5 good reasons why Osborne’s selling off RBS and Lloyds is wrong

Osborne as usual is taking advantage of Labour’s distraction at this time to sell off RBS and Lloyds to the private sector at a huge losses to the taxpayer, to accountability of the banks, and to the future of the British economy.   This is motivated by his ambition eclipse even the Thatcherite privatisation boom of the 1980s and to oversee the biggest ever sale of publicly owned corporate and financial assets in one year, as well as of course elevating his prospects for the coming Tory leadership race and premiership.  But what may be good for his party and for him will certainly not be good for the country.

First, it is a thoroughly bad deal for the taxpayer.   Osborne has agreed to cut the public shareholding in RBS from 79% to 73%, but at a loss to taxpayers of £1bn.   The scandal of this unnecessary sale is one main reason why it was announced in the summer recess when Parliament wasn’t sitting so that he could avoid hard questioning about its implications.   The £2.1bn of RBS shares were sold at 330p per share, far below the average of 502p per share that the helpless taxpayer was forced to purchase them.

But that is not the real reason why Osborne’s policy is downright misguided.   The banks’ overmighty arrogance, recklessness, and incompetence were the prime reason behind the worst global financial crash for a century, and there not a jot of evidence that they have accepted their responsibility, shown any remorse, or are committed to any serious reform. Indeed they have fought tooth and nail against reform, have extracted major concessions from a weak Osborne like his caving in by reducing the bank levy in response to their lobbying, have pushed back the time limit for any statutory changed to 2019, and are demanding a very early return to pre-crash business as usual.

Moreover there are 5 specific reasons why the banks should NOT be returned to the private sector.   Their deregulated lending – for overseas speculation, for deployment of artificial tax avoidance devices on an industrial scale, for exotic derivative financial constructs which were highly lucrative but were at the heart of the crash, and for for prime property sites in central London – do not benefit British industry, but only their own selfish interests for profit maximization.   Only 8% of their lending last year went towards productive investment in Britain.

There has been far too little reform to prevent another massive crash, mainly confined to increasing the capital reserve ratio and setting up ‘Chinese walls’ between the retail and investment arms of banks.   They are still ‘too big to fail’, so that the implicit taxpayer guarantee is still in place.   There is no structural reform: Britain needs smaller, regional, specialist banks that helps Britain in the same way as the German Mittelstand.   And the dark forces of the next crash – the rise of shadow banking and a re-run of the most dangerous derivatives  – are not being countered.

 

5 thoughts on “5 good reasons why Osborne’s selling off RBS and Lloyds is wrong

  1. You could also ask which British banks are exposed to Greek debt and why the Greek people have received so little of the so-called bailout money from the Troika.

  2. Has you say nothings changed the banksters are still defrauding the ninty nine percent who aint rich whilst they still get massive pays and bonuses yet ossie selling off to his mates is normal for them but the masses aint saying or doing much about it jc has the right idea bring back under government’s control everyone’s got to greedie and heads need to roll but ossie wont has it would leave the cons without that pay day will jc put it right has the masses didnt lose monies in 08 but the rich one percent did but we get to pay it back untill that day a proper government who will atleast be honest jeff3

  3. Hello, Mr Meacher – welcome back!
    I hope you had a good holiday and didn’t miss all the fun and excitement generated by Jeremy Corbyn and his fantastic campaign. Do check out what happened in Camden. Amazing.

  4. Welcome back Mr. Meacher missed your blogs. Yes sadly another Tory disaster in the making what’s new. I thought Thatcher was bad what is happening now is mind blowing never thought I would witness anything like this in my life time.

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