Would a banking levy work?

A good idea in principle, however I'm sure the greedy bankers will find a way around any levy, probably by making the custom far more.

Great idea in theory, the only problem is that it will be the customer who pays for this one way or another regardless of any so called EU safeguards. The banks will fnd a way.

Make the banks pay rather than use public sector workers as scapegoats? fine by me

Before you all jump with glee, step back, sit down, have a coffee and think a while. What have the banks ever done for you - for free!

On the face of it this seems wonderful. An IMF for the bankers, a sort of self satisfying fund.

And just where do you think this money will come from? Where does the IMF money come from? Yep - that's the place - your very own pocket.

Be it through higher of more charges, lower interest, less service, fees for using cash points, you bet we will pay somehow. If it is through additional charges to business banking then we will pay.

It is time to remove capital from being the centre of our lives - truly time for change.

Yes it does sounds fine in theory - but I fear there will be a host of banks who till find a way round the levy. How can the levy be enforced? We can't even get the banks to put a ceiling on the bonus's they pay their staff let along make payments to safeguard the public.

The house always wins, and this includes the banks

Whatever is implemented, the banks will find a profit to be had.

I think it wouldn't hurt to have a nationalised bank here and there to spice things up since it seems the big banks are all in cohoots anyway.

Make Northern Rock more competitive using government assurances and the private lot will pay attention!

"It is time to remove capital from being the centre of our lives - truly time for change."

Exactly, how about we leave these bankers and their money and we as a community and country do something revolutionary and coin our own money.

Let's not be fooled, it was the politicians who created the global financial crises by forcing the banks against their better judgement to offer 'credit for votes' to those they knew hadn't a hope of making the repayments against these loans; it was not, repeat not, the banks who forced this issue, so it comes as 'very-rich' indeed that it's those same politicians who now want to levy the banks against further risk taking!

But what, one must ask oneself, will happen to this levy should there not be another crisis and it doesn't stretch the imagination too far to come up with a possible answer, does it?

Political opportunism of no less than a criminal nature?

A recent report stated that a tax on the City, Banks and financial sector could raise £440 billion a year. Not only would this over a short period of time help to massively cut our debt and faster too, it would save the public sector and could if kept up solve most of our economic problems. Why oh why is it not being implemented.

Makes sense and the EU move is even more sensible unless you believe that the Market should dictate and hold a gun to our lives all the time.

As an amoral society broken due to decades of faceless fianance capitalism, its time they paid back to society that what they have stolen through insane deregulation and downright greed.

I bet our society would be stronger and fairer if we did. Shame on New Labour they did not implent this, but when you have people like Brown, Blair and now Cameron and Clegg it tells you why we probably will divide the Nation even further.

As a Christain, I dont know how these people sleep at night, they must read out of different Bible...if they know what that is.

Fact the Christain right are in fact the work of Satan, you cant serve God and Mamon and the Christain right have conspired to destroy our nation, cause vast suffering, by 'blessing' shocking greed and great poverty. That is evil, nothing other than evil.

Thankfully some of us Christains believe this system we have is downright wicked.

Surely this more than anything is what we should be protesting and demonstrating about.

There should be a charge of 2% of the nominal capital involved in any financial transaction. That should include all types of financial instruments, loans, stock loans, futures, commodities, etc. Where derivatives are traded the nominal capital should be the principal amount, not just the interest payment.

We might then start to see a return to real investment rather than gambling on ratios of margins.

It may only be a very small step. The important thing is to start making these little steps and make many of them! Because the ultimate aim is quite big. It is to turn the whole monstrous finance world upside down and have it neutered, so it may never cause harm again!

Just another EU scam designed to subsidise the basket case countries banking system with the profits of the more prosperous countries banks, yet again a successful UK industry would be fleeced to prop up failing states. The govt MUST veto this idea or refuse to participate as it is not in the UK`s best interests

How narrow minded can this be, not only this tax will be passed down to us but us in a tax on wealth creation, let's remember is savings and investments what creates production!!!

Such a bad idea. All the banks will do is move their HQs out of the EU, therefore not be liable for the tax and cause tens of thousands to lose their jobs, + remove a large percentage of the UK's GDP.

New Government, same ill thought out ideas.

This isn't saying much good about european banks. Don't they regulate? Don't they have national banks that insist on capital adequacy?

The levy will work BUT...guess who'll pay for it? Well, it won't be the banks for a start.

The whole thing is stupid. What it needs is:

1) Good and well-enforced regulation, by which I mean that the regulators should be fully familiar with financial instruments/vehicles and able to calculate the risk. If they can't calculate the risk, don't allow the product to be traded.

2) Set a level of capital adequacy to reflect a bank's overall risk/exposure, ensure it's reported properly and dealt with if allowed to fall below the minimum.

3) If a dodgy bank is failing (possibly because the above safeguards have not been enforced) then let it fail?

This levy? Where are the funds going to go? How will they be invested? I noted Osborne raising the issue that he wants the money for use in the UK. For what? Is he going to spend it? If he does how will he get it back if need be?

So, yes, it might work if the "pool" can be guaranteed but it's no new idea. Presumably it can be held in gold at the BofE?
Before Brown's FSA, the Bank of England lorded it with levels of capital adequacy. It received reports from all UK registered banks that had an account with the BofE). It received reports on assets/liabilities, country exposure cross-border and otherwise. It also "credit-rated" each bank, manifesting in the amoung of overdraft a bank was allowed in the event of not balancing the books at the end of the day. We had none of this nonsense then.

