Nov 25 2009
Paul Myners, the BBC and bank bail outs
This morning Paul Myners gave a faultless government spin performance on the Today programme. His main concern was to stress that the government and Bank of England had fully informed the Lloyds Board that HBOS was receiving special loans from the Bank of England to see it through a difficult time, when Lloyds was considering purchase of HBOS.
The BBC interview was feeble. The interviewer pressed him on why we hadn’t been told earlier that the Bank of England was making short term loans available to RBS and HBOS of a large scale, but failed to press him on the much more important issues of
1 How is the government going to halve the deficit over four years if still in office? What tax increases and spending cuts will this require to plug this £100 billion black hole?
2. Why did the government recommend the purchase of HBOS by Lloyds, knowing what it did about HBOS, and the purchase of shares in both RBS and the expanded Lloyds by taxpayers? Why didn’t it just prop the banks with short term secret loans and demand privately that they raised capital, sold assets, cut costs and did whatever it took to sort themselves out?
Paul Myners not only knows all the government spin lines and says them well, but also knows where they are skating on very thin ice. The ice is thinnest over these two issues.
I have no problem with the Bank of Engand’s actions in lending substantial sums to a couple of banks in distress. They were right to do so, and right to do so in private. If they had made it public it might have triggered a run on either or both. During the crisis I advocated using the lender of last resort facilities for just such a purpose, and recommended that this be done in confidence. There is a debate to be had about how long after this happened it should be properly reported to taxpayers. As the loans were lent at a commercial rate, against double security for taxpayers, and were repaid within two months, a delay of thirteen months in telling us does seem excessive.
26 Responses to “Paul Myners, the BBC and bank bail outs”
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
Three things are of concern:
First the BoE’s reports were not transparent in saying that any deals had been done, let alone these deals. This is misleading the taxpayer who funds the whole sorry game.
Second Lloyds shareholders had a right to know that the Directors who they appoint were entering into these dodgy deals, rather than just making them walk away from the stupid tie-up with HBOS
Third, which other icebergs haven’t we been told about? Were Alliance and Leicester being propped up when their share price was yo yoing from one hour to the next? Where were the price-change drivers coming from? Was there scope for insider trading?
More questions left unanswered than answered here, I’m afraid.
John,
I honestly don’t know how you can sit opposite these people , and, stay so calm! Not only are they doing their best to wreck our country, they are trying to scupper a future Conservative governments ability to sort out the mess.
Can there have been a more despicable clique running our country?
John, you’re making the same old mistake of judging the Treasury and Government spokesmen by your own high standards.
They are there to deflect flack when things have gone wrong, not to either do the right thing, or stop things from going wrong in the first place….
‘Why didn’t it (the B of E) just prop up the banks with short term secret loans and demand privately that they raised capital, sold assets, cut costs and did whatever it took to sort themselves out?’
Why indeed – if this wasn’t just a case of incompetence at the B of E then you can be sure that it didn’t suit Gordon Brown or Alistair Darling for this to happen. They certainly didn’t want to see the unemployment queues to be visibly lengthening as a result of cost cutting or asset sales at the banks. The result is that we still have not seen the necessary cuts at RBS and Lloyds.
JimF – these funds did not come from the taxpayer – they were ‘printed money’.
If the banks state was so parlous – how come they were repaid in 2 months? Where did that money come from?
Stuart Fairney Reply:
November 25th, 2009 at 2:40 pm
Of course printed funds simply dilute the value of money in circulation and thus they did indeed come from holders of sterling be they taxpayers or not.
JimF Reply:
November 25th, 2009 at 7:27 pm
Yes, thank you, your children’s and grandchildren’s income tax was being usurped and used as a financial fig leaf by these cowards….
TrevorsDen Reply:
November 25th, 2009 at 10:28 pm
My assertion was based on what I read in the Telegraph, BTW.
I would agree that QE should ultimately reduce the value of the pound in our pocket, but this money was as I understand paid back. Where it is now I have no idea.
But the point is surely that this money did not come from the govts borrowing requirement.
Stuart Fairney Reply:
November 26th, 2009 at 10:06 am
It’s all a bit of a merry-go-round I agree, but I would go further than you, I would suggest QE must reduce the value of the pound, otherwise we can all get richer simply by printing more money. This has been tried previously by various governments throughout history and it has, you might say
“not always been successful”
Surely the board of Lloyds misled investors with their rights issue as they did not declare they knew HBOS was in receipt of billions in secret aid.
