RBS scandal demands workers expropriate the banks

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THIS week yet another scandal has broken out concerning the practices of the banking system.

The Royal Bank of Scotland (RBS) is once again in the firing line over the activities of its business turnaround unit, the Global Restructuring Group (GRG).

On paper, this group exists to weed out the bad debts made by the bank, which is 81% owned by the government following the £500 billion bank bail-out in 2008, but in practice it stands accused of deliberately ‘killing off’ small businesses in order to asset strip them.

These accusations, made by Lawrence Tomlinson who was appointed by business secretary Vince Cable as his ‘entrepreneur in residence’, have been compiled from evidence obtained from hundreds of businesses which have approached him after ending up in the clutches of the GRG unit.

These firms are small enterprises, like shops and hotels, with loans from RBS that Tomlinson claims are ‘engineered’ into the arms of this unit through a variety of means.

Sometimes they are accused of technical breaches of the terms of the loans, or the bank decides that the value of the property against which the loan is secured is in fact much less than originally valued.

Whatever the reason, these small but financially viable businesses find themselves at the mercy of GRG whose main preoccupation appears to be to bankrupt them.

It has the power to immediately scrap ‘risky’ loans, impose inflated interest rates and charge hefty amounts of charges on these firms causing them to collapse.

Then, according to Tomlinson, RBS steps in to buy up the property and assets of these firms on the cheap through its property arm, West Register, so making a tidy profit for the bank.

Far from being a turnaround arm of the bank, offering a helping hand to small businesses, it turns out that they were more intent on asset stripping them to enrich RBS.

Cable and his boss the Tory chancellor George Osborne, were predictably ‘shocked’ by this report and have called in the City Regulators to investigate.

Quite why they were ‘shocked’ is a mystery. RBS and every bank in Britain and the entire capitalist world have been up to their necks in every kind of financial cheating and fraud which has emerged following the banking collapse of 2008.

Earlier this month, RBS was fined £128 million by American regulators for mis-selling a bundle of toxic mortgages to investors before the financial crash, while the European authorities have said that they are close to fining the bank, along with HSBC and several other major banks, over allegations that they tried to manipulate the Euribor benchmark borrowing rate.

This is on top of the £390 million fine already paid by RBS over its involvement in the Libor rate rigging scandal.

RBS, of course, is not unique, as we have seen every capitalist bank has been implicated in every scandal that has emerged out of the banking collapse of 2008 when the sub-prime mortgage scam in the US brought them to the brink of bankruptcy, a fate that they avoided only through governments bailing them out to the tune of trillions of pounds and assuming the debts of the bankers.

Debts that capitalism is demanding be paid not by the banks who caused the crisis but by the working class and middle class.

While the bankers rake in billions, workers are forced to exist in poverty, relying on food banks and payday loans.

The only answer to this scandal is not banking regulation but bank expropriation.

The only future for workers and the growing sections of the middle class being hammered into the ground by the world crisis of capitalism, is to demand that the TUC call a general strike to bring down the bankers government and replace it with a workers government that will nationalise the banks under the control of the working class as part of a socialist planned economy.