkering with the financial system, as if what just happened was caused by a few bad mortgages.

Throughout most of 2009, Goldman Sachs chief executive Lloyd Blankfein repeatedly tried to quash calls for sweeping regulation of the financial system. In speeches and in testimony before Congress, he begged his listeners to keep financial innovation alive and “resist a response that is solely designed to protect us against the 100-year storm”.

That’s ridiculous. What we’ve experienced wasn’t some crazy once-in-a-century event. Since its founding, the United States has suffered from brutal banking crises and other financial disasters on a regular basis. Throughout the 19th and early 20th centuries, crippling panics and depressions hit the nation again and again. The crisis was less a function of sub-prime mortgages than of a sub-prime financial system. Thanks to everything from warped compensation structures to corrupt ratings agencies, the global financial system rotted from the inside out. The financial crisis merely ripped the sleek and shiny skin off what had become, over the years, a gangrenous mess. The road to recovery will be a long one. >>> | Tuesday, May 04, 2010

Britain Threatens to Freeze Iceland Out of EU as Loan Payback Vetoed
TIMES ONLINE: Britain warned Iceland that it would be frozen out of the European Union after its President abruptly vetoed the repayment of a £3.6 billion loan.

The Treasury expected Reykjavik to rubberstamp the terms of repayment for the loan extended by Britain and the Netherlands at the height of the financial crisis. The loan meant that 400,000 savers with deposits in Icesave did not lose their money.

President Ólafur Grimsson stunned the world’s financial community by refusing to sign the repayment schedule into law. Instead, he said that the matter would be decided in a referendum among Iceland’s 243,000 voters.

The decision threatened to bring down the Icelandic Government, took its financial system to the brink of collapse and sparked the worst row with Britain since the Cod Wars of the 1970s. Fitch, the international rating agency, downgraded Iceland’s credit rating to junk status.

Lord Myners, the financial services minister, said that if the decision was allowed to stand Iceland would be frozen out of the international financial system and would not be able to join the European Union. >>> Suzy Jagger and Jill Sherman | Wednesday, January 06, 2010

IMF Warns Second Bailout Would 'Threaten Democracy'
TIMES ONLINE: The public will not bail out the financial services sector for a second time if another global crisis blows up in four or five years time, the managing-director of the International Monetary Fund warned this morning.

Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

"Most advanced economies will not accept any more [bailouts]...The political reaction will be very strong, putting some democracies at risk," he told delegates.

"I do believe that the financial sector needs to contribute both to the costs of the financial crisis and to reduce recourse to public funds in the future," he said.

Mr Strauss-Kahn said that imposing high capital ratio requirements on banks was one price the financial services sector must pay to prevent the threat of further multi-billion dollar bailouts.

He pointed to the debate in the US over the Troubled Asset Relief Programme and said that in many countries, including France and Germany, he doubted that politicians would secure the mandate needed to secure any further bail-outs if banks got in to trouble again, in several years' time.

Europe is in dispute over the spiralling cost of the global economic bailout, with Germany and France calling for a reduction in state support as their economies have shown signs of an upturn. >>> Angela Jameson and Elizabeth Judge | Monday, November 23, 2009

”Unite in Banishing Fear”
Watch Fox News video: here >>>
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Greed. Unadulterated Greed!
THE TELEGRAPH: Andrea Orcel, a London-based banking executive who worked for Merrill Lynch, is under investigation after receiving $36 million (£25.5m) in pay and bonuses last year.

Andrea Orcel, one of seven senior executives from investment bankers Merrill Lynch, is now under investigation. He received $36 million in pay and bonuses last year alone
Mr Orcel is one of seven senior executives from investment bankers Merrill Lynch subpoenaed by the New York Attorney General over bonuses.

Andrew Cuomo is investigating $3.6 bn (£2.5 bn) in bonuses paid by Merrill shortly before it was bought out by Bank of America (BoA) last September.

According to the Wall Street Journal, Mr Orcel, 45, the company's top investment banker, and nine other colleagues got a total of $209m (£148m) in cash and stocks in 2008 at a time when Merrill's net loss rose to $27.6 bn (£19.5bn) and it had to be bailed out by the American taxpayer.

Mr Orcel has worked on some of the world's biggest investment-banking deals in recent years, including the highly damaging Royal Bank of Scotland takeover of the Dutch bank ABN Amro in 2007, a deal for which he was paid a $12m (£8.5m) bonus.

The doomed deal was one reason why the Government was forced to take a 95 per cent stake in the bank. London Banker to Be Questioned in US over £25m Merrill Lynch Bonus >>> By Nick Britten | Thursday, March 5, 2009

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Dutch Princess Máxima Holds Banks Responsible
Princess Máxima of the Netherlands, a former banker, says that banks are responsible for the financial crisis. Photo courtesy of Google Images
NRC HANDELSBLAD INTERNATIONAL: Banks have to go back to the basics of their business of saving and lending, says Dutch princess Máxima. The former banker spoke at a symposium on social banking on Tuesday.

Princess Máxima had nothing good to say about her former colleagues, bankers who have plunged the world into a deep financial crisis. At a meeting organised by Triodos Bank in the Dutch town of Zeist, Máxima said on Tuesday that bankers had lost sight of the core values of their profession. With "overzealous marketing" practices they sold inappropriate loans to vulnerable consumers who did not know what they were getting into. The financial crisis was due in part to these kinds of practices. "Only now we are starting to have some insight in the real extent of the consequences of the last months," the princess said.

Before Máxima met crown prince Willem Alexander ten years ago, she worked as a commercial banker in New York for banks such as Deutsche Bank and HSBC. Máxima gave her talk on Tuesday to mark the founding of the Global Alliance for Banking on Values, an alliance of twelve financial institutions focused on social banking and microfinance, including Triodos Bank.

Microfinance

Over the past three years Máxima has served on a UN advisory group for microfinance: the issuing of loans to poor people or starting entrepreneurs in developing countries. The essence of banking, says Máxima, consists of trust, building long-term relationships and offering financial products that have added value. "Neglecting these values seems to be at the heart of the causes of the crisis."

She appealed to governments to set up a "'light touch' but adequate system of market regulation" and to offer consumers financial education, so that they can better understand the financial products they are offered. "It is the role of banks and microfinance institutions to have consumer protection and transparency written into the DNA of their organisation," Máxima said. >>> By Roel Janssen | Thursday, March 5, 2009

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The End of an Economic Era
Watch Guardian video: Banking Crisis: The Week the Earth Shook: The Guardian's economics editor, Larry Elliott, on an extraordinary week and how it marks the end of an economic era >>> | September 19, 2008
Cross-posted at The Shrewd Economist >>>

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