The bail out of the Scottish banks has brought the whole nation to its knees.
oldrightie Reply:
November 25th, 2009 at 2:17 pm
Surely the board of Lloyds misled investors with their rights issue as they did not declare they knew HBOS was in receipt of billions in secret aid.
This appears a (quewstionable act-ed). I doubt anything will happen, however. I’ve lost count at what, at one time, would have brought governments down. How innocent (past sleaze of past administrations -ed) now appear.
John,
You need to review the circumstances at the time – failing Scottish banks, the Glenrothes by-election, the previous loss of Glasgow East and Crewe and Nantwich. Brown was determined to do anything to save his job. Why don’t you remind him of some of those facts and how he duped Lloyds TSB shareholders in the process?
Can you also please explain where this £62billion came from and if the BoE effectively printed or created it? When they got “their money” back what did the BoE do with it? No doubt they used it to give back to the self-same banks. Are there any credible accounting standards that apply to government and the BoE? How can anyone have any faith in what they are told about the state of the banks, the economy or anything else the government is involved with?
Yes, there is a case to keep secret the loans made to distressed banks , the point at which it shouldn’t have been kept secret was when the Government and Lloyds management pushed for the merger. At that point they had no right to keep it secret, if they didn’t want to reveal the loans, then they shouldn’t have pushed for the merger, but they had no right to keep it from the Lloyds shareholders, in this the Lloyds management failed in their fiducuary duty, and the Government distorted the maket,
John,
You might like to contrast the secrecy, duplicity and (loss-ed) of (Lloyds) shareholder value, and the casual way in which this seems to have been accepted by our wretched Establishment, with the way in which Indonesia (which ranks 111th= in Transparency International’s Corruption Perception Index) is currently handling the collapse and subsequent rescue of their Bank Century.
In Indonesia’s case, they’ve had a Supreme Audit Agency investigation into it, which has examined in detail, and in public, the roles of the central bank, the deposit insurance agency, and the Finance Ministry, (including the excellent Finance Minister personally).
Maybe one day, Britain will be able to aspire to the transparency and decency with which Indonesia tackles similar issues. But for now, I just want to know who’ll stand up for justice for Lloyds shareholders.
Disgusting, truly disgusting.
Not only have the banks been bailed out by us, but now their cartel has been reinforced by the OFT bank charges court case failure.
Whilst I garee with you that the lender of last resort facility should be used under strict confidentiality, something must be done about the banking cartel.
In regards the charges matter, the OFT failure was entirely predictable. The banks key success was to suck up to the OFT quango and massage their ego to get them to put a stay on all the successful small claims for charges repayment that the banks dare not test in court. Quite why the OFT just did not say, ‘Sorry chaps, you seem to be losing these cases, we don’t think we need to interfere at all. The law seems to be working well. So no, no stay and over to you’ defeats me.
What is clear is that when one corporatist quango seeks to judge another corporatist organisation the rule of law and the rights of individual citizens get ignored.
Hey ho, more bank bail out money being stolen from us.
Immediately prior to his ministerial appointment Paul Myners was Chairman of the Guardian Media Group, publisher of The Guardian and The Observer newspapers.
You have been a lone voice in the political world (unfortunately) in pointing out that the equity injections into the banks were a waste of public money & that Lloyds shareholders have been cheated by the Government. History will record the money pumped by Mr Brown into the banks as the most egregious waste ever by a British Government. Probably not in time for the next election though.
Its difficult to decide whether the consistent failure of BBC interviewers to challenge Labour ministers on economic issues generally, and the bank bail-outs in particular, are the result of fear of saying anything which makes a Conservative government more likely, or simply the result of ignorance and a lack of understanding. Charitably, I think the latter – what’s your view?
Holly Reply:
November 28th, 2009 at 11:46 pm
Holly
THE REAL DOWNTURN
Evil walks among us, yet the signs we do not heed.
Evil walks among us, through our lifestyle and our greed.
Evil walks among us, very subtle very sly.
corrupting all our children, with the adults left to cry.
Evil walks among us, if you look it’s all around,evil people killing while the good lay in the ground.
