Do you think the banks will learn this time

  lofty29 21:07 20 Oct 08
Locked

In my opinion there was no option but to save the banking system, and leaving aside the foolishness of borrowers, does anyone think the banks will finally learn about overextending unwise loans. The last time I believe that this happened was when they lost megabucks in unsound third world loans, that time it resulted in the demise of the Midland Bank, now HSBC, this time it caused several banks to be either partly or completeley nationalised.

  GANDALF <|:-)> 21:17 20 Oct 08

'The last time I believe that this happened was when they lost megabucks in unsound third world loans'..it was lending to people who could clearly not pay the loan back, especially on housing, that caused the start of the problems. This also opened up a can of worms of 'interesting' financial schemes which at best were wrong and at worst criminally liable. Oddly it was not the Third World that caused the downfall of the fiancial institutions.

G

  Wilham 21:47 20 Oct 08

lofty29
To be honest, I see most borrowers and politicians, and all bankers in the UK are not at all responsible for the plight of our financial system. The two professions are among those most hurt in the present troubles.

Making scapegoats hides underlying faults, the remedies and way to recovery.

  Forum Editor 22:51 20 Oct 08

The one thing that the tabloid media seek to do at a time like this is to blame anyone but the 'working man and woman', when in fact the truth is that it's precisely the working man and woman who created the problem in the first place - by living increasingly on borrowed money. It was money that didn't exist, and the current situation was bound to arise in the end.

It can certainly be argued that all these millions of borrowers were aided and abetted by a banking industry eager to lend, but then that's what banks are for isn't it? Banks have traditionally made money by lending.

The real problem on this occasion was that too many people found the temptation to borrow irresistible - they lacked the self-control mechanisms that should have warned them they were committing to something they couldn't deliver - the repayments on their huge mortgages. OK, I know it's easy to say that the banks are to blame because they didn't bother to ensure that people had the ability to repay, but that's placing the burden of responsibility too far in one direction; are we all so weak and simple that we are incapable of saying 'no' when offered an even bigger loan?

The fact is, everyone seems to think that he or she can have anything and everything that more affluent people have, and that they can have it now. Gone are the days when people scrimped and saved for a new car, or denied themselves luxuries until they could afford the holiday of a lifetime. Nowadays everyone wants those things now, and to hell with the idea of making sacrifices - flex the plastic, or sign on the dotted line, and the new BMW is as good as yours.

The banks are not without culpability in all this, but they are not the sole cause of it either, and the sooner we all realise it, and stop bleating on and on about fat-cat bankers being the evil witches in our lives the sooner we might start to concentrate on what we have to do now.

  Bingalau 22:59 20 Oct 08

FE. That's probably exactly correct. But what worries me is that although I have never been in debt like people are nowadays. I feel as if I am going to be punished along with everyone else. I know I am "old fashioned" (my children tell me often enough) but surely we need rules to regulate how much people can borrow, just to keep the irresponsible ones from getting the idea that it is easy to get money.

  laurie53 07:47 21 Oct 08

I accept the points made, but the banks did lend a lot of money to people, including other bankers, who could not afford the repayments.

Such practices by loan sharks in the nether regions of Glasgow and London would have been condemned out of hand, and the perpetrators, if identified, prosecuted.

  Quickbeam 08:26 21 Oct 08

"This also opened up a can of worms of 'interesting' financial schemes which at best were wrong and at worst criminally liable."

Put that way, then the banks are no better than the e-mail scammers...

  lofty29 09:29 21 Oct 08

I think from the responces so far that there has been some misunderstanding of the thread, I did not suggest that scapegoats should be searched for, and accept that faults are on both sides. It was that, would unwise lending which caused the previous problems for the banks re loans to third world countries some years ago, and now the unwise lending and investments which caused the present problems cause a change in attitudes to stop it happening again in the future.

  oresome 12:27 21 Oct 08

In a word, no. Markets are driven by human behavour which has evolved over tens of thousand of years and won't change over night.

  jtt 12:41 21 Oct 08

"we need rules to regulate how much people can borrow, just to keep the irresponsible ones from getting the idea that it is easy to get money."

That sounds like the nanny state to me.

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