They are back in the money. But the banks aren’t fuelling any recovery by lending out cash to businesses which want to borrow and keep people in jobs. Instead they are preparing to pay out billions again in bonuses and salary packages paid for by taxpayers.
The chancers and gamblers who brought on the economic crisis with their reckless greed now have the audacity to help themselves to obscene bonuses out of the savings and dividends that rightly belong to others.
Normal service has been resumed. This at a time when, partly through the action of the banks and mostly through the inaction of the Government, the risk of the economy being driven into a double-dip recession is increasing. There appears to be one law for the banks, the new deserving poor, and another for the NHS, schools, the police, prison and fire services, benefit claimants and the entire undeserving poor of the public sector. Private sector jobs are shrinking, the building trade is in meltdown, graduates cannot get a foot on the employment ladder. Yet, to take just one example, HSBC, which has recorded half-yearly profits of £7.2 billion and which lost 4,600 jobs last year, has set aside £1.5 billion for staff pay and bonuses, up 7 per cent on last year. A similar pattern is seen at Barclays, RBS and Lloyds.
The banks received money (your money if you are a taxpayer) on the cheap and are selling it high. HSBC received £33 billion more in repayments from borrowers than it gave out in new lending. In this climate the economy risks stagnation and full-blown recession. No wonder many potential borrowers are scared off from extortionate “offers” from the banks. Europe-wide governments are holding short rates at zero, which means that banks are pretty much getting free money because they can borrow for nothing. The difference between that and what they are charging customers is another source of almost pure profit.
Not only the banks are to blame. They can claim, with some schadenfreude, that they are not obliged to lend money. Their job is to make money, and by that measure they are performing spectacularly well. The same Government that today is urging banks to lend has followed the policies of the last in sucking demand out of the economy and promises to continue to do so, not least with the potentially devastating increase of VAT to a rate of 20 per cent.
The Government owns three banks, Lloyds, RBS and Northern Rock, with estimated assets holding of £850 billion. Facing such a national crisis as Britain is, the Government should tell these banks what to do – just as the last coalition did during the war years – or, even less likely, set up its own bank to lend to deserving borrowers.
Since 2008, billions of tax money has been poured into bailing out banks. Now they are valuable again, the same people who brought about their near collapse are talking about selling them off cheaply for others to make a killing with your money. Don’t expect a Government in supplication to the banks to do what it should.
