HSBC - the cockroach of the banking world?

[King Biscuit Time]

I'm a totally dunce on these matters, but I didn't think the current crisis was much related to the simple issue of people defaulting on their mortgages?

I'm a dunce too, but more people are going to default now anyway (redundancies, end of fixed term bumping up mortgages etc etc etc) so it will affect building societies.

 

[kyser_soze]

I'm a totally dunce on these matters, but I didn't think the current crisis was much related to the simple issue of people defaulting on their mortgages?

Wellllllll...

That's what started it all. In the US (and less so in the UK), there was a massive sub-prime market for mortgages, to the point where salesmen were being paid per mortgage booked, irrespective of whether the mortgagee could ever pay. The money for these mortgages was widely distributed via derivative funds - essentially, if you took out a loan from Bobs Dodgy Mortgage Co, that mortgage wasn't actually owned by Bob, it was owned by the Too Smart for Their Own Good Investment Bank and probably 1000 other people.

Then, when all these bad risks started defaulting, and suddenly it came time to call in the debt, no one in banking actually knew who owned which loans, or even who owned which bits of which loans. What they all knew was that there was a big pile of stinky shit loans that no one was claiming ownership off...and this is before we start talking about fractional reserve banking...

FRB = I have £1 in deposits. I lend 80p of that £. Now you might think I can only really lend another 20p of that. Oh no - FRB allows me to say that the £1 is still the value of the deposit I own, so I can lend another person 80p, so my liabilities are now £1.60 against assets of £1.

No loan that same 80p out 100 times. Your loan book is now £80, against an asset base of £1. So long as the loans are repaid, it's all gravy - you get to reap the interest on £80 worth of loans for just £1 commited.

Do you see where the flaw in this system appears?

(BTW, any bank sorts want to correct this feel free...)

 

[kyser_soze]

I'm a dunce too, but more people are going to default now anyway (redundancies, end of fixed term bumping up mortgages etc etc etc) so it will affect building societies.

Again, all depends on the types of mortgage and whom you leant to in the first place...

 

[TomPaine]

To add to the FRB above. Most people place their cash into their account but do not normally withdraw all their cash at the same time.
Because of this the banks lend the cash out knowing that they have a constant flow from their investments coming in so a percentage of their customers can always access the total amount in their account.
The problem comes when everyone decides to pull their cash out at the same time. As the bank has leant say 80% of it out, it only has 20% in reserves. So you can obviously see what happens when you only have 20% of the total cash and everyone is trying to withdraw 100% of it.
Couple this with the fact that most of the currency is held electronically and you have yet another problem, a lack of physical funds to provide those withdrawing their cash.

Big problem and what we call a run on a bank when everyone withdraws their cash at the same time.

TomPaine

 

[eoin_k]

Like the Matrix starring James Stewart?

 

[ItWillNeverWork]

(BTW, any bank sorts want to correct this feel free...)

You're almost right.

The 80p that is lent out can only be lent out the once. However, this 80p will work its way back into the banking system once the borrower writes out a check which is then deposited by someone back into an account.

Once that happens, 80% of the new 80p of deposits can be lent out as further loans. That means 64p of new loans, which in turn will worm their way back into the banking system. This process will continue on an on until the original 100p becomes up to 500p*.

So, it is not individual banks that create this multiplication of the money supply, it is the overall system.

Here's a link to a page written by those more in the know than me.

*- That would be if the reserve requirement was 20%. At 10% the original 100p could become 1000p

http://www.newyorkfed.org/aboutthefed/fedpoint/fed45.html

In December 1990, the Fed cut the requirement on nonpersonal time deposits and on net Eurocurrency liabilities from 3% to 0%. In April 1992, it cut the requirement on transaction deposits from 12% to 10%.

Some economists believe that FRB is an insignificant issue that does not cause any problems (i.e. anyone at the federal reserve), however there are other schools of thought that claim it is one of the central causes of our current crisis.

 

[teqniq]

*bump*

I can't tell you how shocked I am

HSBC files show how Swiss bank helped clients dodge taxes and hide millions

HSBC’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities, according to a huge cache of leaked secret bank account files.

The files – obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, BBC Panorama and the Washington-based International Consortium of Investigative Journalists – reveal that HSBC’s Swiss private bank:....

and from the Graun's live blog

Gauke is asked whether the government will publish a list of the people who have avoided tax, so it can be checked against a list of donors to the Tory party.

He says that the current system, in which the people fined for avoiding tax are kept anonymous, is more efficient.

Oh rly?

 

[Ted Striker]

It's almost like...all they're bothered about is making themselves and their clients money.

What an 'orrible lot.

 

[brogdale]

*bump*

I can't tell you how shocked I am

HSBC files show how Swiss bank helped clients dodge taxes and hide millions



and from the Graun's live blog



Oh rly?

That one tax evader (out of 7000 names) who did get prosecuted, will have learnt an important life lesson about which political party to donate to.

