The Gordon crunch
While US financial giant The Lehmann Brothers recent colapse wont mean much to many of us the dramatic bailing out and ‘closing down’ sale of HBOS (Halifax Bank Of Scotland) to Lloyds TSB will have raised a few eyebrows across the finanacial world. it was only a few short years ago that Bank Of Scotland were THE big beast in UK finance with ordinary savers and investors complaining about the sky high profits that were being made, and also about how ethical the money invested in BOS was.
A few years down the line and upward of 40,000 HBOS employees are facing Christmas on the dole, and the government has had to bend monopoly rules to accomodate the amalgamation which allows HBOS to avoid going bust. HBOS/Lloyds TSB will have a huge 33% of the UK lending market.
50% of the value of HBOS stocks were wiped in the space of one day and this raises questions about the stability of UK finance. Questions about Gordon Brown’s role in the ‘borrowing culture’ that existed during his chancellorship have arisen, how could a previously ‘prudent’ financier inspire so little confidence?
After The Northern Rock and US problems the UK government has set a trend of forcing lenders to change their ways and become more realistic, what this will do for competition in the marketplace where lending is down to a 20 year low and many lenders have withdrawn previous loans.
While supporting financial institutions is all very well for the overall picture how does this affect the consumer in real terms? The whole mess has been caused by mismanagement by lenders rather governments charging too much stamp duty, or even borrowers paying too much for property. The government should use it’s time coming up with a medium term legislation for lenders in terms of what they can offer, to whom and rules about inter-lender finance.
It should be noted in all this that £35,000 of your savings are guaranteed, so if you spread your savings across a few lenders and types of investment there will be no problem. Gordon Brown was telling us a few months ago to save more for our old age…with many pensions halfing in value in recent days this is looking like folly!