'Oh, so that's who Richard Morris is..." Lord Hattersley on The Daily Politics

'An influential activist' - The Guardian

'Iain Dale, without the self loathing' - Matthew Fox in The New Statesman

You are a tinker...' - Tim Farron

Thursday 15 December 2011

The 1 Billion Pound Bargain

Hidden away at the end of the Telegraph story today, speculating that Sir Fred Goodwin could end up facing criminal charges, is this little gem.

Peter Sands, Chief Executive of Standard Chartered, was up before the Treasury Select committee yesterday. In his evidence he was asked about new rules governing bank regulation. To quote The Telegraph..

Mr Sands also warned that the bank faces a $500m (£323m) a year cost from the "avalanche" of new rules. Speaking later, Bob Diamond of Barclays said new regulations could cost the bank "north of £1bn"

Apparently for the sector as a whole, regulation could cost £7billion. Which sounds like a lot. Until you take a look at the risk the British Taxpayer was exposed to in bailing out the financial services sector not so long ago. Here's 'fact check' from The Guardian...

• Since 2007 the UK has committed to spending £1.162 trillion at various points on bailing out the banks. This figure has however fluctuated wildly during the period and by March 2011 it was £456.33bn. That total outstanding support was equivalent to 31% of GDP in March.

• The £456.33bn figure breaks down into £123.93bn in loan or share purchases, which required a cash injection from the government to the banks, and £332.4bn in guarantees and indemnities which haven't actually been paid, but were offered to shore up the failing bank system.

• Of the £123.93bn, the Royal Bank of Scotland received £45.80bn, Lloyds £20.54bn, Northern Rock a total of £22.99bn, Bradford and Bingley £8.55bn and a further £26.05bn went on "loans to support deposit".

Now there are lots of other ways of assessing both the costs and the risks. But at the end of the day the exposure is enormous.

Not to mention the costs in human terms. 2.64m unemployed for example

Which makes £323m, £1billion or even £7billion sound like peanuts to me.

1 comment:

  1. Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something. I think that you could do with some pics to drive the message home a little bit, but other than that, this is great blog. A great read. I will certainly be back.