Taxpayers to prop up property market/Govt rewarding failure?

#1
HERE
Taxpayer could prop up mortgage market
Alex Brummer, Daily Mail
23 July 2008, 7:58am

The taxpayer could become responsible for billions of pounds of mortgages under radical proposals to restart the housing market.

The Government would offer to take the risk of newly-issued mortgages on to the books of the Bank of England and exchange them for short-term Government bonds.

The scheme, which is being considered by ministers, would provide the banks and building societies with the resources and confidence they need to increase lending.

If it adopts the idea, the Government is certain to be accused of 'rewarding failure' by once again bailing out the banking system from a mess of its own creation.

The plan is one of a number of ideas contained in an interim report by the former chief executive of the Halifax, Sir James Crosby, who has been asked to examine ideas to ease the credit crunch.

The lack of funds in the wholesale financial markets, where banks lend to each other, has led to a rationing of mortgage lending, sent house prices plunging and led to a crisis for housebuilders.

Sir James found that as much as 30% to 40% of home loans in Britain have historically been funded by raising money in the financial markets, not from depositors.

But since financial markets froze over when the credit crunch struck almost a year ago, only two or three fresh bundles of new home loans (known as mortgage-backed securities) have been successfully sold in financial markets.

The Bank of England helped ease the immediate financial strains on High Street lenders in the spring when it launched its Special Liquidity Scheme.

Under this plan the Bank agreed to take at least £ 50bn of mortgage securities issued before December 2006 off the lenders' hands. It offered to swop these for newly-minted Government bonds to help nurse the balance sheets of the banks and building societies back to health. It is also already supporting the failed mortgage bank Northern Rock to the tune of up to £55bn.

Sir James has been told by lenders that the present scheme does not go far enough.

He is considering submissions by the Council of Mortgage Lenders and others which recommend that the Government expand the existing scheme to include new mortgages.

The Government believes that it has some breathing space because with house prices now tumbling at the fastest pace in a decade, demand for home loans has subsided temporarily.
 
#2
The over inflated housing market and the increased speculative nature of most banks and building societies mortgage products in recent years is one of the reasons that we are slightly in pOO city as is America.

If individuals acted this way it would be just call making a bad wager and they would get no government money to bail them out!
 

Biped

LE
Book Reviewer
#3
I bet it's got nothing to do with the drop in tax revenue from Stamp Duty, VAT on house fittings etc etc etc either. Why else spend more bailing out a labour sponsoring bank than you do on national defence?
 

the_boy_syrup

LE
Book Reviewer
#4
Business' go bust every day why should the banks be any different
When they are flying do they phone the Goverment and say we'll pay double tax
Maybe the goverment when talking about these loans should put a wage cut and no bonus condition in it for the fukcwitts in the banks who just carry on regardless

I might change my name to bank of Syrup as I'm skint and could do with a tax payer bailout on my mortgage
 
#5
I'm planning to go to vegas in september. I fully intend to try my luck on the roulette wheel.

I think I might actually gamble much more money than I would normally, as I am safe in the knowledge that HM Treasury will bail me out if it all goes belly-up and I end up not being able to afford the rent!
 
#6
Dear God above. Do the words FANNIE MAE and FREDDIE MAC not sound dreadfully familiar?

Fannie Mae and Freddie Mac were created by the US Government to: "provide funding to mortgage lenders by purchasing their mortgages and then holding them or selling them to investors in the form of securities that they guarantee."

These companies are also known as Government Sponsored Enterprises. And as many will have read recently, in deep cr@p so US Government is having to bail them out!!

http://uk.reuters.com/article/marketsNewsUS/idUKN2349729720080723
 
#7
Isn't the whole rationale behind blockbusting bonuses and dividends the 'risk' that these enterprises take? No risk, no payout, IMO. Sauce for the goose.
 

Grownup_Rafbrat

LE
Book Reviewer
#9
Don't forget also, these are the same banks who are advising big business on 'a million and one ways to avoid paying UK tax .. as legally as we can dare'.
 
