Do banks need funds? I thought they were all sitting on their own funds and frightened of lending it to others for fear of losing it??
They can't have it both ways? Do they need money to start lending again, or have they really got no money to lend?
What happened to the funds they had? Billions and Billions of real cash paid into deposit and current accounts. Who did they lend it to and with what 'security' or assets did they lend it. If those assets are realisable, then they should still have a net positive balance sheet.
If I put money in an 'investment' and it goes south, then that is one thing. If I put it in a Bank, with a banking licence, I expect that cash to be as 'safe as houses' (well OK, wrong metaphor) and guaranteed.
I don't believe that the so called US sub-prime market has soaked up so much of the real cash - maybe a few billion. But the rest appears to have gone elsewhere....probably on big money financing which simply isn't going to turn a profit now that the bubble burst. What that means is that the Banks gambled and lost our money, and when they recover and start making money again they think they can write it off.
Well they can't. If I borrow money and then lose it, the lender holds a lifetime right to get that back (unless I go 'bankrupt'). So if we prevent the banks from going 'rupt' then we WILL get our money back (you would think). As the value of the assets that the banks hold rises again, surely
So, the banks might be in debt to us for a while, but they can't just say 'sorry, we lost all your money' and start again.
Now, I think I have deviated from your point quite a bit, and I am no expert on how the Banking system works (just on some IT aspects that support it!), but I enjoyed the mini-rant, which is why I joined this forum.
-j
15 Oct 2008 15:11 Read comment
It would be a start just to get a test message every time you make a payment. I mean, how many times do we make a payment in a day. Even micro-payments are not so frequent (per user) and in a world where we send something like 60 SMS texts per user per day, a few more wont hurt. Its even reassuring that the system is workign to have your Credit Card issuing bank send you confirmation of the amount you just spent, because as NFC payments and Tap-and-go comes it, you really have no idea what you just paid...and who waits til their statement to find out what that was. And who can remember if that payment is 20% higher than you remember it.
The problem is that this is value to you the consumer, but not to the Bank. They figure that it costs them more to implement the system of text sending to everyine than it does to manage the risk of a few who get conned.
Now if the Bank was instructed to implement such systems, and they could be optional for the user (you could set the level of payment that triggered a notification for example). And because you DONT need to wait and then respond while at the POS, there is no delay at all.
Remember - Chip-and-Pin was not for consumer security, it was added to cover the backs of the banks. You lose your 4digit PIN, you lose any claim on the transaction.
Now that the Banks have royally messed up, and shown themselves to be incompetent charlatans (well OK, they do provide a service or two) we should all be taking up the case of the customer to balance our rights.
15 Oct 2008 14:55 Read comment
I don't think this is atypical at all.
Its the concept of low hanging fruit. HSBC has a captive audience, with contact details that make this easy. Its easier to close a debt like this one than for a £500k re-financing loan to a company who don't answer their phones.
Its also like it is easier for police to hand out speeding tickets than actually catch a car thief.
The real problem is that the 'little guys' have very little recourse to prevent it. There is no way to make them be reasonable, and of course most of these cases result in ever increases charges levied to the account which are again arbitrary and excessive (although they may be detailed in the small print).
I suggest he takes out a loan with another bank (one which would like to get a relationship with a young graduate with some earning potential) and pay off HSBC with a finger-salute (take choice from one or two, or just a wave). Oh, and write a Blog about the experience of course.
13 Oct 2008 14:02 Read comment
I need to find the time to read this again. Always enjoyable and informative.
Just wanted to cast my doubt that you will see fixed term mortgages again. I haven't seen them in the UK markets for 25 years - the current norm is a 2 yr fixed term deal, but it always reverts to a variable rate and tI suppose this allows the bank to manage the risk and therefore offer terms/rates which are more competitive and wins them customers.
I do agree that it sucks and puts all the risk on the consumer. And no government is coming to bail us out when we can't find a replacement mortgage at a sensible rate.
Anyway - I don't believe this is all about US sub-prime market going wrong. I think there are many more dubious investments flying around that have much less tangible assets associated with them, and lenders who have disappeared or who will fold and close their doors at the prospect of never being able to sell-on or profit from their massive borrowing. It is these loans which are causing the pack of cards to collapse. Pyramid selling - I thought it was illegal in the retail business, but in banking it sems it was OK.
13 Oct 2008 13:00 Read comment
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