Monday, 1 December 2008

Waiting in vain

The UK's largest state owned bank - the Royal Bank of Scotland - generously announced that it will at least six months before foreclosing on delinquent mortgages. A few simple questions; is this a political or commercial decision? Will this initiative be in the best interests of the shareholders or the government?

Actually, that last question is a silly one. The government are the shareholders. And what is good for Zanulabour is good for Britain.

6 comments:

Mark Wadsworth said...

The answer to your second question answers the first one as well.

Nick von Mises said...

I think it's about banks not wanting the foreclosure event that forces the writedown of the mortgage. They'd rather stay in lala land another few months and hope for a miracle.

Anonymous said...

This is what happens when you firstly employ politicians who have no skills other than being politicians (good liars, good backstabbers, good social climbers) and when you secondly allow these muppets to control a major bank.

The politicians here are reverting to type; they are controlling the banks to further their own ends, secure in the knowledge that their political event horizon extends only to getting re-elected. So, regardless of how horribly it screws up things in future, they are acting to prevent the thick Labour-voting population from being held to account for silly decisions made in the heat of the housing bubble.

This happens a lot with socialists; see also the UK energy policy, and the on-going wibble about global warming.

Towjam said...

Not the top, but in the top five of the dumbest ideas banks have come up with. Rather than take on the properties and sell them at what they can now, they want to wait 90 days, or six months or whatever and sell them at an even lower price.
1st they are NOT bottles of wine, they don’t get better with age.
2nd It’s like taking off a band-aid, quickly, not slowly.
But as I have been selling them (houses) for banks this year here in FL, I know that both of the above always fall on deaf ears.
I have to wonder if it will be any different there.

fajensen said...

Is it not obvious:

They are pushing the losses into the next financial year. More and more businesses start their F.Y. in April, following the Tax year instead of the calendar year!

That they even bother to cook the books show that we are nowhere close to capitulation in the market.

Anonymous said...

Perhaps RBS are attempting to delay write downs in an effort stabilise the share price so that the governments stake doesn't look so bad in the short to medium term.


As there's an election round the corner I can expect every drop of whatever's left to be squeezed out of RBS in an attempt to keep the New Labour Project going into a historic 4th term.


Chefdave.