RBS is to begin its return to the private sector. Way back in October 2008 I suggested it should be fully nationalised instead. I stick to that view. Around that time I argued that there were at least four reasons for keeping RBS in the state sector.
The first was to clean it up, although we had no idea at the time how bad it was.
The second was to split it up, both by spinning off unnecessary activity (some of which has happened) but more importantly to make it a series of regional banks for the UK, which would, of course, have overcome the competition issues that still threaten it.
Third, it was to ensure that the state had a bank available to it to ensure that SMEs could secure the funding they need, which is so hard in the UK economy.
Fourth it was to act as an infrastructure bank. This does now, of course, link to the idea of People's Quantitative Easing or Green QE (whichever you prefer).
All of these remain valid arguments now.
What is more, if they had been done so many of the massive mis-selling and other abuse issues that still hang around the neck of RBS (and so the government) would not have happened.
I hate to say I was right, but this is a massive tale of opportunity lost with no happy ending in sight when the shares in the company are now being dumped on the market at massive undervalue because of all that has gone wrong because of mismanagement since 2008.
If there is blame in all this then it is across parties. Alistair Darling and Gordon Brown should have had the courage of their left of centre convictions. They should have also never entrusted the management of this bank to the sole care of bankers as if 2008 had not happened. And George Osborne has never taken the right steps as the banking tales of woe unfolded to address the issues in a bank for which he was ultimately responsible. The political class failed here.
I'd love to think it will never happen again.
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Your second and third reasons echo the ideas expressed by George Tait Edwards and Byron Gould in series of articles published before the election in the London Progressive Journal. George Tait Edwards is an advocate of Shimomuran Economics. Are you aware of his work?
I believe that progressive reform of money creation, banking and central banking need to be added to the list, somewhere near the top preferably, of Jemery Corbyn’s economic policies and thinking. They are too important to be left out if we want real change and positive social outcomes within society. Your thoughts?
Kind regards. RT
I am not aware of his work
Any links?
I agree re money reform
I share your annoyance with RBS management, and neither am I sure why Osborne is selling now. However, I don’t understand this bit:
“What is more, if they had been done so many of the massive mis-selling and other abuse issues that still hang around the neck of RBS (and so the government) would not have happened.”
These issues are certainly still plaguing the bank, but the abuses occurred prior to 2008. Whether nationalised or not, RBS would have remained liable surely?
Many of the abuses arose after 2008
Only some before
Those arising after 2008 could have been prevented but weren’t
Which scandals have arisen since?
Just google RBS scandals
Anything specific? It all seems to have started before 2008.
Libor and other rigging?
Come on….
LIBOR was prior. FOREX was prior, but continued after (I think), and is relatively minor.
That’s not what the evidence I have seen suggests
George Tait Edwards:
http://rethinkingeconomics.blogspot.co.uk/2014/05/shimomuran-economics-and-rise-of-japan_6.html
http://londonprogressivejournal.com/article/view/2122/economic-policies-for-an-incoming-labour-government-part-of
The second link should take you to article 1 of 9 in the London Progressive Journal.
Have you also read any of Richard Werner’s work? He is another excellent economist. He is the author of Princes of the Yen, New Paradigm in Macroeconomics and co-author of Where Does Money Come From? (Published by NEF). All are excellent reads.
Kind regards Richard
Thanks
I have engaged with Richard
He has endorsed this view of QE
http://newsthump.com/2015/08/04/1bn-lost-during-rbs-share-sale-found-alive-and-well-in-investment-bank-client-accounts/
As usual Richard you are talking so much sense…RBS is another Tory scam like selling of the Post Office.
Brown also completely wasted an opportunity to reign in the banks, but if you remember when we were fighting for the Currency Transaction tax – such a simple tax that could have raised billions at little cost, Brown promised Stamp Out Poverty that he would implement it and never did. I hope Corbyn gets the chance to try out his new way.
I wouldn’t mind seeing RBS ‘mutualised’ in a similar vein to the original Trustee Savings Bank. It could be split up to form regional TSBs with elected and boards of trustees with a triple remit to manage the banks in the best interests of depositors, the community (e.g. regional investment) and provide services to credit unions and alike (lowering the barriers and all that). Also, as a network of mutuals (and with appropriate anti-carpet-bagging provisions) it’d be immunised to the inevitability of a forced privatisation that any nationalised bank(s) would suffer.
It would also go some way to repaying the moral debt that the government owes to ‘the community’ for forcibly expropriating and effectively gifting (to the private sector) the original Trustee Savings Bank in the 1980s (http://www.solhaam.org/articles/tsb.html). That was a real stitch up (all too typical of a certain political party, I’m affraid). The new shareholders got the bank, all of it’s assets and reserves PLUS their purchase price back (albeit deposited into the newly privatised banks reserves). The depositors and their trustees got noting; no shares, no bonds, no cash, just spit in the face and new owners to please. It’s as if I sold you a vase filled with paper money for £200, and then placed that £200 into the vase and handed it to you. Truly appalling, and the courts upheld the expropriation!