High street banks offering current and deposit accounts to the general public should operate under statutory regulations stipulating that their prime function is to preserve depositor's funds, and not to speculate in high risk investments. That is the domain of declared Investment Banks where supposedly, knowledgeable investor/depositors are prepared to invest at risk. But, early in her "stewardship" of the UK government Margaret Thatcher deregulated the Banks and the whole UK Financial Markets. This was gross doctrinaire political paranoia, there being no evidence that a Free for All would result in any Long Term economic advantage. How could it; the whole Bank/Financial Market ethos is based on greed which would inevitably and did, generate ever more irrational risk taking: this being done easily with other peoples' money.

It does not take a "financial Einstein" to conclude that if you sell a mortgage to someone who can't afford it, they won't be able to pay. Or, if a lender advances 120%/125% on a property they are de Facto generating negative equity. Both the above scenarios are social financial crimes, and should be dealt with accordingly. This becomes self evident when one considers what a mortgage is: it is a "Secured Loan"; secured on the value of the property. How then, can a secured loan of 120% plus be secured on a 100% property value? The 20/25% excess could only, in reality, be an unsecured advance. But, did the lenders tell the borrowers this? If not, then therein lies the crime of miss-selling, and a lender should not be permitted to demand 120% + repayment upon default/repossession.

The average member of the public, especially those that have been coerced by the present Labour government to have their benefits paid direct into a bank account have no desire to have their meagre monies put at risk of a bank collapse, a la Northern Rock, caused by bankers uncontrolled investment traders: belatedly reported as not knowing or understanding what they were doing or the risks they were taking (why care its not our money; the banks will pick up any losses and we will still get our bonuses). In this regard the Bank of England Chairman, Norman King should be sacked; he being reported as saying, paraphrasing, "banks should take responsibility for their lending and not expect to be bailed out but be allowed to go to the wall." If the likes of him doesn't understand the function and purpose of high street banks, what hope is there. If he had been doing his job properly, and regulating the banks irrational, rapacious and insane behaviour we wouldn't be in the mess we are today - mid 2008.

But don't blame Margaret Thatcher for everything, stupid as it/she was. She just unleashed the dogs of financial aggression; but, even she could not have contemplated the havoc they (along with other foreign parasites) would wreak on the world's financial economies. We have since had a decade or more for Gordon Brown to put matters right but he just sat on his hands as this disaster was festering around his ears and eyes. Worse, he even made the Bank of England independent, so there was no government control/over sight on this unregulated; uncontrolled banking monstrosity that just lurched from one misconceived disaster to another. So we now have the worst of all worlds. And, it was he that was running the treasury, for ten years: he saw all the reports of excesses throughout the financial markets but he did nothing; he just carried on spending public money he/we don't have, Just Like those Miscreant Bankers, and now he has the audacity to claim he's the only man to put things right; what a nerve! And, how does he intend to achieve this miracle: simple, spend more money we haven't got bailing out the perpetrators of the disaster! What a vicious circle, generated by vicious people. And, who now takes the rap? He is belatedly calling for miscreant bankers to be sacked: he should first look into the mirror. Repossession of number 10 should be the order of the day.

The FDP does not dissent from the "Bail Out" proposals, they being the least worst option available: But the price the banks must pay for the rescue must be rigorous regulation, and prohibition of all those practices that caused the calamity.

1) The Government must take a stake in every bank that draws on government (Tax Payer) funds proportionate to the percentage of that capitalisation.

2) The government must have voting rights on the Board of Directors of each such bank, with the power of veto in specifically defined spheres.

3) All banks must have a clearly defined role; eg.

a) Retail Banks - Taking deposits from individuals of the public and businesses, offering savings and credit accounts; loans (mortgages) and funding for the public and commerce. They should be prohibited from speculating - on there own account - on the stock exchange or the money markets. They would be permitted to undertake such trades on behalf of individual customers at the customer's risk and indemnity.

Forward exchange deals for particular customers/businesses to fund foreign currency export contracts would be permitted for a fee. The taking of deposits/loans from the corporate financial markets to be strictly limited/controlled under the auspices of the BOE. Investments in Non tangible assets, eg. derivatives (and the like) and the purchase of third party debt prohibited.

b) i) Investment Banks - Prohibited from taking deposits from individuals unless that depositor signs a declaration that such deposits are made entirely at risk.

Any deposits made on behalf of Third Parties, eg. Pension Funds; Insurance Companies; Local Authorities;

Public Trusts etc. must firstly obtain clearance from the Bank of England and be separately insured by an independent insurance Co. not itself involved in deposits at that bank.

b) ii) These investment banks must be separately capitalised, and totally divorced from any "affiliated" retail bank. They must be totally independent business and legal entities: there must be no parent company or

holding company/ subsidiary relationship. If a retail bank board of directors desire to set up - or operate - an investment bank they must fund this totally independent of the retail bank, and no capital funds ever transferred (or utilised in any way) from the retail bank to the investment bank. If the investment bank goes bust, (because they continue to speculate in risks they do not comprehend) so be it. But, that must never again be allowed to threaten the viability of the retail - the ordinary peoples' - banking system.

b) iii) If any bank wishes to set up a foreign domiciled bank they must do this on exactly the same "arms length" terms and conditions as in b ii) above, with one additional proviso, namely; if they utilise any UK generated funds to capitalise any proportion of the foreign bank (new or acquired) they must pay UK taxes on that proportion of the foreign banks pre-tax income. This is eminently fair and reasonable; if they take capital out of the UK economy, they deprive the UK economy of the opportunity to benefit from that capital wealth generation.

