Banks Have to Make a Profit

As the politicians all start to bash the banks for not passing on the full rate cut, Guido asks how can the recapitalisation of the banking system be successful if they don’t make a profit? This is the danger with quasi-nationalisation – once you start putting political considerations before commercial imperatives, banks will be perpetually loss-making burdens on the taxpayer.

The fact is the banks have to earn a spread from the rate they lend against the rate they borrow, otherwise you get into the Northern Rock position with the cost of borrowing exceeding the return on lending. Politicians will nevertheless huff and puff regardless of reality.

UPDATE : The government is going to force banks to double their holdings of government bonds, supposedly to increase their “liquidity reserves”. Handy when the government is desperate to find buyers for gilts to keep itself afloat. If they have to buy gilts, it will make it even more difficult for banks to extend credit to corporate borrowers… doh!




Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

John McDonnell does a funny:

“I’m told there are a group of KGB colonels who are suing The Sun for associating themselves with us.”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Mr Toynbee’s Fine Dining Brass Neck Mr Toynbee’s Fine Dining Brass Neck
Labour and Communists Hold “Co-Operation” Meeting Labour and Communists Hold “Co-Operation” Meeting
Camilla Tominey on Labour’s Smears Hypocrisy Camilla Tominey on Labour’s Smears Hypocrisy
Dugher vs Skwawkbox Dugher vs Skwawkbox
Remembering the STB Remembering the STB
Even Remainers Think BBC Is Anti-Brexit Even Remainers Think BBC Is Anti-Brexit
Millions of Students Affected by Lecturers Strike Millions of Students Affected by Lecturers Strike
Corbyn Considering Backing Customs Union Corbyn Considering Backing Customs Union
CIA Files Reveal US Spies Kept Tabs on Corbyn CIA Files Reveal US Spies Kept Tabs on Corbyn
Cabinet Sub-Committee Committed to Divergence and Taking Back Control of Laws Cabinet Sub-Committee Committed to Divergence and Taking Back Control of Laws
Stasi Files: Corbyn’s Peace Group Infiltrated by Spies Stasi Files: Corbyn’s Peace Group Infiltrated by Spies
Boris on Corbyn’s “B*llocks” Boris on Corbyn’s “B*llocks”
Read: Stasi File on Labour Party Read: Stasi File on Labour Party
LISTEN: Labour MPs Knowingly Meet Foreign Spies Every Day LISTEN: Labour MPs Knowingly Meet Foreign Spies Every Day
BBC Website Finally Reports Corbyn Spy Story… And Attacks “Press Barons” BBC Website Finally Reports Corbyn Spy Story… And Attacks “Press Barons”
Tory ERG MPs Remind May of Her Commitment to Take Back Control of Laws and Trade Tory ERG MPs Remind May of Her Commitment to Take Back Control of Laws and Trade
Aaronovitch Talking S*it Aaronovitch Talking S*it
Live In Truth: Corbyn vs Havel Live In Truth: Corbyn vs Havel
Watson Now Opposes Airing Lurid Historic Claims Against MPs Watson Now Opposes Airing Lurid Historic Claims Against MPs
Green: I Wasn’t Inappropriate to Kate Maltby Green: I Wasn’t Inappropriate to Kate Maltby