What amount would be contributed by the banks?
Who will really control the fund?
Who will actively administer the fund?
What will the fund be used for till it is needed for a bank failure?

Which politically correct personage will get the plum job of EU Banking Fund boss, no doubt it will carry a seven figure salary, require a support staff of thousands, a seat in the Council of Europe and world wide first class air travel investigative trips for its staff.

All in all it looks like another EU scam to increase tax revenues by calling a spade a shovel and hoping no-one would notice them digging deep into our pockets.

The banking business is all to pot
Politicians talk tommy rot
A levy is the new idea
Sounds like another tax to me

Do you think they’ll raise charges to compensate
You bet they’ll tamper with the rate
They’ll moan about talent that will be lost
And will end up paying the cost

Bit how do we bring this dog to heel
Whilst keeping the economy on an even keel
We need joint action that all can agree
That helps restore the economy

If this meets the needs of all citizens
If it means just as much to the cocks and the hens
Then we can look forward to being well off
If not then they’re just having a laugh.

I suspect that if the bankers knew there was a huge pot of money out there to bail them out (again) they would be even quicker to gamble their way into a hole in their greed for big bonus payments.

Far better to let the next failing bank go to the wall.

10. At 8:23pm on 26 May 2010, Simon Davies wrote:
There should be a charge of 2% of the nominal capital involved in any financial transaction. That should include all types of financial instruments, loans, stock loans, futures, commodities, etc. Where derivatives are traded the nominal capital should be the principal amount, not just the interest payment.

Oh dear. I've heard many bad ideas in these bank-caning times and that ranks amoung the worst!

You mean every time you or I buy or sell a small amount of shares I have to pay 2% on the capital? In addition to the stamp duty I already pay and capital gains I might have to pay? You're joking, surely? What about loans and mortgages? Small investors are going to LOVE you!

I'll happily go along with that if EVERY financial transaction is subject to the same tax. So every time you use your debit card, write a cheque, use your credit card (esp for a foreign transaction) you get slammed with a % stamp duty. That'll rake in a fair bit for Osborne's rather empty barrel!

You can bet your overdraft that the poor bl***y customer will end up paying for it.

But on a more serious note: Money can't buy happiness........ But spot your bank manager chasing a £10 note down the street on a windy day and you'll laugh your socks off.

Something has to be done, at the moment there are a relatively few people who benefit when things go right, but when things go wrong its the rest of us who suffer and it doesn't seem to affect the people who caused the problem they just seem to carry on as usual paying themselves vast amounts of money.

The levy should be on the total wage bill so the banks cant get around the levy by changing the way they pay the staff and directors, I am sick to death hearing the old refrain that they have to pay vast amounts of money to get the best people, they payed the money but if they were the best people they should give the morons a chance they couldn't do any worse than the so called best.

Take the case of Sir Fred who managed to turn a well run and profitable bank into a basket case in a very few years, and what happened, did he suffer in any way? not on your life they paid him millions in wages bonuses and pension, in any other walk of life he would have been sacked on the spot, but there is no justice if you are high profile and have money you can get away with anything.

I don't agree that the levy should go into general taxation where it will be lost in the shuffle, it should go into government bonds with the interest going to pay down the debt that we have incurred in bailing out the banks, but I don't believe any of this will happen because after all the bankers are the lords of the universe

What a wonderful bandwagon for the 'We Hate Bankers' vocal crowd to jump on. But how about a tax on the profiteering oil companies to cover any future oil spills doing damage to the environment? What about a massive tax hike on supermarkets for the damage done to the local shops by their invasion? And how does a tax on those energy companies whose prices keep going up when the price of gas goes down? I could on and on. What about those banks who do conduct their business properly, do pay their staff reasonable bonus's in line with other firms in other industries, and didn't go cap in hand to the government for a bail out? Oh and lets stop them from raising those funds through additional charges and stop them paying staff bonus's aswell. Ten years time, we'll have banks whose hands are tied in respect of how much they can lend and to whom, and who are struggling to make profits as those loss-making branches can't be offset by the profits made by investments in markets as the staff who could do those jobs have gone elsewhere where they receive what they feel is a fair reward for their talents and the almighty European Commission has forgotten all about the free market economy and is determined to justify it's own existence by interfering as much as possible.
To blame the banks for everything is like blaming the single straw that broke the camels back. Government, regulators, public demand - all have had their part to play yet seem to forget that for years the banks were paying £M's in tax and lending £000's to those who couldn't really afford it but were happy to persuade the banker that they could as so many other players had been let into the market that if the high street bank didn't loosen up their lending policy there was a supermarket round the corner who would lend the money.
Oh happy days.

It would effectively be just another tax on the long-suffering middle classes as the banks would pass it on like a shot to the customers.

Just another politician blaming the banks. Yawn....

The EU wants to take action - at last we have a US administration trying to do something!

What the hell are we waiting for? There is a will in the western world to try and do something - why are we spectating?

Vince - we know OSBORNE has neither the capability nor the inclination to upset his chums - so it's down to you to make your mark.
If the banks find loopholes that contravene the spirit of reform then punish them retrospectively!

