Dispatches

Comments

1. A lot of fraud has gone on, and is still going on but no one appears to be doing anything about it. If you gain someones trust and then sell them a pig in a poke, that is fraud. About time those responsible had their assets frozen, and a long spell in prison. Those in power are still under the spell of those who managed to fool them, they are all fools, and it is time for change. The world needs to get rid of the conmen and replace them with HONEST people.

   Posted by mickthebish on 23/04/2009 23:20:09

   Offensive? Unsuitable? Report this comment
2. The crux of Will Hutton's argument for the major cause of the current credit crisis is the CDO, yet there was no explanation for exactly how these are made up and why 13% of people defaulting causes these to turn toxic. If we are to understand any of the arguments for the failure of the CDO we must first understand exactly what it is.

   Posted by James on 22/04/2009 01:00:35

   Offensive? Unsuitable? Report this comment
3. IAN R has not mentioned the changes brought about by the Bush Administration on access levels to personal assets that allowed the notion of more collateral to sub-prime borrowers (Chapter13).

   Posted by Kumar Devadasan on 21/04/2009 18:15:00

   Offensive? Unsuitable? Report this comment
4. In my opinion as a banking professional, accountant and an economist, Mr. Hutton's broad cast so far is somewhat one-sided, contains errors and does not display sufficiently an understanding of the global banking system. Furthermore, he overly emphasised the light-touch regulation in laying it on Gordon Brown's feet. While then as Chancellor, Mr. Brown made some very serious mistakes especially in the terms of working for the Bank of England, he could not have done enough without Basel 2 crystallising - this occurred in August 2007. Furthermore, he implies that London's creavity included CDOs - this is not true - it was created by the US. He incorrectly states that AIG used CDOs as default instruments. Like the lack of control and understanding in the banking world, the programme has not been suitably reviewed and checked. One should also ask what made or allowed and lubricated the rush for bonuses in the banking world. Note that investment funds, with-profits pensions and final salary pensions require companies to improve the market prices by increasing shareholder value so that these funds do not sell off one stock for others with better performing potential for their market prices so as to increase the value of the funds.

   Posted by Kumar Devadasan on 21/04/2009 18:09:46

   Offensive? Unsuitable? Report this comment
5. I can't think why JACKS1 feels Hutton has blamed everyone except the Labour government. He clearly shows Gordon Brown was as seduced by the 'success' of the City and as out of his depth as anyone else. He also said the government was slow to see the danger of Northern Rock's failure. Perhaps JACKS1 would only be happy if Labour was given ALL the blame.

   Posted by Al on 21/04/2009 14:22:25

   Offensive? Unsuitable? Report this comment
6. For 2 years before Northern Rock went bust the signs of what was to happen were glaringly obvious. In these years the bank had repossesed its budgeted annual quota of houses/bad debt value after only 10 months, but to fudge the figures being returned to the city and hide the true state of business, staff were ordered to ignore all the procedures and not to proceed with action on arrears until after the Christmas breaks,hence add them onto the next years figures. As soon as the new year arrived, all arrears were verciferously chased.The Rock gambled to cover up and ride out the reality of an overcooked market and catch up the following year, but lost as circumstances deteriorated further!! How did the Cheif Exec know to sell all his shares at ?13 apiece only a couple of weeks before the bad news of NR leaked out and the run started and shareprices crashed?

   Posted by ex employee NR on 21/04/2009 14:07:52

   Offensive? Unsuitable? Report this comment
7. I was disappointed that the program did not mention either of the prime causes of the Crash. Firstly, the Glass-Steagall Act of 1933 was repealed by the Gramm-Leach-Bliley Act of 12th November 1999. This is what allowed the US banks to combine lending activities with investment banking. Secondly, no credit was given to the Clinton Administration who in 1999 were pushing their social engineering programs to increase mortgage lending to people who would previously not have been able to raise mortgages. See The New York Times article (NYTimes.com) of 30th September 1999 by Steven A. Holmes titled " Fannie Mae credit to aid mortgage lending".

   Posted by Ian R on 21/04/2009 10:00:25

   Offensive? Unsuitable? Report this comment
8. It was obvious from 2003 that banks were using a best-case-scenario, this-time-it-is-different analysis. That should have made any half intelligent person wary. When the BoE was given independence it lost its true lever over liquidity (over banks) to the FSA, a body run by politicians. So what independence? The BBC did a documentary on excessive income multiples and self-certiLIED mortgages in 2003. The true driver of the housing-asset-markets bubble was housing... ...this was driven by excess liquidity (ever rising income multiples in a low wage growth world). How did that sound realistic? What idiot assumed that cycle (requiring ever upward trends i.e. it would collapse if prices stabilised) could continue? That only virtuous cycles were possible!? It was as if all banks could suddenly ignore business and credit cycles that have existed for centuries because they had learn something new... ...is this the first time it has been "different"? No, yet Greenspan etc accepted models with 3 years worth of data for back-testing. Warren Buffet, who has arguably done better than most during both the boom and bust, said do not trust anything one does not understand... Greenspan in his odd world decided that we should let anything happen, despite not understanding it...markets could be trusted! Has he met bankers? They are mediocre people, with some Phds creating products like drones i.e not understanding what they are doing beyond theory and orders. The very fact that most of the people at the top of banking were hardly qualified was not a sign that trusting these people as geniuses was over done? As for the genius Blancheflower having foresight. He was an interest rate dove no matter what the scenario, so crying wolf was going to work eventually.

   Posted by Trevor on 20/04/2009 22:01:15

   Offensive? Unsuitable? Report this comment
9. Will Hutton presumably this means a highly subjective analysis, pinning the blame on everybody except the Labour govt. More objectivity please channel 4

   Posted by jacks1 on 20/04/2009 17:19:12

   Offensive? Unsuitable? Report this comment
10. %u201CLast year we set out radical proposals for changing the way we regulate: minimising the administrative burdens of regulation; and ensuring that the realities of regulation, as you experience them on the ground, are transformed -- by moving away from the 'old' blanket approach, of 100 per cent form-filling and 100 per cent inspection that is inefficient and wasteful of your time, to a new approach based on RISK%u2026 And I believe, too, we should consider how we can continue to extend our RISK-based approach, applying the concept of RISK not just to the enforcement of regulation, but also to the design and indeed to the DECISION ON WHETHER TO REGULATE AT ALL%u2026 %u201D Gordon Brown Speech to the CBI, 5 June 2006

    Posted by DissavowedDan on 20/04/2009 17:07:13

    Offensive? Unsuitable? Report this comment