The banks are not (really) owned by the state

We’ve heard a lot of tough talk recently from the so called Financial Regulator, Matthew Elderfield, and various ministers warning banks not to increase mortgage rates and to reduce rates in line with the ECB reductions.

Well, we can see from the two fingered response of NIB and other banks to the latest ECB rate reduction that all the government tough talk is nothing but hot air.

The Government can do nothing to force the banks to comply with their wishes, the banks can and will continue to screw their customers with complete impunity.

Many people are puzzled that while most of the banks belong to the state (the people) the government seems powerless to tell them what to do.

In reality, of course, the banks are not owned by the state.

They are in ‘pretend’ ownership until all the billions recklessly gambled, robbed and wasted by the banks is either paid immediately by current taxpayers or set aside to be paid for by generations of taxpayers to come.

As soon as the time is right, the banks will be handed back to the greedy criminals and the corrupt roundabout will continue to turn.

2 thoughts on “The banks are not (really) owned by the state”

  1. I agree. If and when the banks return to profit, they will be handed back to our true masters (the bankers) and the taxpayer will not see a red cent.

    Remember the days when the AIB made 4.7 billion profit each and every day? I wonder how much tax they paid?

  2. I think you should bear in mind that NIB is owned by a Danish bank, which is able to fund itself, which has not risen its variable rates since 2008 (i.e. since the crisis began) and which had these increases approved by the Financial Regulator last month.

    I think you should also bear in mind that there is no “free win” here, even for banks we own. If banks in State ownership are forced to pass on rate cuts, they become even more dependent on ECB funding and their margins are cut meaning that they are more likely need even more taxpayer dig-outs.

    Lastly, given that interest rates do not cause mortgage arrears, unemployment and negative equity do, the Government is going about the mortgage arrears crisis completely the wrong way. It should set policy not prices. By forcing banks to lend at unsustainably low rates, they do little other than contract the supply of fresh mortgages even further. The impact of this is to push house prices down even more, further entrenching the problem of negative equity – which, unlike the straw man of interest rates, does actually cause mortgage arrears.

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