Evil walks among us, and we can not let it win,luring some with money,luring some with sin.
Evil walks among us, but from most there is disgust.
Evil walks among us, in our outrage we must trust.
Evil walks among us, through the corridors of power.
Evil walks among us, bringing this man’s darkest hour.
Evil is in power,judge the action,judge the deed.
Evil walks among us, and it’s signs we need to heed.
Evil walks among us, and it really is our fault.
The shallow wants of people is what we really need to halt.
Evil walks among us, growing stronger,hard to slay.
Evil walks among us, set to eat us all one day.
Evil walks among us, with one purpose set in mind.
Evil has to rid us of the thoughtful and the kind.
Evil walks among us, we must fight it and be fast.
Evil walks among us, can the good in people last?
Evil can be beaten, if we’re firmer and we’re strong.
Give the children boundaries,so they know what’s right from wrong.
Evil walks among us,using chances he has had,have we learned the lessons, what is good and what is bad?
Evil walks among us, do we turn and look away?
Or do we re learn morals and defeat the bad today?
Written 1/6/2009.
If we’ve done all the bailing out then wouldn’t the deficit fall by a significant amount next year anyway?
I havn’t heard the Tories mention anything about a balanced budget either, they must be allergic to the idea of not spending vast quantities of taxpayers’ cash.
Myners is reported as saying that none of the depositors lost any money. As if they were the only parties involved!
I suspect the answer to your second question is that Brown actually wanted to nationalise ALL the banks in order to a) disguise what had been happening, mostly via his housing Ponzi scheme in which the banks had been semi witting partners b) obtain total control over all financial assets (powers to raid bank accounts on the say-so of courts, government departments or even quangos having already passed through parliament). He didn’t want a good bank to be left standing.
Eventually we may hear to what extent Lloyds’ board was (cajoled or required-ed) or whether they merely failed to understand the warning signals. Certainly, Victor Blank was handed a very poisoned chalice at the cocktail party at which he was Brown-nosed.
As a former Northern Rock shareholder I am disgusted that we are to have our shares valued as not a going concern when it was bungling by the government and Bank of England that led to the run on the bank.
Northern Rock asked for a 3 billion facility and were hung out to dry, whilst RBS who were responsible for sub prime lending get a 36 billion loan to tide them over.
Like you I actually think RBS and HBOS should have been given these loans and that the loans should have been kept secret. However if Northern Rock had been treated in the same manner then it would not have got into trouble and the 185,000 shareholders would not have had their property stolen from them.
Ross J Warren Reply:
November 27th, 2009 at 8:20 am
I agree with you about Northern rock shares. I bought a few, a very few and feel that I have been ripped off. I also bought a few HBOS shares, when they were in trouble and so the two will hopefully offset each other. Even so the way Northern rock was handled is something that should be looked closely into. Of course buying shares is always a risk, but it still seems to me that in Northern Rock we had a decent business, that has been undervalued. Its mortgage book is still a very strong asset, will we ever see, even a fair price? I am not holding my breath.
If the government really did fully inform the Lloyds board, then the Lloyds board did not provide all the material information to their shareholders to allow them to vote on the takeover.
I would like to see a statement from the Lloyds directors at the time as to whether they did know about those loans or not.
To me, it really looks as though somebody somewhere broke the rules, and the Lloyds shareholders lost out as a result.
Yes, the authorities were right to provide those loans; yes, they were right to do it secretly; but was it really necessary to let the takeover go ahead on false information? They didn’t have to disclose the loans to stop the takeover.
well done on newsnight
Never forget that the BBC played a specific and malign role in the Lloyds/HBOS merger. Never forget that Robert Peston somehow managed to source a scoop about Gordon Brown orchestrating Lloyds rescue of HBOS, even whilst the shares were trading, and whilst they continued to trade. (The failure to announce these matters first in the correct way to the Stock Exchange is a matter of concern-ed)
So far as I know, there has never been a proper investigation into how Mr Peston got his scoop, to rule out the possibility that his sources were from within the Cabinet Office or the Labour Party.
I do not blame Mr Peston: he has the defence of ‘just doing his job’. But I seriously want to know who was leaking.
(Sentence left out -ed)
Just one more example of the collapse of institutions, due process, and legality which has taken place under this wretched administration.
Oh yes, and Myners was predictably wretched. Wretched.