THE Committee of Public Accounts today publishes a report which reveals in the words of its chair Margaret Hodge that: ‘The peak of the financial crisis may have passed but taxpayer support for UK banks remains extensive and the risks to the public finance from the banking sector are great. There must be an end to the dependence of the banks on taxpayer support.’
She adds that she was encouraged that by December 2010, ‘the level of explicit support had decreased from nearly £1 trillion to £512 billion.’
She urges that ‘The Treasury must continue to work towards the orderly removal of this support which will depend in particular on the success of the sale of the shares in RBS and Lloyd’s.
She also reveals that: ‘Those banks that have not received capital cash injections from the Government still benefit substantially from an implicit expectation of taxpayer support.’
She warned: ‘Currently, the arrangements available for winding-up failing banks would not be able to cope with the failure of a major bank. There is still no way to avoid the taxpayer having to bear the cost of any such failure.’ (News Line emphasis)
Hodge adds: ‘This committee feels that it is inappropriate for banks dependent on taxpayer support to be generating excessive incomes, unnecessary bonuses or dividends at the expense of exiting public support.’
The taxpayers’ rescue of the big banks in 2008 involved their temporary nationalisation, but the transference of the bankers’ debts to the working class – the British workers and workers internationally, permanently.
These workers are now being forced to pay these through savage wage, health, pension and benefits cuts, as well as through collapsing living standards due to rampant inflation, as well as massive and growing unemployment.
For workers in Libya, the crisis has meant oil thieves invading their country, to try and recoup their losses elsewhere.
The committee’s verdict on the bankers’ debts being transferred to the working class is that ‘These moves were justified at the time. . .’
The committee however has reservations.
It states mindlessly that ‘the peak of the financial crisis has passed, and banks must not remain dependent on taxpayer support indefinitely.’
It points out that ‘the Treasury still retains the ultimate risk of supporting banks should they again threaten the stability of the overall financial system. The options available to deal with a failing bank are still not able to pass the costs of failure to the shareholders and creditors instead of to the public purse.’
The banks are still ‘too big to fail’ and the workers of the world have the responsibility of keeping the bankers and the bosses going, despite the fact that the system has begun to display its full propensity to go from a roaring away inflationary boom into its opposite and death-diving collapse and slump.
Indeed, the committee points out that ‘Taxpayer support for the banks, both explicit and implicit, provides a subsidy to the banking sector as a whole. Estimates of the size of the implicit subsidy vary – from as high as £100 billion to just below £10 billion in 2009 alone.’
It reveals: ‘But regardless of the size, the Bank of England, Treasury, and RBS all agreed that the implicit subsidy as well as the explicit subsidies must be removed. . .
‘These subsidies enable private gains to be made at the expense of public risk. Contracts entered into when state support was put in place have allowed some of these gains to be used to pay bonuses to certain bank staff, and dividends to shareholders, rather than enhancing the financial sustainability of the sector, and this causes us and the wider public much concern.’ (News Line emphasis)
A banker like the leopard never changes its spots. It’s in the genes, as they say.
In fact the banking crisis has not passed its peak, it is moving towards a total collapse of the EU banks as the EU debtor states default.
There is only one way to deal with this bankrupt system and its bankrupt ruling class, and that is to abolish both with a socialist revolution.