#11
vvaannmmaann said:
Tax avoidance and tax evasion.Two totally separate worlds.
One is immoral one is illegal...both are used more by the extremely rich rather than the normal taxed too the eyeballs everyone else.
 

the_boy_syrup

LE
Book Reviewer
#13
Don't forget those who presided over the Norther Rock policy have walked away with all there big pensions etc intact
Any other person whose company goes tits up will kiss good bye to theirs
As I understood it banking is effect a gamble on the money markets why should we bail them out and it dosen't even register on their radar?
 
#14
vvaannmmaann said:
Who was the guy (MD of merchant bank?) who was paying less tax than his cleaning lady?
It was a venture capitalist 'Nick Ferguson' however they are just as bad IMHO for the effect they have made in encouraging the 'Buy to Bet' attitude.

http://www.iufdocuments.org/buyoutwatch/2007/06/private_equity_firms_paying_le.html

I have no problems with people trying to make money i have no problems with people getting rich, i do have problems when they get burnt and then cry foul and expect the public to bail them out.

Im a little old fashioned in that way.
 
#15
vvaannmmaann said:
Who was the guy (MD of merchant bank?) who was paying less tax than his cleaning lady?
There are so many of them. Philip Green, owner of Debenhams, etc. keeps his wife domiciled in Monaco and pays all his wages to her, so he pays less tax on his millions than I do on my pittance. Rupert Murdoch, changes his nationality every few years to suit whatever newspapers he wants to own, and his domicile to suit the minimising of tax - News International pays less tax than someone on 8 grand a year. The more you've got, the more you can keep.

And as for the companies, they're now trying to sue the government for taxing them too highly because it's 'restraint of trade' or some such nonsense. Lawyers in the European Court standing by to make another fortune. Taxpayers standing by to pay fees, fines and extra tax to fill the gap.

My view? Simplify the tax system. No allowances, breaks, schemes or scams. Every individual earning over ten grand a year and every company turning over more than twenty sends 15% to the Revenue.

We won't need so many tax lawyers, revenue collectors, accountants, schemers or scammers, and the money could be used to provide health, education, transport, military equipment, and even a few wages for MPs who have no other job.
 
#16
Grownup_Rafbrat said:
vvaannmmaann said:
Who was the guy (MD of merchant bank?) who was paying less tax than his cleaning lady?
There are so many of them. Philip Green, owner of Debenhams, etc. keeps his wife domiciled in Monaco and pays all his wages to her, so he pays less tax on his millions than I do on my pittance. Rupert Murdoch, changes his nationality every few years to suit whatever newspapers he wants to own, and his domicile to suit the minimising of tax - News International pays less tax than someone on 8 grand a year. The more you've got, the more you can keep.
These are the very people who cry that the UK is too costly to invest what with its minimum wage and everything whilest offshoring as much as there business as practical :x
 
#17
I guess its a question of if life would be better or worse for us if the system went tits-up?

Personally i can't see why we should bail them out. The losses are mainly in the virtual economy, with banks writing off/down cash they don't actually have/never existed. Money is an abstract concept after all.

TB
 
#18
TopBadger said:
I guess its a question of if life would be better or worse for us if the system went tits-up?

Personally i can't see why we should bail them out. The losses are mainly in the virtual economy, with banks writing off/down cash they don't actually have/never existed. Money is an abstract concept after all.

TB
Until, TB, you want to buy that high quality porn from your local newsagent! :D

At which point, you will need some spondulicks!

Litotes
 
#19
When I was made redundant following the dot-com crash more than one person told me "you can't go wrong with property", to those people I'd like to say

OH YES YOU CAN!

You can't wrong in the long run with creating goods and services people in other countries want to buy. No nation has ever got rich by going into debt to sell houses to one another.

It's a good thing that the property bubble has burst - we might get back to the fundamentals now. Government should not interfere with that.
 
#20
Grownup_Rafbrat said:
My view? Simplify the tax system. No allowances, breaks, schemes or scams. Every individual earning over ten grand a year and every company turning over more than twenty sends 15% to the Revenue.

We won't need so many tax lawyers, revenue collectors, accountants, schemers or scammers, and the money could be used to provide health, education, transport, military equipment, and even a few wages for MPs who have no other job.
I agree completely with the basic principal. However, you cannot tax companies on turnover, or at least not at that rate.
 

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