Bank Deposit Protection Scheme

[Mutley]

Ireland and now Germany:

 

Add Austria to the list...

 

And Denmark

[Freggyragh]

Excuse me, but I am very happy that my government is not gambling my country's future by promising to protect billions of other people's money. From what I understand, Zimbabwe's national debt is only about US$ 5 Billion, but some of you posters want us to guarantee private companies to the tune of £66 billion? Ireland may have taken a huge gamble - particularly as they, like us, are not in a position to print their own currency. Good luck to them, they may well emerge from this as banking giants, but then again, they may end up even worse off than Iceland.

[bluemonday]

What full of crap food, Kerry Katona and a Nolan?

 

http://news.bbc.co.uk/2/hi/business/7654257.stm

[bluemonday]

http://news.bbc.co.uk/2/hi/europe/guernsey/7654222.stm

 

Protection for savings considered

 

Guernsey politicians are considering how to protect local bank customers' savings and help islanders maintain confidence in the local economy.

 

The Policy Council has agreed firm proposals and possible new laws should be presented as a matter of urgency.

 

All of the States members have been invited to a presentation of the plans on Monday afternoon.

 

The Policy Council will then meet to decide the next step, including the possible introduction of the plans.

 

 

http://news.bbc.co.uk/2/hi/europe/jersey/7654284.stm

 

 

Savings protection debate goes on

 

Jersey politicians are continuing to debate how to protect local people's savings and help islanders maintain confidence in the local economy.

 

Senior politicians began discussions about savings protection last week.

 

Ministers will decide how the scheme will work, including where the money to guarantee savings will come from.

 

Chief Minister Frank Walker said that under the proposals the full amount of people's savings would be guaranteed if a bank collapsed.

 

But he added that he was confident the island's banking system was strong enough for the system not to have to go fully into operation.

[oldmanxfella]

Excuse me, but I am very happy that my government is not gambling my country's future by promising to protect billions of other people's money. From what I understand, Zimbabwe's national debt is only about US$ 5 Billion, but some of you posters want us to guarantee private companies to the tune of £66 billion? Ireland may have taken a huge gamble - particularly as they, like us, are not in a position to print their own currency. Good luck to them, they may well emerge from this as banking giants, but then again, they may end up even worse off than Iceland.

 

Freggyragh I agree with you idealogically but all the IOM does is manage other peoples money or hold other peoples money. If we can't at least provide them with comfort then we have nothing of value that they want. The whole economy could tank overnight if everyone who banks here decided that we don't care enough about their financial safety to do anything about it. Then were totally screwed.

[triskelion]

Freggyragh I agree with you idealogically but all the IOM does is manage other peoples money or hold other peoples money. If we can't at least provide them with comfort then we have nothing of value that they want. The whole economy could tank overnight if everyone who banks here decided that we don't care enough about their financial safety to do anything about it. Then were totally screwed.

Well, if we use the Irish example, the IoMG has to do nothing. All deposits in the Island's branches of Irish banks are covered by the Irish Government's scheme. If there ever is a similar scheme to come out of the UK, it seems probable that the same will apply, but this is probably unnecessary speculation.

 

As for this new scheme proposed by Juan and co., its typical Manx politics: Declare we have a cunning plan, but not actually release said details of plan. What is the reasoning for bring it in line with the UK? If he thinks it should linked to wages surely it should be higher than there's? Why is the UK being used as a benchmark? Their proposed scheme would only apply to locals, so how does that promote the Island's competitiveness? And so on.

 

A lot of the problem seems to be the lack of confidence in banks lending to each other. Is this where governments need to act?

In the UK this is responsibility of the Bank of England, which has tried to increase liquidity in the inter-bank lending market by injecting great wadges of cash.

[thesultanofsheight]

Well, if we use the Irish example, the IoMG has to do nothing. All deposits in the Island's branches of Irish banks are covered by the Irish Government's scheme. If there ever is a similar scheme to come out of the UK, it seems probable that the same will apply, but this is probably unnecessary speculation.

 

No. IOMG has to look like its in control. Hoping to be by default bailed out by the Irish or the UK is not enough because it shows the outside world what they have invested in - in most situations straw men who can't make a decision because they don't know what the options are. The Irish scheme is a total sham that can't possibly work in practice, but you have to admire them because they have not been straw men. They got off their arses and reacted quickly to what was likely the crash of one of their largest desposit takers. It might come back to bite them but markets are changing so quickly who cares.

 

Everywhere else you see staw men ... either bankers hoping the taxpayer will bail them out because they have not got the guts, the brains or the balls to do anything more, or politicians who lack the ability to take the political lead. People are only looking for leadership and direction and many governments can't even provide that because they're scared that if they get it wrong they'll be on the dole queue with everyone else when the whole system goes tits up.

[pongo]

No. IOMG has to look like its in control. Hoping to be by default bailed out by the Irish or the UK is not enough because it shows the outside world what they have invested in - in most situations straw men who can't make a decision because they don't know what the options are. The Irish scheme is a total sham that can't possibly work in practice, but you have to admire them because they have not been straw men. They got off their arses and reacted quickly to what was likely the crash of one of their largest desposit takers. It might come back to bite them but markets are changing so quickly who cares.