Barclays and GolDman Sachs have shown by their actions exactly how much they care about public opinion - it's time to reciprocate with ACTION.

cant they ( the banks) just pay back whats already owed first, before we start these big ideas?

19. At 8:58pm on 26 May 2010, doctor bob wrote:
"I'll happily go along with that if EVERY financial transaction is subject to the same tax. So every time you use your debit card, write a cheque, use your credit card (esp for a foreign transaction) you get slammed with a % stamp duty. That'll rake in a fair bit for Osborne's rather empty barrel!"
-----
You'll happily go on about inflation too if this ever happens because inflation is what it will create. Seems obvious to me, but some highly qualified economists have said the same thing too.

The concept may be laudible. In practice there will be exploitation by the bankers and the customers will end up as the losers in the system.
This is only an attempt to shore up the faltering Euro

22. At 9:18pm on 26 May 2010, silentmajoritynomore wrote:

What a wonderful bandwagon for the 'We Hate Bankers' vocal crowd to jump on. But how about a tax on the profiteering oil companies to cover any future oil spills doing damage to the environment? What about a massive tax hike on supermarkets for the damage done to the local shops by their invasion?
-------------------------------------------------------------------------
Agree with some of your sentiments but these other industries did not cause the jobs losses and suffering that the bankers have inflicted.

It sounds very popular to the voters, but when these banks have been taxed where do you think that money will come from?

Do you think the banks will just pay it and give less to the shareholders?

What happens to people who borrow from the banks? will their rates rise?

Will your savings rate decrease? yes.

What happens to the pension funds that invest in banks etc, that your money except if you’re in the public sector where they are guaranteed!

There is a law of unintended consequences but it might not be felt for a 2 years

Wish the UKippers would give it a rest - there has to be a concerted international effort to stand any chance of taking on the banking mafia.
Obama has started the ball rolling ...the EU needs to demonstrate co- ordinated commitment.

Banks should be allowed to do what they want with money from speculators and professional investors. What they do with current, savings and mortgage accounts of ordinary folk should be regulated so tightly it makes their eyes water. The banks gambled our money and lost. Any bank given public money should be made to pay it back no matter how long it takes. No safety nets which is what this proposal is.

And those knighthoods Brown handed out to all those crooks should be recalled.

Sounds good but and there is a big but, Banks will try to hang on to our money by using scare monger delays see story on this site under the heading of "Banks' customer rules to change ". If a bank holds on to a £1 from everyone with an account for one day how much will they make by using that money elsewhere. You do the math and try with realist figures. Banking delays cost us a fortune.

The sooner the EU experiment falls apart and the EC turns back into the common market for trade the better all the EU has achieved is to soak money from the more sucessful econmoies and given it to poorer countries.

The richer countries can no longer afford to prop up these financial basket cases, we need to realise the simple fact that some countries are destined to be poorer than others and no amount of social engineering and wealth distribution will change that.

It is time to put a stop to this re distribution before we are all dragged down to the level of the basket case states

A levy won't work.

Stop the high street banks speculating recklessly with our money by regulating what they can do if they run current and savings accounts, and leave the merchant banks to get on with it.

Make bank shareholders and executives personally liable in the event of failure.

Not a single canadian bank required bailing out - or even came near to that position.
Some sort of fail safe that prevents tax payers footing the bill is a good idea in principle. However, why should well run exemplary banks be punished ?
The right approach in my view would be to charge the banks an insurance fee based on the sort of rating that is done by professionals to rate both business and countries debt worthyness. This way the various banks track record will determine how much they should pay into such an insurance scheme.

According to Osbourne he wants any bankers levy to go straight into the govt coffers making way for the population to pay another tax as the banks will only pass it on to the customer. The road fund licence (car tax) is another typical example. if all the car tax that is collected was spent on the roads we would be driving on roads with diamonds for cats eyes but no it goes into the coffers and we punish our cars on the potholes. Remember the Thatcher years no one knew what tar was then let alone resurfacing.

Nice bit of scapegoating from the EU as usual.
Few if any of the mainland European banks were involved in parceling up subprime debt & selling it. Although a fair few of them, esp German regional banks, were naive enough to buy it.
Yes, European banks, esp in Spain, overstretched themselves by bad lending for construction booms, but their governments practically encouraged them in this.
Europe's real problems, as shown over the last couple of months, relate to unaffordable expansion of debt at the sovereign level - in other words, politicians borrowing too much, and if felt necessary, wilfully lying in order to hide the true debt position.
We are not hearing about a levy on lying politicians from Barnier & his crowd in Brussels.
What a surprise.

Seems to me like EU bureaucrats trying to create means to have more control over national financial systems.
The "national funds" they are proposing are "national" only by name with the control strings in Brussels's hands.

10. At 8:23pm on 26 May 2010, Simon Davies wrote:
"There should be a charge of 2% of the nominal capital involved in any financial transaction. That should include all types of financial instruments, loans, stock loans, futures, commodities, etc. Where derivatives are traded the nominal capital should be the principal amount, not just the interest payment."

Have you thought this through?
The international players will find a way round it.
Ordinary Joe Public will have his meagre pension further decimated than it has been already by falling markets & high charges, by being stuffed for a further 2% on costs.