4) Bonuses for all bank employees and directors must be strictly controlled. The bonus regime must be registered with the bank of England. Individual bonuses would be calculated on a Nett aggregated annual return, ie. all individual Trader/Director gains and losses would be aggregated over the financial year, and any remuneration based on the Nett sum.

In the event the end year trading figure is negative, that trader's or director's basic annual salary shall be abated proportionately.

5) Any Retail bank wishing to lend sums above a set % of its gross deposits (say 50/100% TBD) must firstly obtain bank of England clearance and borrow that precise sum from the BOE at published base rate or higher, and commit to an agreed repayment schedule.

6) The Banks would be afforded the opportunity to buy back the government stake at some future time, at Par or the prevailing market price, whichever is the higher But all the government rescue regulations shall remain in place for ever, and the government nominee Board Directors shall be confirmed in post as non Executive Directors in perpetuity. They will be required to perform all normal non executive duties but specifically, restraining rejuvenation of the excesses that caused the banking collapse. Additionally, they will be required to prepare independent annual (more frequently if circumstances dictate) reports - not edited or even disclosed to the bank's BOD - for submission to the BOE who will be duty bound to report verbatim to the chancellor of the exchequer and the PM, giving the BOE's assessment of any consequences of the non executive report, and its recommendations in relation thereto.

Axiomatically, the BOE shall no longer be independent.

7) And, how is all this rescue stimulus going to be paid back?

The Guru (and his intellectually bankrupt party) now have the temerity to imply that we will all have to pay! By increased taxes. All the other established parties seem to acquiesce to this approach, so if the country elects any of them you will all be clobbered; for years to come. Why, we the innocent citizens didn't cause this financial disaster. Everybody in the world knows it was caused by the "financial industry" - and there's a joke -- ably supported by the Guru, singing their praises, who shut his eyes and ears to the patently obvious looming disaster year upon year and who is thereby instrumental in its creation.

The FDP agrees that taxes will inevitably need to be put up but the first imposition must be an immediate penalty tax on all those rapacious financial institutions that caused the disaster. In this regard, the choice between public sector cuts and increased taxes must be addressed. On balance the FDP proposes that tax increases muist be the first consideration: A) they cause less immediate damage to the ecomomy - indeed they can generate an ecomomic advantage if they are targeted to those profitable entities that can afford such; or B) are the reslt of un-earned speculative income.   

8) All existing Post Offices (and as many as could be reinstated) would be up-graded to the status of National Banks, with as many as possible services reinstated, eg. Saving Accounts; Credit Accounts; Passports; Driving Licences; Pension and all Benefit payments; Foreign Currency Issue & Exchange, and any other Retail banking type service, including personal and company overdrafts and mortgages.

Date-line mid May 2009

We now have a new political crisis: fraudulent expense claims, manifesting itself

throughout all the established parties and among a high proportion of all MPs: front bench spokes-people;

cabinet ministers; as well as back benchers.

The competing arguments being run are; who should repay; who should be sacked; and "we must have a general election now to let the people decide" and " we firstly need to reform parliament now to show the people we have tackled the problem of abuse"

All three main Westminster parties now preach, we want a new code of practice: but they already have such a code: paraphrasing "expenses must be wholly necessary for the furtherance of MP parliamentary duties." That's as clear as a bell, but they all trot out the same mantra, "every thing was within the rules" regardless of the degree of their outrageous and outlandish interpretation of the rules. What arrant nonsense and bare faced gall. And, no doubt, some will have the effrontery to expect to be re-elected.

Will a general election put matters to rights? No, but what it would do is to let all those miscreants off the hook. No expenses recovery action will be enforceable post parliament dissolution. Those so charged will simply be able to claim "it was all agreed by the Fees Office" and therefore, nobody - not even the police - would be able to sustain a charge of misconduct, unless some authority was brave enough to say the fees officers were complicit in the crime of deception, and a criminal action brought jointly against named MPs and the fees office/officers.

Will G, Brown's approach to parliamentary reform solve the issue? Absolutely not, especially as he is now saying he wants to see "root and branch" reform of the whole parliamentary structure; number of MPs; House of Lords reform etc. Not a chance before a general election; with the present bunch of MPs currently sitting.

If he or the country wants parliamentary reform all that is necessary is to elect an FDP government. Please see the accompanying sections herewith on constitutional reform.

To download the full FDP constitution document please click here

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Last Updated (Thursday, 13 May 2010 10:37)

 
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