Banks Face Two New Taxes

If the State has a FAT share of various taxes from the banks and financial institutions, and also have pretentions of being regulator, over-seer and almost Gods, when the times are good and its coffers are filled up year-in-year out, why should the financial institutions pay ANYTHING if they stray in the wilderness and lose a little, once in a blue-moon. The state should also share equally in loses too.
After all, if the State has no grey matter upstairs to spot danger signals at the appropriate times, the taxes they collect from profits should be considered as more than enough INSURANCE PREMIUMS collected and as well cough up a small portion of the free bounties collected in the past.
Come on! Where are all those brainy lawyers banks etc. pay for?
I am just another tax-payer and with no bank shareholding, so have noself-interest to look after - after all...fair is fair!

..."The state should also share equally in loses too" .......Mahdave, sorry, matey but as a taxpayer myself helping to support the state, I thoroughly object to MY taxes being used to share in the losses of private enterprises, nor their investing stockholders, nor their bondholders. They can go smoke.

Perhaps the problem is that the banks prefer to pay out their profits to their top-level staff rather than their shareholders.

The government would already stand to get a reasonable deal out of our banks if they shared their profits more like they do in other industries.

Many thanks for your feedback.

If new financial taxes do arise, then expect banks and other firms to increase their charges to claw back the money from customers.

Heads they win, tails we lose. Bah! :0(

Cliff

Let's not assume a rising up against a capitalism is beyond the wit of ma and impossible. If one thinks back into history not too many decades ago following a major downturn, communism swept to power across half the planet.

Swiss (or Lichtenstein for that matter) : Let's not assume they are immune from the blame game culture of finger pointing and scape-goating.Recall recently how under intense pressure on these states by USA IRS and Government forced them into handing over lists of american citizens for investigation of tax evasion......mmmh. Also, not all banks in these states are in the big global game and exposed ( eg Credit Suisse and UBS)..... many are local smaller institutions based on a Canton structure, are often extremely highly capitalised even up to 120%!!! . These Swiss and Lichtensteiners are pretty prudent folk. :-) Can't see somehow these states even needing to resort to the IMF for funding myself. ...If you want a safe canton Swiss bank account, .....well, maybe these days you only get an account opened if you get a personal introduction recommendation to the bank manager and have a spare suitcase with a million dollars in readies to open up your balance with. ........then again, there's Singapore of course.

The idea of leaving £50 billion in the hands of the Govt "just in case" is laughable.

Someone, over the 15-20 years it might take between when the money's collected and when it's next needed, will decide that it's more efficient to spend it now on (say) more hospitals and schools, and then borrow or print the necessary £50 billion or so if and when the banking industry next hits the fan and needs the cash.

Looking at it coolly and rationally, they might well be right. The Govt can afford to self-insure from current revenues against more or less anything.

So where's that got us, then?

Having read the proposals on "contingent capital" put forward by Goldman Sachs and others, I think that's a far better way to go. It leaves the risk where it belongs - with a failing bank's shareholders, is more likely to act as a deterrent as well as a palliative, and probably has a lower opportunity cost as well. There needs to be a risk that any bank throwing a double 1 (or whatever other threshold you choose) goes bust rather than being bailed out.

Does anyone have the case against contingent capital?

This is nuts. Take £50bn out of the system to do what? We need to keep money in the system and speed up how quickly it moves around.

Like almost all interventions the outcome will not be what is envisaged. Bankers will get richer, customers will foot the bill and the next crisis will happen regardless.

I'd also like to see an article that fully explores what would have happened if we'd let the banks fall.

I struggle with the idea of having a fund to prop up failing institutions as it's not an evolutionary stable strategy.

RE: FINGERED 4.03 pm RESPONSE
Why do I get a single penny from my House Insurer when I spilt baked beans on my carpet, or when my house goes up in flames when I "forgot" to switch off the cooker with the chip pen full of hot fat? My house insurer's booklet tells me what I should and should not do to protect my property.
Why did I get un-employment benefit etc. when my employer fired me I was not really upto my other colleagues standards and when my factory "folded" into bankruptcy?Should I go on?
The Govt. and Regulators were asleep at the wheels whilst the banks were making money from whatever was in fashion then. Did they change or pass any laws in the parliament? BANKS ARE ALSO TAX-PAPERS LIKE YOU AND ME.
I maintain, the Govt.the Regulators and the Cabinet Memebers (50% pay cuts?) should pay up and shut up!

.....But hey, welcome to the world of the fractional reserve banking systems and a sector where the financial engineers have dreamt up a plethora of unregulated toxic financial instrument debt lakes such as cdo's, cdo's squared and cubed which dwarf the debt pools of conventional instruments by 10's of trillions . Enjoy the public's reparation of these busted balance sheets!

There's an idea. Let's go back onthe gold standard, then the books will have to be balanced and inflation will not be regarded as a good thing.