Sounds like a good idea in principal, however as many have pointed out the banks would probably try and pass the cost on to their customers to keep up their profit ratios, so how about making it a levy on their profits and bonuses instead, trying to claw back the money out of the customers wouldn't be so easy then, especially if the levy was graduated to the level of profit i.e. the higher the profit the larger the percentage levy, that should discourage them.

If I get this proposal right, the banks will be forced to enter into a kind of insurance policy with either their state government and/or the EU government on the basis that premiums will be paid by the banks in exchange for financial protection should they misbehave in the future. Haven't they forgotten something.......like who is actually going to prevent the banks from making such a future claim because as far as I can see, the answer to that is nobody and we all know how devious the banks can be, don't we!!! The scheme should be never to allow this to happen again, not assume it will happen and therefore build in a fall-back.

Only if the rest of the world does it as well.
The Europeans seem to want to flush themselves down the pan.
I am sure HSBC and Standard Chartered to name but two, will be watching with interest.
Neither needed gov bailouts; neither was more than marginally involved in subprime.
Both have much if not most of their business outside of Europe.
Standard are mainly based in the Far East; HSBC's chief exec recently moved his office to HongKong.
Yet both pay for a lot of UK schools & hospitals by paying UK tax.
If Barnier & co get heavy, both could wave two fingers & shift domicile to Hong Kong, Shanghai, Mumbai or Singapore.

Europeans have had it so good during the last twenty or so years that they forget how bad things can get economically. The United States, and Great Britain have shared more than anyone the burden of protecting Europe during the Cold War, and the United States and the United Kingdom are still supplying the bulk of all military hardware and men in an effort to contain terrorism. With this said, the United States cannot afford to prop up Europe forever. The Europeans are much closer to Afganistan geographically than either the U.S, or the U.K. Germany and other European states need to realize that their past and current prosperity is due to the fact that most European nations don't have to spend a lot of their budget on military hardware, development, soldiers, or sailors.

Americans in general are starting to feel cheated by the fact that many Europeans enjoy a high standard of living and early retirement with lots of benefits that the average American can only dream of. Due to the fact that so much of the American GDP goes toward protecting Europe many Amercans don't feel sorry for European economic problems. Americans are starting to view Europe as a drain on our economy due to the fact that they refuse in many ways to give more toward the effort in Afganistan, Iraq, and other needed resources toward the battle with terrorists, and other potential enemies. Americans are becoming somewhat isolated in their view of world affairs. They tend to view the EU as a bunch of wealthy liberals who have nothing better to do then go out for nice dinners, enjoy lavish vacations, worry about global warming while Americans work to protect them from any now or future enemy. Americans often see Europeans lavishing in the sun while they work and throw hard earned protection at them. Europe needs to get real, and realize that America is not going to prop up their defense forever, and spend tons of dollars while they are on vacations and Americans are at slaving away to protect their new found wealth and elitism.

It is a good move, but before a rescue fund is built up this levy must be used to re-pay every last cent taken from the taxpayer, with generous interest. And the system must operate alongside stringent regulation to stop bankers gambling with money that is not theirs.

YEAR 2009 to 2010, UK BANKS/FINANCIAL SERVICES PAID OUT £45 BILLION IN BONUSES.

It was the banking/financial industry which got us and the world into this economic and financial mess.

It is the BANKS/FINANCIAL MARKETS who have received £$BILLIONS of GOVERNMENTS injected money, PAYABLE by taxpayers, which HAS FACTUALLY PUSHED EUROPEAN COUNTRYS (& others) INTO MASSIVE DEBT SITUATION.

NOW, the VERY institutions which were SAVED from TOTAL DECIMATION, are NOW demanding WE TAXPAYERS COUGH UP THE MONEY BORROWED TO PROP UP THE BANKS/FINANCIAL SERVICES.

Basically, its like saving someone from drowning, then after their rescue, while you catch your breath, they beat you up and mug you.

I personally would introduce a levy of at least 25% of the SICK BONUSES paid out year 2009/2010, which would amount to just over £10billion a year. I would levy this amount until the UK economy & employment has at least got back to where it was prior to the banking collapse.
At the rate of bonuses paid out for year 2009/2010, this would STILL leave the banks with 75% of their bonus pot (over £30BILLION).

If the banks got funny about it & threatened to leave the UK, I'd do a Mugabwe and just snatch all their assets.

The banks should be levied for ONE purpose and ONE purpose ONLY, which is to PAY for consequential economic and social damage caused by their negligent actions. That way, we should NOT have to mug every UK taxpayer to pay the costs incurred due to banks.

This works out at over £50billion over 5 years, the UK government is presently going to have to find around £65 billion. This £50 billion if levied on banks, would MASSIVELY reduce more serious economic and social damage.

But there is just one little important aspect. Government doesnt want the banks money, because it is MORE intent on using its political and government position combined with economic circumstance, to enforce its policys and ideology upon the UK and its people. It wants continued economic trouble so it can privatise the schools via cynical and deviously pretentious accadamys, which many will be run by private business.

..and who will ultimately pay this levy? - of course US the customers!

nice work if you can get it.
It is time to rid capital from our society once and for all
this is exactly what the aim was.
did any body watch capitalism a love afair on C4? I was sickened.
european money fund run by the banks? it stinks of more plundering.

Well it would save screwing the poor old taxpayer - YES? but shouldn't be added to the already exorbitant bank charges we already pay.

