Economics for 2010, or How The Banks Were Brought To Heel

[despaer]

I don't believe it. It looks like I am going to be forced to praise a politician, an activity which I am generally not in favour of at all. The individual in question? That would be Barack Obama, for having had the courage to step right out and say that having received vast amounts of taxpayer support, the banks are going to be expected to repay

Comments

[despaer]

I have to say I don't think our bonus tax measure is that clever. It smacks, as Simon said, of a government who really don't care about anything other than getting re-elected and want popular press on their side. The reason I thought the USA measures were so good is that they don't punish a bank for being big, they punish it for lending assets they don't hold. A traditional building society under this model won't get caned as the tax only applies to loans not backed by tangible assets (this catches the likes of RBS and Lehmans).

This in turn means that those lenders who are liable to chase the sort of high volume, low checking business even if they have some assets to back them are risking only their own money. (e.g. HBOS, Bradford and Bingley models).

Must say though I agree with you about the rent system. What I don't know is how one gives the tenants more rights and control without putting the property at considerable risk as although there are many good honest tenants, there are also lots of very suspect ones and it's jolly difficult to house them if they have the right to wreck the place and don't have the assets to pay for the damage.