Socialist Worker

What have the bankers done with all our money?

Four years after grabbing a trillion pound bailout, Dave Sewell finds that the banks are still taking our money—and using their cash to rip us off

Issue No. 2337

The year started well for bankers as Goldman Sachs last week opened the bonus season with average payouts of £250,000.

They wanted to wait until April, when the top rate of tax is set to drop from 50p to 45p, but bowed to public pressure.

LloydsTSB is now 41 percent owned by the government. Yet it could still offer boss Antonio Horta?Osorio over £4 million.

It’s now more than four years since the emergency bailouts. And the MPs’ public accounts committee revealed in November that they don’t expect to ever get it all back.

The government gave the banks more than £1 trillion by buying shares, granting loans and underwriting debts.

The share purchases were a grotesque parody of nationalisation. Banks took money from the state but continued to run themselves without any public control over what they do.

The government’s shares in Northern Rock were sold at a massive loss to Virgin Money—owned by convicted fraudster, Richard Branson.

Those of LloydsTSB and RBS are also worth far less now than when the state bought them. Most of the initial government loans, and the other debt instruments that benefit the banks, have technically been paid back.

According to the National Audit Office (NAO), that brings the value of the bailout down to £230 billion—still more than double the Tories’ cuts target of £100 billion by 2015.

Underwriting

The NAO adds that the government is still underwriting an ­“unquantifiable ultimate risk of supporting banks should they threaten the stability of the overall financial system again”.

But politicians are desperate to bribe the banks into lending and the bosses into investing. So they stumped up much of the money that enabled banks to repay government loans.

The Bank of England gave them £375 billion through four rounds of “quantitative easing” from 2009 onwards. This is often compared to printing money—and they handed it straight to the banks, where most of it has stayed.

The government threw more cash at them last year, with the Funding for Lending Scheme (FLS).

Six banks drew more than £4 billion in cheap, government-backed loans. But between them they actually cut ­lending by more than £1 billion.

By guaranteeing some of their lending, the FLS has made it easier for banks to rip off savers. Now just three ISA savings accounts pay out than inflation.

Banks are using low interest rates to keep “zombie” banks and companies artificially alive.

Ordinary people are being caught either way with low returns on savings and high interest rates on credit cards.

None of this absurd failure should come as a surprise. The economic crisis didn’t start because banks didn’t have enough money, and giving them more won’t stop it.

It will only give them new ways to screw us over.


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