The bailouts get bigger and bigger

Susan Hill

It defies belief that anyone could have worked in the managemennt of this bank and not understood just how deep they were in the mire. Ignorance and incompetence rather than corruption but in this instance every bit as culpable. And meanwhile they went on spending millions on palatial new offices and sponsoring Formula One and other sports to the tune of millions. Some pensions really should roll.

mark c

no doubt the board of directors is still intact too.

isnt it about time insolvency laws were put into place.. give the bail out monies to administrators to be used to break up the businesses and protect the savers /morgage recipients and get it over with. Death by a thousand cuts is not even a least bad option, it hurts us all much more in the long run.

Just think Fred the Shred with statutory redundancy and no bonuses anywhere. might even make for a few votes Gordon, though I doubt anyone has the balls to do it

Rhoda Klapp

Time to cut 'em loose.

jon dee

Theres something about the letter "b" tht lends itself to insult.

Now that we have it from the horses mouth that the FSA was leant on to look away by Blair,Brown and Balls might we expect further apologies?

Bloodied bankers cower before McFaul and his committee while his boss and cronies continue to hide from the truth.

What a load of b------s.

Roy

How can treasury provide insurance when it too is overspent, has limited and reducing income with its only real asset is being able to print money which reduces in value with the ever increasing amount printed? That is, without mortgaging the very country itself? Now, who was it who was criticizing Iceland?

Short the UK

It will not go to plan as the plonkers running the country continue to think we are in a mid-cycle slowdown. This is an end to a cycle that began in the early 80s. Hence the magnitutde of the debt bubble popping.

Forget the term bail-out!! This is now a bail-in!! We the country get sunk by the banks.

Some interesting charts:

http://www.cnbc.com/id/15840232?video=1045290529&play=1

If 2,500 comes to pass for the FTSE then the pension system will be kaput.

Faceless Bureaucrat

I seem to recall a post on Coffee House recently that suggested that it is not the Government that is taking over the Banks, but the Banks taking over the Government. This a narrative seemingly gaining ground in the blogosphere and the kind on 'telephone number' figures being bandied about today can only feed in to that view...

Chuck Unsworth

Outrageous. It's clear that the Government (if one could call it that) is petrified of allowing a bank - any bank - to be subject to normal commercial rules. If that is so, all banks should immediately be nationalised as they are de facto underwritten by the taxpayer.

The great mistake was to prop up Northern Rock for entirely obvious and petty political reasons. That set this whole disastrous chain of events into motion. It will be three generations before an economic balance is restored. Brown and his colleagues have been the architects of this catastrophe. Even if they were all to resign today we, the public, will go to our graves burdened with the debts which are results of their profligacy, arrogance and stupidity.

Moraymint

As the global economic system collapses under the intolerable weight of unsustainable levels of debt, the UK government makes it legally binding for RBS to pump a further £25 billion more debt into our economy during 2009.

Presumably, we'll all feel rich again by the time of the next election then?

Wilhelm

The ex chairman of RBS is getting a pension of £650,OOO per year for the rest of his life, he's only 50. The word greedy bastard comes to mind.

Wily Trout

Radio 3 News this morning says Fred the Shred is recieving a £600k+ pension, at age 50. What idiot (or committee of idiots) agreed that?

Ivy Eileen

Susan - as I have posted previously, the Monument to a Towering Ego that is the new RBS Group Head Office is on the site of Edinburgh's former psychiatric hospital.

One point regarding Goodwin's pension, if and to the extent it has not already been fully funded it is a continuing obligation of RBS ...... and so is being indirectly supported by this bail-out.

Ray

"It defies belief that anyone could have worked in the managemennt of this bank and not understood just how deep they were in the mire."

Susan Hill's comment really says it all. And there was me thinking one needed brains to manage a bank!

mac

Sadly, and despite Brown's risible claims to saviour status, there's no sign of a latter-day equivalent to Robert Walpole, who picked up the pieces after the South Sea Bubble.

I wonder how many of our parliamentary and banking whizz-kids know anything about that 18th Century example of collective stupidity and greed?

That'd be History, though, and not a cool subject for contemporary movin' an' shakin' sophisticates.

oldtimer

@ Ivy Eileen re Goodwin pension.
Pension funds usually are quite separate from the company for whom the pensioner was employed - it may even be a legal requirement.

What will be more interesting is the extent to which Mr Goodwin`s pension pot was topped up after the black weekend when the banks were forced to go to the government for their bailout capital.

Normally pension contributions are accumulated year by year. In the case of an early retirement, a lump sum is provided to top it up. It would not surprise me to discover that there was a significant lump sum top up; and that that was in effect funded by the taxpayer. No doubt Goodwin will argue that he was contractually entitled to it; taxpayers will argue that he is not entitled to any top up. In any event, it looks as though he put his last few weeks at the bank to secure his pension.

Politicians seem to have been asleep on the job - again. Do you think that the Chancellor would pass for Rip van Winkle?

Steve.W

Quote - “The bailouts get bigger and bigger.” True, this is the flip side of the 'do nothing' approach favoured by others.

When Northern Rock got into trouble I thought the best way out was to let it go bust, do nothing. Given such a warning other banks may have acted with more care.

But then the 'home' of Northern Rock is the North East and Nulabour heartland.

Wily Trout

But Anatole Kaletsky in the Times says the govt is doing the right thing, so relax, everything's fine, what are you worried about?

Ivy Eileen

@oldtimer -

which was why I wrote "if and to the extent it has not already been fully funded ". The funding will be by the company with contributions from the employee. Any underfunding may mean company is failing in its contribution obligations - as witness those companies in financial difficulties with pension deficits (useful poison pill).

Yes, it would be interesting to know the timing (and amount) of any late-stage contributions.

Susan Hill

But would the late-stage contributions not have been put in by the man - i.e from his sslary - not the bank i.e. the employer ? I have a self-employed pensiom fund so it is different and entirely funded by me - i.e. top-ups entirely out of my own income - so I am not qualified to speak. But I didn`t think an employer could or would simply add a huge lump to an employee`s pension pot at the last minute. Maybe someone else can speak with better knowledge on this one.
But whichever it turns out to be - NOBODY is worth or needs 650K a year pension - NOBODY. It`s taxed of course, at 40% but even so - why would he need this much to live on comfortably ? There is only one honourable option and that is for him to forgo all but, say, 50K of it.
A fiver says Fred G will not take the honourable option. Any takers ?

Tom Pride

Susan Hill

Abuse of final salary (defined benefit) pension schemes by company directors (the ones who write their own terms and conditions) have gone on for years. Rip off techniques include substantial increases in base salary in the last few years before retirement(as the pension is determined by percentage of final salary), lump sum employer contributions, clauses granting special enhancements if forced to leave or retire early (I.E. taking a full pension at 50).

The Treasury lawyers need to go through the pension contract with a fine tooth coomb and find a get out clause. Gross negligence might be a way. At least make him fight for it in the courts.

But, most importantly, go for the directors who signed off on the pension. In the US an ambitious District Attorney would find some way of making a case and bankrupting them if they chose to fight it. Then go for the advisors’ pockets - the pension consultants, remuneration consultants, lawyers who were involved in advising and drafting these contracts.

Make an example of them. Let them just try and justify the rampant unjustifiable selfish greed of CEOs and boards in the last few years.

The damage that these people have done to the “little people” who owned shares in the banks either directly or through pension funds means they deserve substantial retribution. The taxpayers who are now picking up the bill should demand this at the very minimum.