Take it out of the profits before any tax implication for the financial institutions.

ANY BANK WHO ARE PROVED TO BE STUFFING THE CUSTOMER TO PAY THE LEVY SHOULD END UP IN PUBLIC OWNERSHIP!!

The question made me think of a Led Zeppelin lyric "When the levee breaks we got nowhere to go",My question for all the economists who have contributed to this blog is, Do you trust the banking industry not to arrange crises in order to access the fund set up to act as a safety net for their industry? Do you trust them not to write off the cost of the levy against tax? Do you trust them to not bury the cost of the levy in a raft of new "finance packages",which will include new charges for "new" packages/deals? Regulation has to work for both the customer and for the banker,this is a complex balancing act and one which has taxed some of the brightest minds in global finance,Warren Buffet has said that the government that can exert the right kind and level of regulation will be the most popular with their population and most hated by the speculators(of whom there are very many.)We have to do something,that is certain,but the levy would need a two hundred page document detailing all the safeguards and penalties issued to every single bank and I'm not sure they would like that much,they do not like regulations very much at all,I'm very unsure if we could ever get a workable version of the levy idea,what would satisfy us would not satisfy the banks and it would need to or we would find ourselves with very few banks willing to remain in Britain.

It remains my firm and unwavering opinion that there needs to be a built in "levy" within the costs of borrowing that assesses a larger amount, by percentage, against higher risk loans. The criterion for assessing risk ought to be the amount of real assets (rather than paper) collateral that is used to secure the loan. The less security the higher the levy. While it would still be possible to take risks, those risks would have a built in and reasonable cost, which would offset the risks for the higher percentage of instances where defaults are more likely to occur. This would hold true for all classes of loans, at all levels of borrowing. This would require a higher degree of disclosure as to to real assets and liabilities, in order to assess the amount of the levy, but in effect that too would help reduce the total levels of risk, and at worst would enable bankers to classify risk more accurately while providing more accurate levels of reserve which also should be legislated as to the means of their determination and the amounts that must be held on reserve in relation to the total given out in loans. It is only in those ways that a variety of impending crisis situations can be properly averted.

Bob Ezergailis
Hamilton, Canada

Who will hold the funds until needed? Surely the government is equally inept at managing assets.

It seems like a reasonable first step. As many say the banks will pass the cost on to us, and doubtless find ways to circumnavigate it. But then at least they will be reminded once a year, when they cook the books at year end, just how much their stupidity is costing them.

On a happier note, it's interesting to see that the EU, and the world markets, are looking to Germany, not London, for the financial lead. Looks like London's loosing is stature, so hopefully soon we'll be rid of all those Porches and few people joining us in the real world - or learning German.

It sounds great on paper and coming from politicians and bankers, the real truth is that this kind of catastrophic failures cannot be contained by funds in the form of insurance, this is large scale looting of public money under many banking laws that absolves the staff from any wrong-doings. Every prior administration and present administration knew quite well that giving credit to unworthy is a risky game, in steps the bankers, who get these credit rated as the best via rating agencies, then this bundle of problems is sold to the consumers as high yielding securities, then the artificial bubble bursts, out comes the truth, in comes the government bail-outs. The Government is the printer of money, they can produce the money sooner than later, no one believes in the Gold Standards, one day money will become worthless if the same behavior is kept.

Are not Banks a business? Why bail out a failing business like a bank in favour of, say, my local hair dresser?

Bailing out business is akin to communism: The State owns the majority to fund the wellbeing of The People.

Should the Governments of Old sell off these items which are now as dear to life as water?

Oh come on! This crowd must think we were born yesterday. Of course we, the bank customers, will end up paying this levy. There is no way the banks are going to cough up the money themselves. So at the end of the day its all swings and roundabouts: do we pay in advance (levy) or just bail them out with our taxpayer's money when the you know what hits the fan.

Who do you suppose pays for the levy.

Capitalism.
Profit to one party is theft from another.
Happy?

Why should banks be allowed to make a profit? The profit motive only encourages greed. Just a straight forward 100% tax on all bank profits is the fair solution. If bankers don't like it they can always get a job elsewhere.

Do what you may, the Banks would keep getting influenced by the rich and powerful; in fact, the banks always like it that way, and like it all the more if they are also unscrupulous and corrupt. To the bankers, besides their very high salaries, what matters the most is their personal gains, in any form; commissions/bribes (unseen/undeclared), bonuses, perks etc. I do not feel that they are going to mend their ways or compromise on their unfair gains. The proposed network of national funds is a measure being taken to bolster the investors' confidence and to pep-up the sagging financial markets/institutions; It is certainly not going to work. The common people/investors, unlike the bankers/financial and corporates/big business houses, are more worried and caring about their nations' interests and economic health/well-being than their own financial securities. 'Therefore', the need of the hour is to ensure honest implementation of very strict/stringent measures, in such a manner that the nations' wealth is not allowed to be squandered or misused.

Now let me see if I understand this.

When public services fail to deliver efficiently or spend more than they have, we privatise them. When private operations, like banks, spend too much, we give them public money and then develop schemes that allow failure to be managed until we can find another way of dealing with it.

So it is okay for the private sector to bring us to our knees, as they did a short time back, but a public sector deficit must be managed, instantly, by making us pay back the debt regardless of how much blood letting is involved!

Excuse me for asking, but is this some kind of confidence trick?

