ianrobo1 Posted February 22, 2009 Author Share Posted February 22, 2009 HBOS .... ermm .. you will be lucky eh ? £20bn loss frankly blame your high level peopel they got you into the mess Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 22, 2009 Author Share Posted February 22, 2009 just watched the news and tomorrow NR will have £14bn to lend for new mortgages be interesting to see what they offer and the restrictions as I said before, will they be in force ? Link to comment Share on other sites More sharing options...
snowychap Posted February 22, 2009 Share Posted February 22, 2009 just watched the news and tomorrow NR will have £14bn to lend for new mortgages That's not quite right though, is it? What the beeb is reporting is the following: Northern Rock is set to revive its mortgage lending business with up to £14bn in new loans by 2011, plans to be released on Monday are due to show. It is expected that Northern Rock will take on about £5bn in new mortgages this year and up to £9bn from 2010. They will be financed with money from new deposits, repayments on existing loans and more government money. The move is part of wider government plans regarding the nationalised lender to be revealed this week. ...more on link Link to comment Share on other sites More sharing options...
kidlewis Posted February 22, 2009 Share Posted February 22, 2009 the FSA is about as useful as a flat spare tyre. I used to work in a department for a mortgage company, that purely came about due to FSA regulation. It had almost no use at all the job I was doing. But if they wanted to pay me £800 per month to do so, then I am not going to stop them. Link to comment Share on other sites More sharing options...
leviramsey Posted February 23, 2009 VT Supporter Share Posted February 23, 2009 The US didn't cause the global recession In the Washington Post, Ricardo Caballero of MIT has a novel and promising idea about “How to Lift a Falling Economy.” Unfortunately, he echoes the mantra that all the world’s economic problems can be traced to the U.S. in general, and to big U.S. banks in particular. “Already,” he says, “this illness has spread to the global economy.” Already? Industrial production in Japan began collapsing in November 2007, two months ahead of the U.S., and the Japanese industrial decline has been twice as fast. Unlike the U.S., real GDP began falling in the second quarter of 2008 in Germany, France, Italy, Japan, Singapore and Hong Kong. By no coincidence, that was when the price of oil rose as high as $145 a barrel. Soaring oil prices raise the cost of production and distribution for many industries, and reduce real household incomes and therefore consumption. Nine of the ten postwar U.S. recessions were preceded by a major spike in the price of oil. In a piece for the Claremont Review of Books (written last November), I conclude , “This recession is not just a U.S. problem, not just about housing, and not just financial.” Compare the decline in real GDP over the past 4 quarters (from The Economist): U.S.: -0.2% France: -1.0% Germany: -1.6% Britain: -1.8% Italy: -2.6% Japan: -4.6% Does it make sense to blame the largest declines in GDP on one country with the smallest decline? If so, then we need some explanation of how some uniquely American “illness has spread” to so many innocent victims. If the explanation is supposed to be falling U.S. imports, then the worst decline by far would have been in Canada and Mexico (where real GDP was rising even in the third quarter). If the alleged causality is supposed to be because of some undefined links between financial centers, then Italy would not be among the hardest hit. When it comes to trade, in fact, the shoe is mainly on the other foot: Collapsing foreign economies crushed U.S. exports. In the second quarter of 2008, U.S. exports accounted for 1.54 percentage points of the 2.83% annualized rise in real GDP. But falling exports subtracted 2.84 percentage points from fourth quarter GDP. Falling exports, not falling consumption, were the biggest single contributor to the overall drop of 3.8%. After looking at which economies fell first and fastest, it might be more accurate to say that some foreign illness has spread to the U.S. economy than to assert or assume the causality ran only in the opposite direction. The Caballero article referred to Hope is in short supply during these trying economic times. Nowhere is this clearer than in the financial system. Since Treasury Secretary Timothy Geithner's recent announcements, shares of the main U.S. financial institutions have imploded yet again. The Dow Jones industrial average keeps falling. And to make matters worse, politics has decidedly entered into the process of economic policymaking, which makes it all the more likely that we will end up with the wrong policy response, one that is probably too late anyway. Talk of nationalizations has become widespread, as if government takeovers were a panacea, further reinforcing the deadly spiral of fear and panic. Already, this illness has spread to the global economy. It has ravaged the wealth of citizens around the world by about $40 trillion, according to some estimates. This continuous wealth destruction has frozen consumers and companies alike, so the real economy is in a free-fall as well. How do we stop and reverse this process? Here is a proposal: The government pledges to buy up to twice the number of bank shares currently available, at twice some recent average price, in five years. While the policy is about future (and unlikely) interventions, the immediate impact would be enormous. In particular, it would turn around the negative dynamics of stock markets, and it would allow banks to raise private capital. The most direct effect would be an increase in the price of banks' shares, as the pledge puts a floor on the price, but the upside potential is huge once we get over the hurdle posed by this crisis. That is, buying equity from these banks would become like buying Treasury bonds plus a call option on the upside. By the strong forces of contagion, this rise would immediately spread to non-financial shares. Consumers, especially retirees, would see some of their wealth replenished; insurance companies' balance sheets would improve; destabilizing short sellers and predators would be wiped out (as happened in Hong Kong in 1997); and we would have the foundations for a virtuous cycle. The second, and reinforcing, effect would be the stabilization of the financial sector, as banks would possess the conditions necessary to raise private capital. Until now, banks have not wanted to raise capital because it would be highly dilutive at current prices. Potential investors have no interest in injecting capital because there is an enormous fear of further dilutions, especially through public interventions or, worse, outright nationalizations. A pledge to support the shares would reverse these dynamics and quickly recapitalize the banking sector. How much would this cost taxpayers? Probably nothing. It is unlikely that the crisis will last five years, especially in the presence of an aggressive policy response, and most banks' shares are likely to soon trade for many times current prices. If the market prices surpass the government-pledged sale prices, there would be no cost to taxpayers. There would be implementation issues, including how to customize to each bank's needs and the extent of the liquidity discount of the different portfolios. But the market needs good news sooner rather than later. And there is no real reason not to try such a proposal -- not unless the "cut off your nose to spite your face" attitude grows even more prevalent. I think Reynolds actually misread Caballero: he seems to be talking about the talk of nationalizations as panacea and such, not about the recession/depression as such. As far as Caballero's plan, it's provocative, but I don't think it solves the fundamental problem which is that the debt-service-to-income ratios are unsustainable. Link to comment Share on other sites More sharing options...
