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Er, some questions about the bank rescue
As the detail of the potential £50bn rescue package for UK banks is mulled over I realise I am now invested and I'm pretty sure I want some answers to some key questions.
Firstly, (and this is prompted by a colleague on his blog Shareholder Values) the government may invest in the banks but it looks like the state will not be the most senior creditor in the event of a bank going belly up. Who's ahead of us and why is the investment taking a subordinate position?
Secondly, I do hope the government is looking very closely at the capital requirements for banks under the current regulation. Though it is not clear whether civil servants will be taking positions on the banks' boards, if they do I wonder if they would care to take up seats on the audit committees. I wonder too whether the government will ask the profession to look again at the way it audits banks. Food for thought.
Be nice if we nationalised that greedy lot and you lot to boot.
Civil servants are a steady hand on the tiller.
Too much greed and then when it all goes t*ts up you expect the tax payer to bail out capitaism.
Total joke.
Posted by :Keith | October 8, 2008 6:25 PM
Of course, the nationalising of public company audit is a debate that comes back from time to time (I assume you're being serious rather than sacastic)and is worth considering. It would certainly get by all the conflict of interest issues. But then so could many other measures that would change the work of private sector audit.
the key issue about private sector audit is that it is competitive, attarcts some of the brightest people and offers expert opinion.
On your capitalism point. Failure of the banks, I don't believe, means the end of capitalism as we know it. Most businesses in this country will continue to operate very effectively in a capitalist framework without government intervention and continue to make money for themselves and their employees.
What I think the credit crunch and crisis raises is a number of questions - some technical about the calculation, spread and accountability for risk. The other questions are about the appropriate activities for banks and how we regulate them now that we all realise how central they are to the economy.
Just read Selwyn Parker's book, The Great Crash. I don't remember the last chapter covering the end of capitalism coming about as a result of the 1929 stock market crash. What did happen is the US created the Securities and Exchange Commission to regulate institutions. That is where we end up again - review the regulation (as Adair Turner of the FSA has already said). Not sure anyone has proposed transforming the UK into a command a control economy.
Posted by :Gavin Hinks | October 21, 2008 10:43 AM