 

Everywhere else you see staw men ... either bankers hoping the taxpayer will bail them out because they have not got the guts, the brains or the balls to do anything more, or politicians who lack the ability to take the political lead. People are only looking for leadership and direction and many governments can't even provide that because they're scared that if they get it wrong they'll be on the dole queue with everyone else when the whole system goes tits up.

 

1. What would you do specifically, today, right now, if you were in control ?

 

2. Personally I don't think that there is much that the IOM govt can do except hope. Well they could maybe try summoning fairies or witches. The locally licensed banks are basically creditor banks. It is inconceivable that the UK govt would protect offshore savers - but I don't believe it will come to that anyhow. Down the line I am beginning to wonder whether the local licensing of banks has much of a future (that isn't supposed to be a red - rag to anyone btw ... it's a quietly held p.o.v. which I hope is wrong )

 

BTW - the stock market drop is very dramatic and exciting and everything. But it's a side show. The great Ken Clarke said more or less the same on Brit TV tonight.

[thesultanofsheight]

1. What would you do specifically, today, right now, if you were in control ?

 

I'd raise the scheme to the same level as the UK for no other reason than it is totally stupid not to. You can pick holes in our scheme like anything but at least if they can say "We're the same as the UK" it stops people looking too much into the other reasons why our scheme is rubbish. Nobody looked at the Irish scheme and thought they couldn't pay, they just said "Great my account is guaranteed" the fact that the economy can't afford to pay the guarantee is sadly irrelevant to most people.

 

2. Personally I don't think that there is much that the IOM govt can do except hope. Well they could maybe try summoning fairies or witches. The locally licensed banks are basically creditor banks. It is inconceivable that the UK govt would protect offshore savers - but I don't believe it will come to that anyhow. Down the line I am beginning to wonder whether the local licensing of banks has much of a future (that isn't supposed to be a red - rag to anyone btw ... it's a quietly held p.o.v. which I hope is wrong )

 

I believe that offshore banking through here has always had a finite life so I agree with you. What this situation is doing really is highlighting the reasons why you don't want to hold cash offshore - the IOM may be a AAA rated location but that means bugger all as its got the smallest pockets of all if your looking for a bail out.

[Gladys]

Gladys, obviously as I've picked your brains privately on a few issues recently, I'll defer totally to your knowledge of the complexities involved.

 

However.

 

IMPO some sort of confidence boosting action is required.

 

Specifically to the small local saver.

 

Possibly I'm being simplistic but I do think Bell et al could be doing more to show and instill confidence to the small manx savers.

 

Please Bluemonday, no deference expected or deserved, this is really not my area of knowledge or expertise. Through work I am quite a close spectator, but these are totally uncharted waters for everyone, and I mean, everyone.

 

The IOM deposit protection scheme is funded by the banks themselves, if deposits are lost it is up to the banking industry to come up with the compensation, so the scheme will only be as good as the banks' generic ability to meet those compensation obligations. To date, there have been no deposits lost, what has happened is that precarious banks/institutions have been propped up by their governments to avoid a run on the bank which will guarantee its demise or ailing institutions have been snaffled by healthier banks. Some governments have given a blanket guarantee to shore up confidence in their banking system in the hopes that this will stabilise the sector. But a call on any compensation scheme has been a way off.

 

So a first reaction would be, well, guarantee your indigneous banks and everything will return to an even keel. But this is not so easy for the IOM, as ai Droid mentioned the amount of deposits at stake is simply beyond the means of the IOM government. Furthermore, and this is important, many of the big global players have locally incorporated subsidiaries licensed here. Is it really for IOMG to underwrite those deposits when the parent group in each case probably has an asset base far in excess of the totality of the IOM?

 

As someone mentioned above, it is a bit of political posturing for Juan Watterson et al to press IOMG to up the compensation scheme and to 'do something'. The extent of the problem and how far its ramifications go globally is just beyond what the IOMG can respond to. So, perhaps sitting on its hands is the best course for IOMG at the moment. However, I would hope Mr Bell and his mandarins are having daily, if not hourly, consultations with the FSC and the other major players so that they can quickly see when corrective action is needed. Whether it will be in a position to make the corrective action is a different matter, it seems to be beyond the likes of the US so far.

 

Worrying times, but perhaps we are just a little cork on a tempestuous sea; the super-tankers may founder around us, but when calm returns this insignificant little cork will still be bobbing around, a bit battered and bruised, but still afloat.

[Albert Tatlock]

I'm down in the mouth, cos my pensions gone south...and I'm busted,

At least cotton is down, so I'm Primark bound...cos I'm busted,

My job will soon go, cos the economy's slow,

and when things'll improve, I don't really know,

But as Gordon's in charge, all I can say is Doh!

...cos I'm busted

[Gladys]

So good you sang it twice.

[Mutley]

I'd avoid anything with an Icelandic connection.

They've got problems.

 

Got this weeks lottery numbers too?

[bluemonday]

Only if you ask nicely.

1-49 dead cert.

[Lonan3]

Okay, so how often is Andy Capp quoted on here?

Today's cartoon:

Andy (looking miserable as he speaks to bank manager): "You're right - I'm useless at handling money. Because of my incompetence my finances are in a terrible state" Then, brightening: "So tell me - how are the banks doing these days?"