Gringo Posted February 23, 2009 Share Posted February 23, 2009 and it seems the heads of state of the G20 and going down the route of stricter regulation Politics is getting just like TV - full of repeats Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 tis true Gringobut the big meeting is in April thats where something concrete has to come out but I don't hold my breath Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 just watched the news and tomorrow NR will have £14bn to lend for new mortgages be interesting to see what they offer and the restrictions as I said before, will they be in force ? Picking up on this, Ian, it is just what Vince Cable is saying at the moment to BBC News. He was saying that there ought to be a framework governing what is acceptable concerning mortgage lending (much as you have said). I have to say that the throwing of money at the problem like this smacks again of 'commercial practices are the best'. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 not if it is proper lending with sound deposits, that is what we are need and I suspect will be the case Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 not if it is proper lending with sound deposits, that is what we are need and I suspect will be the case You suspect? How do you suspect this? Do you not think when making an announcement of this kind that it might be sensible to announce whether or not any restrictions accompany it? Then no one would have to suspect/guess/imagine anything - then we would all know. As far as deposits go, is it now going to be Northern Rock's policy to (attempt to) increase the numbers of savers and the deposits that they hold? So, all those bonuses that were given out on the basis of slashing savings rates and deposits held and pushing customers to other institutions last year were a bit of a waste? And that leads me on to the next question, what proportion of this increase of lending over the next two years is to be funded by deposits? Is it a significant proportion? If so, then that lending cannot even get started until the deposits have been taken. That means encouraging saving before the lending can be done, surely? Slightly contrary to what has been coming out from government for the last few months, isn't it? In order, also, to attract these deposits, will they be offering rates above normal market levels? If so, what happened to the worries about falling foul of competition and state aid regulations? And if this increase in deposits doesn't happen, will it mean that the increase in lending won't either? Or will it mean that it will be taxpayer-funded? Another area of funding is repayments on existing loans - well, let's hope that there isn't an increase in defaults, then. Has NR changed it's aggressive policy yet on repossessing? I think there are lots of questions and Panglossian answers don't really cut the mustard. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 your right it needs explaining especially as it is a public bank but I suspect that new rules would apply because of Brown's comments about 100% mortgages Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 Brown's comments about 100% mortgages Did he speak about 100% mortgages? Not in his article, he didn't. In the article, he said: ...we have also asked the Financial Services Authority to look at how in the future we should control new mortgages for more than 100% of house value. Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 snowy from the BBC report Chancellor Alistair Darling said the new plan was one of a series of measures being taken to rebuild the banking system. "It's repaid about £18bn of the loan the government made, and I said in January this year that because of the problems the mortgage market faced, instead of looking to wind down its business, it would be better for Northern Rock to maintain lending," he said. He added that some mortgages would be lent at up to 90% of the value of the property being bought. Ray Boulger, of mortgage brokers John Charcol, said the new plan was very welcome. "Last year net lending in the mortgage market by all lenders was £40bn," he said. "This year the Council of Mortgage Lenders forecast that could be minus £25bn, and that probably assumed Northern Rock would be paying back some more of this loan to the bank of England, so an extra £5bn from Northern Rock this year, instead of a minus number, will be very significant." also checked their site and most mortgages are well below 90% whether that will help is another matter Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 Yes, Ian, I read that. That still doesn't say anything about the detail of how the package is to be funded. The only thing I have read so far (again from the beeb article) is: To help fund this the Treasury will provide an extra £10bn in taxpayers money to the bank. Are they giving that to them in a lump sum, now? Are they knocking that off what needs to be repayed, now? Is this an extra loan to NR? Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 I would read it as an extra loan and lets face it Snowy it is what should happen when banks get taken public the next big thing is what happens to RBS in the next couple of weeks , I think the size and desperate state of it has shocked everyone in government and beyond Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 I would read it as an extra loan Again, though, that ought to be explicit. The public shouldn't have to guess at the detail of actual public policy. And is it all there in NR's hands, now? If so then why only £5,000 million pounds of extra lending this year? Why not all of that extra taxpayer money this year? lets face it Snowy it is what should happen when banks get taken public Can you tell me how that fits with your comment about 'proper lending with sound deposits'? If this money is coming from the taxpayer - that makes up around 70% of the extra lending that NR expects to do over the next 2 years. That is hardly lending from deposits, is it? One further thing on this - what happens if NR don't manage to find people willing to borrow this extra money? Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 23, 2009 Author Share Posted February 23, 2009 then the money does not get borrowed does it ? as for where the money comes from in a way it does not matter mortgages if properly given out make money, from what I have read this is 'proper lending' the LTV figure is between 70 and 90% and that figure by law should be fixed at 90% should it not ? Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 then the money does not get borrowed does it ? Really? Or does it just get offered in a more attractive way. as for where the money comes from in a way it does not matter So why did you bother talking about 'sound deposits'? :? If it's okay to borrow the money to increase lending then are we not back on the merry-go-round? As far as the LTV % - doesn't that depend on the value of the asset and whether or not that value is over-inflated? Is 100% of something which is unlikely to drop much any less prudent than 90% of something which is overpriced by, say, 20%? And doesn't that all come back to the ratio to earnings? Link to comment Share on other sites More sharing options...
snowychap Posted February 23, 2009 Share Posted February 23, 2009 Another area of funding is repayments on existing loans - well, let's hope that there isn't an increase in defaults, then. More news on NR: link Northern Rock crashed to a £1.4 billion loss in 2008, the state-owned bank revealed today and warned that the number of mortgage customers getting into difficulties was rocketing. But senior staff regarded as essential to the company's future will still receive bonuses for the year, it said. The bank wrote off £900 million because of defaulting borrowers and lost a further £300 million in investments, it warned today as it announced an abrupt U-turn in strategy. Instead of calling in loans as quickly as possible in order to pay back government loans, it will now make available £14 billion in new mortgage lending over the next two years. A total of £256.4 billion was lent by British mortgage lenders last year. Rock said it would make a full results statement for 2008 on March 3, but it admitted that its losses had worsened significantly, from £600 million in the first half to £800 million in the second half. The proportion of borrowers more than three months in arrears on their mortgage payments had soared from 1.87 per cent in September 2008 to 2.92 per cent by December 2008. Senior staff bonuses would be paid in loan notes, not cash, and deferred until 2010. They could also be clawed back subject to performance. Gary Hoffman, chief executive, said: "2008 was an extremely difficult year for the company, as expected. We confirmed in our business plan last March that the company would be substantially lossmaking in 2008 and this proved to be the case, driven by the deteriorating economic situation and the increased level of loan loss impairment." Rock had made good progress in repaying £18 billion of government loans. Rock was nationalised in February 2008 after attempts to find a private sector rescuer failed. The additional mortgages would be made available to first time buyers and to people wanting to remortgage. They would be competitively priced but would deliver a commercial return to Rock. Rock also said it was planning a legal and capital restructuring to maximise its capital efficiency, but gave no further details. Today’s announcement shows how keen the Government is to restore available credit to homebuyers and stimulate the housing market. Despite hefty cash injections using taxpayers’ money into several of the UK’s biggest banks, they remain reluctant to lend. Alistair Darling, the Chancellor, said that Northern Rock would be able to give mortgages of up to 90 per cent of a property’s value but he expected most to be “at a sensible level”. He told the BBC Radio 4 Today programme this morning: “Northern Rock are not going to do 100%. They had their fingers very badly burned and, rather more importantly, a lot of their customers had their fingers very badly burned. “They can go up to 90% but they will have to take that judgment on the individual circumstances.” He added: “I have made it clear, and the Prime Minister made it clear at the weekend that I really have severe doubts about the 100%-plus loans that were made available. In this day and age, that is ridiculous.” Vince Cable, Liberal Democrat Treasury spokesman, told BBC Breakfast: “The rules have got to be set out first, for mortgage lending, before Northern Rock is let off the leash.” Alistair Darling, the Chancellor, said that Northern Rock would be able to give mortgages of up to 90 per cent of a property’s value but he expected most to be “at a sensible level”. That sounds like he's saying that 90% isn't sensible, doesn't it? Link to comment Share on other sites More sharing options...
ianrobo1 Posted February 24, 2009 Author Share Posted February 24, 2009 yes he does and I think we all agree, the bg mistake was not clamping dow on stupid multiples, un checked wage claims ad LTV of more than 90% not that you heard many calling for it mind you also it appears that byt the end of this week the taxpayer will be the guarntor of £500m of lloyds and RSB debts huge numbers but of course much of this will not be paid but it does beggar the question of whether there is any other possible solution at this stage, i do not hear much of it Link to comment Share on other sites More sharing options...
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