Making The Bankster Swine Pay For What They Did To Us
THERE’S a fairly strong current of thought these days that we must make those bankster bastards pay for what they did to us and the economy. Hanging a drawing is sometimes thought to be too kind. However, those bankers complaining about what is being done also have a point. For what is being done is the banking levy and it’s not actually being applied in the right way:
In an interview with The Telegraph, Richard Meddings said that the levy, imposed on banks by the Treasury since the financial crisis, is unfairly focused on two banks — Standard Chartered and HSBC — which did not receive any taxpayer-backed support during the financial collapse.
“Standard Chartered went through the financial crisis without any assistance or help from government and there’s something awkward I think, or challenging, when the UK exchequer is taking a levy fundamentally on Singapore deposits being lent to fund Singapore deposits, or Bangladeshi deposits,” he said.
“I think given the hard target that exists for the amount the levy requires, as international banks have shrunk the assets booked in the UK, and as the definitions have changed, excluding in the main insured deposits, so Standard Chartered pays proportionally more than Lloyds, say, and so I think the structure of the levy is now clearly disproportionate.”
There’s something wrong about this but that’s OK, he’s talking his own book and we can discount for that. The banking levy isn’t to pay back what the banks consumed in the crisis. Therefore it’s just fine to be charging that levy to people who didn’t need it.
Here’s what the banking levy actually is: it’s an insurance premium against ever needing help in the future. That’s why it is charged only on those liabilities of banks that are not already insured under some other scheme. And because banks have this “too big to fail” guarantee from the government they benefit from it by paying lower interest rates on their borrowings. So, Standard Chartered does benefit and it’s right that they should be charged this levy.
However, they do have two fair complaints as well. The first is that Osbor4ne insists that the levy must raise a certain amount of money every year: but that’s not how insurance should work. If you stop doing the dangerous things that the insurance is to protect against then obviously, your insurance premium should fall. But that’s not what Osborne is doing: as the banks stop doing those dangerous things (ie, borrowing lots of money not covered y those other insurance things) he is raising their premiums on the smaller amount that they are doing.
That’s one complaint and the other fair one is that Standard Chartered is indeed being charged the levy on money in Singapore or Bangladesh: but that money isn’t actually covered by Osborne’s guarantee.
The levy itself is a great idea but Osborne’s actually implementing it in a horrible manner.
Posted: 8th, January 2014 | In: Money Comment | TrackBack | Permalink