All this user's posts have been removed.Why?

A bit late!!!! They have already trashed the world economy. What happened to the days when a bank was just a bank (before they became casinos)?
Tax them to oblivion and then tax them some more. Once they have started to act responsibly tax them some more. Then when they are brought to their knees, tax them some more. When they are just about finished, tax them some more. It really doesn't matter to the everyday joe trying to make a living in a world they decimated.
Then they will know what it is like to be an everyday citizen of UK 2010.

Hmmm

So what is capital gains tax, share stamp duty, insurance preimum tax, and the pension safety levie?

Then again corporate tax on their profits?

My pension savings (spread over several providers and risk factors) are growing below RPI AFTER fees and charges and have done so for the last 7 years. Its only the tax rebate that makes them worth while and now their will be another yearly charge!

Taxing the banks or the bankers will bring in revenue but it won't address the fundamental issue which is the way banks are organised,the over-complexity of the products they sell and the lack of monitoring indicators to show when there is a problem.

The banks do need to be reformed and separating banks into two separate parts, one for high risk - high profit investment banks and another part
for safe,modest profit banks for everyday banking and saving is the best idea especially if the investment banks can only use the funds from customers who want to invest,take the risks and accept the possible loss of their money.

Lots of people just want safe, ordinary banking.

I'm still unconvinced that the banks have done anything to prevent future crises and I expect that if the banks continue as they are we will be having more credit crunches and more shocks to the banking system.

We need Cameron and Clegg to bring safe, stable government to the banks because more credit crunches are a threat to our ability to pay off the deficit and a threat to our national financial security.

After all they should know by now that taxes are avoidable and that there's always a way of not paying them as evidenced by all the unclosed banking loopholes.

The banks cannot be relied on to police the financial system as they simply want to keep paying bonuses at the Taxpayers' expense.

The government needs to act now before it's too late and we need to put banking directors, managers etc on notice that a banking failure will result in them going to prison.

The levy should be paid by the banks from their resources or profits with legislation in place to prevent charges being imposed on the customers.

With rewards so high and pressure to perform so great-bankers will take the risks to get their hands on the only thing they love-MONEY!
Papering over the cracks,putting a levy on the banks,reducing the bonuses etc etc will not make any difference at all. These people sold their souls years ago and nothing will change them bar death.-mmm! that could be arranged.

Banks were put in place to look after customers financial assets, not to take customers assets to pay towards a levy. The banks, their executives and their shareholders are now so greedy they'll no doubt find a way to cream off money from the tax payer. Protect peoples assets and savings first and let the banks go to the wall. My advice to any shareholder in a bank, take your money elsewhere if you don't want to loose it.

61. At 07:25am on 27 May 2010, polly_gone wrote:
"....So it is okay for the private sector to bring us to our knees, as they did a short time back, but a public sector deficit must be managed, instantly, by making us pay back the debt regardless of how much blood letting is involved! "


Not a public sector worker are you by any chance?
I'm afraid you are being disingenuous.
It was not 'the private sector' which brought us to our knees, as you say.
One small part of the private sector, namely some of the banks, not all, acted irresponsibly.
They were bailed out by governments.
But some governments had been indulging in their own, even greater, acts of irresponsibility, by borrowing & overspending on a huge scale.
The problems of the UK government for instance, result from the previous administration borrowing recklessly for a decade to bloat out its 'business' (namely the public sector), to the extent that it was even unaffordable in a global boom and is certainly unaffordable now.
So the public sector cutbacks now occurring in the UK (& other western economies) are in the main due to the previous reckless acts of their politicians much more so than their bankers.
Although this is not what Gordon Brown, for one, wanted you to believe of course.

A company has a profit target. If the Government takes a lump out the profits the profit target does not change. The money has to come from somewhere to reach the target. It'll be paid for by lost jobs or by passing on the cost.

ie Pension fund managers who have to pay an extra charge when they move money will take it of the pension rather than his commission or the banks percentage.

I very much support this. Under normal circumstances the profits of the banking sector should be more than enough to cover this levy, and under abnormal circumstances it will make European banks a safer place for your money than their American and Asian competitors.

There is indeed a risk that this will give non-EU banks a small competitive advantage. However, I think that the European banking sector is big enough to deal with that.

This is the kind of regulation that only works if it is adopted on a supra-national level. Whilst I have my question marks around some EU regulations, I believe that this one shows exactly why we need to manage certain affairs on a European, rather than a national level.

62. At 07:26am on 27 May 2010, Peter Bridgemont wrote:
"We need to reduce the power of the banks and markets, which doesn't mean harming the economy. In the same way that our education needs to lessen the powers of bureaucrats and inspectors, which will help education. Countries that have more controls on the markets and less on schools do better in both. I mention education because we need to improve our thinking, our nat. curriculum produces people who accept the status quo. It's UK that's dragging its heels on controlling the markets, even USA s starting to do it."


You can't 'control the markets' if you put yourself in thrall to them.
And you put yourself in thrall to them if you borrow too much.
China, Singapore, Qatar, to name but three, are not living in fear of the markets because they live within their means and spend no more than they earn.
The UK, Spain, Greece, to name three, are running scared of the markets because they have overspent in the good times and are still not living within their means.
Controlling the markets is easy; all you have to do is control your spending.