 

[Pickman's model]

i do like it when a bank gets in the shit

 

[brogdale]

i do like it when a bank gets in the shit

I would too...if they actually did.

HSBC's owners and their appointed managerial class continue to rake off their millions irrespective of a little bad publicity.

 

[Chilli.s]

i do like it when a bank gets in the shit

Quaintly naive.

 

[Chilli.s]

dp

 

[tim]

I assume tomorrow's Guardian exclusive will expose bears shitting in the woods, or that the Pope has the occasional secret wank.

 

[emanymton]

I would too...if they actually did.

HSBC's owners and their appointed managerial class continue to rake off their millions irrespective of a little bad publicity.

While using this to attack the pay and conditions of their workers.

 

[treelover]

"He says that the current system, in which the people fined for avoiding tax are kept anonymous, is more efficient."

While 'benefit fraudsters' are splashed all over the media, they really don't care how they are seen anymore.

 

[J Ed]

While using this to attack the pay and conditions of their workers.

Spot on, if anyone suffers from this it will be the staff in branches and call centres. HSBC already tries to guilt its frontline, powerless, staff about the bank money laundering drug money. I am not even kidding.

 

[tommers]

It's almost like...all they're bothered about is making themselves and their clients money.

What an 'orrible lot.

That's what they used to be like. Apparently now things have changed and they're much more focused on compliance and ethical issues.

 

[brogdale]

And Green is an ordained CoE priest. Am I imagining things, or does there appear to be more and more of this "god/mammon" stuff going on? Green, Welby and Flowers etc?

 

[Louis MacNeice]

There was a great piece on the radio yesterday with Nigel Lawson saying that because Green is an ordained priest he wouldn't get up to/allow such behaviour. This was slightly undermined by the its juxtaposition with news in the same programme of a CofE preist being banned from social media for posting 'Israel to blame for 9/11' material.

Cheers - Louis MacNeice

 

[The Octagon]

There was a great piece on the radio yesterday with Nigel Lawson saying that because Green is an ordained priest he wouldn't get up to/allow such behaviour. This was slightly undermined by the its juxtaposition with news in the same programme of a CofE preist being banned from social media for posting 'Israel to blame for 9/11' material.

Cheers - Louis MacNeice

Weird sidebar - I went out with that Vicar's daughter when we were 15/16, met him loads, thought he was a tool but not like that .

 

[Yuwipi Woman]

The trouble with cockroaches is that for every one you see, there's a thousand more you don't.

 

[bemused]

Is the Co-Op a good bet? Is it worse that other banks for some reason I haven't thought of yet?

The co-op where the first bank I was with and the worst I've ever had. I'd never use them again.

 

[King Biscuit Time]

Right - well thanks to the 7 year megabump I can now report that yes, the Co-Op are just as shit as any other bank when it comes to customer service. And now that it's 80% owned by Hedge Funds there's no real reason to stay.

 

[J Ed]

Right - well thanks to the 7 year megabump I can now report that yes, the Co-Op are just as shit as any other bank when it comes to customer service.

What do you think the common denominators of this poor financial sector customer service are? Low pay, terrible hours, unachievable targets, constant calls and a culture which is accepting of (constant) abuse of customer service staff.

 

[Yetman]

No mention of HSBC and S.American drug money laundering? That's my first excuse for lumping them in with all the other banks I hate.

 

[J Ed]

Oh my god, look at this, times really are changing it seems - Green has just been raided

Only joking, pic is from a raid for alleged minor benefit fraud in Croydon

 

[brogdale]

It really is surprising that the authorities have not made the list of tax evaders public....

ICIJ enlisted more than 140 journalists from 45 countries, including reporters from Le Monde, the BBC, The Guardian, 60 Minutes, Süddeutsche Zeitung and more than 45 other media organizations.

The reporters found the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria, among others. They found several people on the current U.S. sanctions list, such as Selim Alguadis, a Turkish businessman alleged to have supplied sophisticated electrical goods to Libya’s secret nuclear weapons project, and Gennady Timchenko, a billionaire associate of Russian President Vladimir Putin and one of the main targets of sanctions imposed on Russian individuals and businesses in response to the annexation of Crimea and the crisis in eastern Ukraine.

http://www.icij.org/project/swiss-l...-murky-cash-linked-dictators-and-arms-dealers

 

[phildwyer]

There was a great piece on the radio yesterday with Nigel Lawson saying that because Green is an ordained priest he wouldn't get up to/allow such behaviour. This was slightly undermined by the its juxtaposition with news in the same programme of a CofE preist being banned from social media for posting 'Israel to blame for 9/11' material.

Huh? Can you say "non sequitor?" What does blaming Israel for 9/11 have to do with anything?

 

[Pickman's model]

Huh? Can you say "non sequitor?" What does blaming Israel for 9/11 have to do with anything?

only an ignoramus would say 'non sequitor' when as any fule know it's 'non sequitur'.