‘Charities want ‘Robin Hood tax’ on banks’

February 26, 2010 at 2:51 pm

A group of 48 charities and trade unions has been formed to provide backing to the introduction of a new ‘Robin Hood’ tax on the banking system.

The tax, supported by Comic Relief, Save the Children and Oxfam amongst others, would consist of 50p on every £1,000 of trading by the big financial institutions. The 0.05% tax would be a tax on banking transactions rather than earnings, so it would not hurt the individual workers.

The money earned would go towards public services, schools and hospitals, as well as raising billions every year in the fight against global poverty.

The idea behind such a tax is by no means new, as it was previously mentioned as far back as the 1970s. But the global recession is now being seen as a new way to instigate the tax because of how the banks have behaved.

If the tax is adopted around the world, it could raise an estimated $400 billion a year. So far it has received a favourable reception in the UK, France and Germany, with the US also sounding positive.

However, not everyone is in favour of the tax. Mervyn King, the Governor of the Bank of England, has stated that he is against it because it could increase tax avoidance levels and force more banks into operating in tax havens.

You can vote on whether you think the tax should be introduced at the Robin Hood Tax website, where you will also find a 3-minute film starring Bill Nighy and written by Richard Curtis.

The group has adopted the slogan: “Turning a crisis for the banks into an opportunity for the world”.

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‘Banks still not lending’

February 26, 2010 at 2:51 pm

The ramifications of the recession are going to go on for a long time in the banking sector, even if the recession has officially come to an end. Now RBS and Lloyds are being criticised once again, but this time it is not bankers’ bonuses that are causing concern, but their lack of lending.

Both banks have a combined legal target of £39 billion that they must lend by the end of February. But the Committee of Public Accounts has now issued a report claiming that both banks are unlikely to reach this target.

The commitment was made by the two banks in return for the government bailout using taxpayers’ funds. £850 billion was paid out to keep the banks going.

The lending of money to both businesses and homeowners is crucial for the health of the economy. Indeed, it is the reason for the reduced interest rates imposed by the Bank of England and the recent quantitative easing programme.

Following its bailout, RBS committed itself to providing £25 billion in lending for both business and mortgage customers, with Lloyds committing to £14 billion. RBS had to pay more because the government owns an 84% stake in the bank compared to just 43% for Lloyds.

The report is calling for new powers for the Treasury to help it enforce the lending commitments, otherwise they are essentially worthless. The chairman of the committee, Conservative MP Edward Leigh, said that the Treasury “does not seem to know why the banks are not lending,” and that it has “few sanctions available”. It now wants sanctions to be put in place that are enforceable in time for next year’s commitments.

The banks, however, are claiming that it is not their lack of commitment that is the problem, but it is instead the low demand for loans that is preventing them from sticking to their lending levels.

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‘UK’s top ten cities for fraud named’

February 19, 2010 at 3:39 pm

According to recent research carried out by card protection specialists, CPP, the Welsh capital is now Britain’s number one card fraud hotspot. Cardiff has stolen this dubious accolade from London, knocking it into second position. Numbers 3, 4 and 5 on the black list are Norwich, Southampton and Leeds. Other cities featuring in the Top 10 are Newcastle, Plymouth, Glasgow, Edinburgh and Nottingham.

37% of Cardiff’s residents have fallen victim to card fraud at least once in the last year and London is not far behind with a rate of 35%. Overall, card fraud in the UK was up by 8% last year with an extra 2.7 million victims over the last two years.

On average just over £590 is siphoned off each time a card is misused, although 16% of victims have over £1,000 stolen. The fraudster’s favourite spend is electronic goods (13% of cases), whilst clothing accounts for 10% and holidays 7% of card crimes.

You may well wonder how this can happen. It seems that online card fraud is the most common scenario with 32% of cases arising in this way. Another 17% of victims had their cards cloned at a cash point or when using a Chip and PIN device, whilst a worrying 34% do not know how it happened. In many instances the first indication of anything being awry was when the victim received a call from their bank (43%).

Tips to prevent card fraud include the following:

  • Take good care of your cards and don’t carry more cards than necessary
  • Do not let them out of your sight e.g. in a shop or restaurant, in case they are cloned
  • Never write down your PIN
  • Do not let anyone else use your card
  • Contact your bank as soon as you suspect a problem and make sure the bank has your contact details for emergencies

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‘Bank calls end to quantitative easing’

February 12, 2010 at 3:56 pm

The Bank of England has just announced an end to the practice of quantitative easing, where excess cash is printed off and injected back into the economy. It has been surrounded by controversy since it began, but it was seen by many experts as the only way to stimulate the economy when it was failing to react to the lower interest rates.

The quantitative easing programme has seen £200 billion pumped into the economy since the start of the recession. Many economists predicted that the programme would end earlier, but it carried on throughout the recession until the bank announced that there is now enough money in the system. However, although it has officially come to an end, the bank has refused to rule out using it again in the near future if the economy continues to struggle.

The first line of defence, the reducing of interest rates, failed to have the desired effect of increasing lending again, even though the rates had been reduced to their lowest possible level. Indeed, the bank has now decided to keep interest rates at just 0.5% for the 11th month in a row.

Many analysts will now be asking the important question of whether it actually worked. It is true that bank lending is still very low, but it won’t really be clear just how successful or unsuccessful it has been for some time to come.

Although many financial institutions simply held onto the extra money rather than lending it out, most analysts agree that without the quantitative easing programme, the economy would be in a worse position now.

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‘British bank shares fall following Obama’s reform plans’

February 5, 2010 at 2:35 pm

Shares in Barclays fell steeply following President Barack Obama’s announcement of the new reforms that he will be introducing to Wall Street. RBS shares also fell as a result of the news, reflecting investors’ fears over what the events in the United States will mean for the banking system in the UK.

Barclays’ shares plunged 4% the morning after the announcement, and shares in RBS fell by an even larger 5%. The fall in shares in these two banks reflects their greater involvement in the American banking system than other UK banks.

Obama is planning to break up the big banks if they have both large retail and commercial arms. They will also be forced to split their proprietary trading from other operations. This is where they are involved in trading securities with their own money and not that of clients. There will also be greater restrictions in place for activity surrounding hedge funds and private equity. The overall aim is to stop any bank from becoming “too big to fail” in the words of Obama.

American banks employ many workers in the City, and it is likely that these banks will be the worst affected by the changes. Big names that could take a hit include JPMorgan, Goldman Sachs and Citigroup to name but a few.

It is also likely that the UK will follow where the US has led. George Osborne has said the Tories will back the regulation. Speaking to the BBC Radio 4 Today programme, he said that “President Obama is creating a lot of space for the rest of the world to come up with new systems of regulation.”

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