The European proposal sounds like a good idea. As for George Osborne wanting access to the funds for other things - about time he resigned!

It would be a great idea, if the money was guaranteed to be taken only from the banks profit dividends.

But what is being proposed at the moment will inevitably end up being funded by the bank's customers, us.

So it will actually be a banking tax on the citizens of europe.

which I'm less keen on.

I think some sort of provision, drawn from the banks directly (rather than taxpayer underwriting) would be extremely helpful. This could be done on one-off basis, perhaps working jointly with the banks to say 'work with us and this will be the extent of the financial pain' (regulation is a different issue).

Reasonable side over: it will actually be a badly managed battle of interest groups, ultimately resulting in some sort of fudge which probably serves no-one that well. If politico's and financiers had the nous and willingness to work together, they would have done so. I put this down to the fact that the people leading us in this are just people; they look after numero uno, and probably do not think its very bad, because they still go on holiday, get satellite TV, wear expensive clothes and eat nice food.... 's all good....no leadership, no foresight, no consideration of wider society....

I seem to have grown very cynical in recent times: everyone in charge now looks inadequate to me...

#69 zzgrark

Not a property or share speculator are you? We know you are a Tory but you apparently know nothing about me!!!

Let me repeat this in easy bite sized chunks for you...

Asset inflation. Asset inflation. Asset inflation.

And in case you didn't read up on the subject, under monetarism the spendthrift public purse cannot happen..... read Milton Friedman.

Go back to school, and learn some economic theory. Had Georgie boy been at the helm the exact same would have happened it is just that the recipients of the wonga would have been his mates, and not Gordon's, at the time you will understand....

As many others have already said, if you increase the banks costs they will have to pass this cost on to the consumer, which is the General public. The levy is nothing more than an additional tax on banks, and as we all know any tax increase is always passed on to us. Petrol prices and alcohol for example always go up when the Government increases duty, and insurance costs rose when the government introduced insurance tax.
I also think we should stop trying to blame the bankers for everything, as at the end of the day it was Governmental incompetence across the world that lead to the credit crunch, and the lack of adequate regulation of the banks. Many bankers did nothing wrong, and simply lost money because the markets readjusted.
It has to be remembered that the majority of trades done by bankers are actually on our behalf, as they manage our pension funds and other investments. If they are receiving bonuses it is because the trading they have undertaken on our behalf have been successful. If they aren't successful they don't last long. Lots of investment bankers lost their jobs in the credit crunch, with only the best ones surviving.

Apparently in the 70's and 80's local government offered mortgages to local people as well as the banks, this worked well and gave good secure rates, secure banking and income to local services.

Well, in this time of cutbacks any additional income or profit streams for local authorities would be welcome.

Perhaps we dont need a levy, what we need is for the banks to become less relevant, give back the powers to local authorities, and tell the banks that only those that self levy and operate within prudent rules will be allowed.

Imposing levy's is pointless when banks have the monopoly and power to operate as they have been doing and always will do. Use local authorities and split up the bank power.

Depositor’s confidence has been shattered due to global economic crunch in which uncounted banks declared bankruptcy.

Now it has become a difficult task for banks to regain confidence of depositors. No bank can survive in the market if it does not have enough depositors to run the show.

The only option is banks should provide insurance guarantees to depositor’s equivalent to the amount of deposited money. In case of future financial mishap, at least the depositor’s can claim money from insurance companies.

If the US and UK banks are now "more secure" than those within the EU, largely because of the respective governments quick response to the market collapses, does that mean that a certain failed PM was actually "right" all along?

It appears that the EU is in crisis with almost every economy in danger of being pulled apart by the ailing and failing Euro. Does this all add up to a much more optimistic future for the UK as compared to most EU economies, and is the worse waiting in the wings for the rest of Europe?

Do we have the best Chancellor in No 11 or have the ConDems made a big boo-boo already?

No, Cameron intends to spend the levy on other things instead of investing it in a compensation fund.

It's simply another stealth tax which bank customers will pay indirectly, why not be honest and say so?

It's the same old story as National Insurance, spent over decades instead of invested for the publics benefit, eg: in energy infastructure, thus giving a long term return for state pensions.

Breaking up the banks into smaller controlable junks with tougher regulation is a most important step.

In addition smaller size Banks could be forced to insure them selves against failure, the insurer would be subject to strict criteria thus policing the banks.

"Why should banks be allowed to make a profit? The profit motive only encourages greed. Just a straight forward 100% tax on all bank profits is the fair solution. If bankers don't like it they can always get a job elsewhere."

Proof, in any were needed, that no matter how silly the proposal being reported, someone on HYS will manage to raise the bar.

Honestly, it's like some see it as a daily challenge.

What's to stop these banks just moving their HQ to a non EU country to avoid this tax? Modern communication systems allow transactions to be made very quickly from just about anywhere, the banks don't have to be centered in the EU to operate. Is this what we want to happen? All those jobs disappearing?

