UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Wednesday, 19 December 2012

An early Christmas present for the big 4 banks

Not content with robbing us blind, laundering drug money for the world's most dangerous drug gangs and fixing interest rates for their own trading and bonuses - now we learn that the UK's biggest "too big to fail" banks are to receive a big fat Christmas present in the form of £34bn subsidy from us! http://www.newstatesman.com/economics/2012/12/early-christmas-present-britains-biggest-banks-%C2%A334bn-taxpayers

Once the government implicitly guarantees the debt of banks, the cost of borrowing goes down, as creditors are taking on less risk that they won't get their loan repaid. This reduction can be measured, and its value is the too-big-to-fail (TBTF) subsidy.

Today the new economics foundation has calculated the benefits of the subsidy for 2011 and found they totalled £34bn for the big four banks combined. Barclays, Lloyds, RBS, and HSBC enjoyed subsidies of £10bn, £9bn, £11bn and £5bn respectively. Their competitors didn't get this advantage, and neither do firms operating outside the banking industry...so no subsidy for the 6,000 Comet workers sacked before Christmas!

2012 has made it clear that public sector workers have borne brunt of the austerity programme that is meant to address the debts built up by government to 'save' the banks. While the for all the hustle and bustle on banking reform, fundamental flaws in the system remain completely unaddressed. The Financial Services Act and the Banking Reform Bill fall far short of producing the safe and useful banking system that British businesses, customers and taxpayers deserve.

The Labour movement should 'spend' its efforts in 2013 campaigning for a safe banking system...where every penny loaned out by the banks has a penny on deposit to cover any defaults. The government should then through the Bank of England issue all the new money our economy and society needs.

The Bank of England could also issue all citizens with a one-off payment to pay down debts.

This way we could reverse the madness of austerity and build a bright future for all our people - not just bankers!