R.F.Wilson writes from London: Don’t you just love the way bankers operate. Having escaped any responsibility for causing that financial crash in 2008, all thanks to their friends in the corridors of power and incompetent regulators, the money men are now busy enriching themselves further, getting all that taxpayers’ money to plug black holes in their books that are constantly created by their dodgy get-rich-quick schemes on the markets.
And now comes more news of the banks pulling off another stunt and ripping off the long suffering taxpayers. It turns out that British banks involved in the so-called Funding for Lending Scheme (FLS) that the Treasury and the Bank of England (BoE) had launched with so much publicity last summer, have actually failed to pass on the cheap money that was given to them by the government to companies and individuals, effectively misusing public funds. (Imagine if someone were to take out a loan from the bank and use it for purposes not stated in the application. He or she would go down as fraudsters.)
Since the FLS was initially launched only six banks have joined the scheme, testing the waters to find out whether they’d actually be forced to lend the money that they were getting from the Treasury and the BoE at the lowest interest rate possible. And it worked out brilliantly, as they were able to misuse the bulk of the money borrowed from Big Brother and spend it as they saw fit. In case you’re interested in the amount of money going walkies, here are the figures: the six banks borrowed £4.4 billion but lent only £496 million. And when the others found out about it they quickly joined the scheme and did exactly what the first lot did. Took out cheap government loans and used them on other things rather than lending. (I wonder, I just wonder, whether those payday loan companies are not getting their funds from the big banks that are rolling in cheap money.)
Overall in the last quarter of 2012 banks and building societies cut their lending by over £2.4 billion. And that was happening at a time of recession that was camouflaged by dodgy statistics as a ‘sluggish recovery’, with the BoE openly talking about reviving the semi-criminal quantitative easing scheme that provides banks with huge funds to use as they see fit. They have already received £375 billion of these grants funded by the taxpayers and are salivating at the thought of getting another £100 billion. The fact that QE did absolutely nothing for the economy somehow remains unnoticed by the people running the BoE.
Now , the funniest thing of all in the failure of the FLS is that two nationalised banks, the RBS and Lloyds, took some serious cash from the taxpayers in the fourth quarter of last year but their overall lending went down. That means that the Treasury and the BoE simply looked the other way while the money men misused the funds. Which in turn means that Chancellor George Osborne and BoE Governor Sir Mervyn King should be sacked at once for gross incompetence.
This won’t happen though. What’s more, the BoE has had the nerve to say that the benefits of the FLS will start to become apparent ‘later in 2013’. Yes, sure, and the economy is doing well too.
But the bottom line is that British banks ain’t lending. Period.