Not so long ago the government’s critics lined up to slam a new tax before it had even been announced. When Gordon was chancellor it was suggested he planned a windfall tax on our banks – British banks, the custodians of our wealth – banks which stand central to the UK’s success story; banks, the wealth creators of Britain.
Of course, not everyone likes banks. Do you remember that ad back in the 1980s for Barclays. The ad was filmed with a Bladerunner type backdrop, with the central character saying “I just to want to talk to someone.” It’s all quite ironic, because twenty years on banks really do remind one of that very situation. If you ring your bank these days you are quite lucky if you manage to get past a computer.
So the idea then of taxing banks has a lot of grassroots support – it's just that this government likes to be portrayed as the government of business. To tax banks any more is tantamount so saying "we don’t care about business," or so they say. It was also argued that a wind fall tax on banks would be a short-termist thing – it would bring money into the exchequer but the loss of jobs overseas that would inevitably follow would mean the government was in effect shooting itself in the foot.
But then, isn't that short-termist argument a little rich. Isn't the banks' preoccupation with the short-term the very thing that created the current credit crisis?
Be under no illusion, the current financial crisis is very serious. If the credit crunch continues much longer, if next year it really is much harder for buy-to-let investors to to obtain mortgages, if the 1.4 million people coming off fixed mortgages in 2008 really do struggle to find affordable replacement mortgages, and above all, if people who are struggling to pay off debt find they are no longer able to top up their mortgage, then it seems unlikely the UK housing market can avoid a crash, and it seems unlikely the UK will be able to avoid recession.
In the US, the land of the free and arch-exponents of capitalism, it has fallen to the government to try and bail out the economy with its plan to extend the life of teaser rates on some subprime mortgages.
As for the UK, this weekend, the FT reported that Michael Coogan, director general of the Council of Mortgage Lenders wants the government to provide money to help those who could be in danger of falling off the housing ladder next year.
You may recall from the early 1990s, repossession levels soared, creating a new supply of cut-price properties, exacerbating the housing crisis of that era.
On a micro scale it may make sense for a bank to repossess a property if a lender is behind with payments, but if applied across the land at a time of rising debt default, such an approach can make the situation much worse, with bank profits falling as a result.
And so it seems, that both here in the UK and in the US, it’s down to the government to try and stop recession by providing support to troubled borrowers.
At the same time, tax payers see their exposure to Northern Rock approach £30 billion.
Right now it seems that actually the government should have taxed banks more heavily in recent years, when times were good, providing the funding for the rescue plan the UK now needs.
Time and time again banks have proven to be unreliable custodians of our wealth – maybe it’s time the government chose to protect the banks from themselves, and tax them in the good times so that there is a lifeboat for them and us when their exuberance proves to have been irrational.
It is a fantastic idea of requesting the government. I really appreciate the idea. Infact we should be careful while getting assigned for a mortgage. If we think that we are not capable enough of repaying the mortgage then we may be locked with Mortgage arrears. As a result we might loose our house and other belongings. To avoid all these complications its better to consult an expert who can help us out easily.
BKR problemen? Nu Geld lenen zonder BKR toetsing? Op zoek naar betrouwbare aanbieders? Wij vergelijken banken die u toch kunnen helpen aan een betrouwbare
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