Bank bad public good?

Risk transfer, and they did not ask us

It's a bargain!It's a bargain!
'Too big to fail', was a popular way for banks to portray themselves, until that is, the public had to bail them out following the financial crisis. Several years on and the Royal Bank of Scotland, now in better health due to all that public money, is running an advert related to George Osborne's 'help to buy' scheme. This is so funny.

First a ridiculous style of management took RBS, and other lenders, to the brink and did so in an era of property price expansion that was encouraged by government. Then, when it had gone wrong, and without any consultation the public were signed up to a rescue plan and so 'bought' RBS. Now some years later and again without consultation the public are helping again.

This time it will be different, so they say! House prices are too high in relation to typical incomes, especially so in the London and South East of the UK. Furthermore, it has been impossible to see any government policy since the downturn began that would alter this. It would be more honest for the present government to admit this rather than tinker with the problem.

Buying anything comes with a risk, there's no reason why property should be different. It's the duty of the purchaser to evaluate the risk and traditionally it was this caution that helped to stabilise the market. And in extreme cases act to lower prices.

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