Make no mistake we the customers will ultimately pay for this, as the banks will protect their profit margin to pay bonuses etc. The tax should be low enough that we do not push profitable banking businesses out of the UK; we need to gather the other taxes from these banks and also encourage other money into the UK, what we cannot afford is for footballers, F1 drivers and foreigners taking money to low tax countries such as Switzerland

It sounds a good idea as long as one of the conditions of payment from it was that the directors of the banks concerned would be dismissed with no golden handshake and lose the previous year's bonuses and pay and the money **only** goes to protect customers deposits. Otherwise they'd use it's existence as a guarantee and be free to take even more risks. But the car insurance industry has a scheme that they all pay into to cover clients hit by uninsured drivers - the principle is much the same, so as long as it's to protect clients, it would seem a god idea. That way, if a bank fails, but the clients all get their money, they just put it in another bank, so the system does not fail, just the bad management!

The banking crisis was brought about by banks lending to speculators in high risk investments, (e.g. £100 million in Bulgarian property development). To stop this speculative investment we need to control the bonus culture that STILL operates in the banking system.

The FSA had over 1000 people in their HQ, guess how many were watching Northern Rock, just 3.

We should have monitoring, more monitoring and then more monitoring still. Then when bankers like 'Sir Fred the Shred' give £2,500 Million to ONE RUSSIAN, (and loose the lot) his bank's credit rating is marked down with a corresponding lowering of the share price. Result, the bosses do not reward flash salesmen who put the bosses jobs at risk, and therefore we get less risky lending.

If you just tax the banks, as is proposed it will not work, they will either make us pay or shut up shop so the man in the street suffers until the tax is removed.

The banks will use this fund as a product they can bet on to make more profits.

We already have a central fund in the Car Insurance Industry to cover for accidents by uninsured third parties, so this is a welcome move.

27. At 9:49pm on 26 May 2010, Phosgene wrote:
19. At 8:58pm on 26 May 2010, doctor bob wrote:
"I'll happily go along with that if EVERY financial transaction is subject to the same tax. So every time you use your debit card, write a cheque, use your credit card (esp for a foreign transaction) you get slammed with a % stamp duty. That'll rake in a fair bit for Osborne's rather empty barrel!"
-----
You'll happily go on about inflation too if this ever happens because inflation is what it will create. Seems obvious to me, but some highly qualified economists have said the same thing too.

Exactly. That's what this levy will do anyway.

The bankers were in crisis because of suicidal economic policies. Governments should personally pay the levy.

Banks are taxed already. More taxes will force them to take more risks to maintain profits for shareholders or to move out of the EU.

Furthermore the artificially low interest rates imposed on them is also putting more pressure on banks.

Another tax on the bank's customers, not on the banks. Another sneaky way of raising taxes for the bottomless pit that is the EU.The simplest thing is to guarantee ordinary savers' deposits and let the banks that can't operate profitably go bust.

Not really, after all the main complaint that we the public had was that after the banks spent years fleecing us they then messed up and took more of our money through the government out of our taxes to fix the mess they had made. Well if they start paying that levy then where will the money come from? That's right, their customers, the public. There'll be a little charge here and a reduction in what we get back there, to channel our money in to the levy.
So we have a situation where we are still paying for any future mistakes they make, it's just that that the money will move through different channels.

Get the city rogues first and "hang" them not literally (it could be messy as they are too many of them!) before putting in any more money from the taxpayer.

Why aren't the banks we bailed out not automatically paying us back a half of their profits to ease our debt.

It's interesting that George Osbourne doesn't want the levy to be an insurance scheme whereby the money is put aside for a rainy day, but wants it to go into the general taxation pot instead. Isn't that exactly the sort of short term thinking the coalition says is wants to get away from, and that's got us into such a mess with things like pensions?

83. At 09:25am on 27 May 2010, Tio Terry wrote:

What's to stop these banks just moving their HQ to a non EU country to avoid this tax? Modern communication systems allow transactions to be made very quickly from just about anywhere, the banks don't have to be centered in the EU to operate. Is this what we want to happen? All those jobs disappearing?

---

Goodness gracious, Tio! You're right! They would do that wouldn't they? We can't have this. We should ask "how high?" every time the banks say jump, and supinely roll over for our tummy tickle every so often. After all, they own us now.

88. ian cheese wrote:
We already have a central fund in the Car Insurance Industry to cover for accidents by uninsured third parties, so this is a welcome move.
----------------------------------------------------------------------
And who makes the contribution to this central fund, we do of course. We pay extra in our car insurance which goes into the fund, the insurance company's contribution = zilch!

After saying that, if we the customer are required to pay extra, maybe it will stop us recklessly spending on 'stuff' we do not need (like a new mobile phone every 6 months as the new one has more bells on it).

Banks used to have simple controls and were considered as safe as the rock of Gibraltar. It is only when non-bankers entered the banking business that standards were lowered. It was only when governments tried to manipulate the monetary system that things began to go awry.
Even a child with its´ money box is more careful how it spends than governments are.
It used to be enough that all banks had to keep a percentage of their assets in liquid form, easily accessible, in times of crisis. Only when banks take care of depositors money, or are made to take care via legislation, will both shareholders and the public be reasonably protected.
The type of government forever searching for fresh sources of income to fund ever more grandiose unaffordable schemes is potentially dangerous for all of us. While banks need legislation, there should also be a limit on what governments can take from the national pot. Governments are the biggest spenders and thus most prone to error.

So banks would know if they took risks and failed the fund would bail them out?

criminalise the owners/chairmen/managers of failed banks, jail them, strip them of any future careers in banking, ensure they are blacklisted and that all personal assets gained from said positions are taken from them, thus creating an incentive to do business with a keen eye on responsibility.