www.iva.co.uk

So the banks have been caught at it again. I dont pretend to understand the LIBOR system (can anyone explain) but my take on it is that the banks fix their own interest rate of borrowing which depending on the figure can make them look good or bad. But the traders get involved and say this rate will do for today, then everything is hunky dory, we'll make millions or is it billions "crack open the Bollinger" and if we get caught just say we wont take our "bonus" this time.

I have a mortgage and a pension, can anybody tell me if they have been affected by the grasping, shameless, fraudulant activities of the "BANKERS"

Bank managers were people who you used to look up to and trust but the actions of those in management has severely eroded any such trust or faith in the banking system.

I know some of my posts do get a bit "red mist" and rambling but couldn't let this one go without letting rip.

I know it wont do any good moaning about the banks but sometimes dont you just get the feeling that they are extracting the bladder fluid. Finished.

Iamfubb2 [:(!][:(!][:(!][:(!][:(!][:(!]

I agree with you ianmfubb2 ---- I also detest the way we are treated by the banks, being in IVA's, when, if it were not for "us taxpayers" bailing them out they would be bust by now ! They have the audacity to treat US like dirt --- especially when we are still cleaning up their mess !!!

Whoaaaa ... nearly started me off then ... cuppa I think .....

The London inter-bank overnight rate is the rate at which banks lend to one another and it isn't tied to the base rate; that's why the interest rates on mortgages and loans etc are so far removed from base. Banks buy at libor and price their lending accordingly; base rate is pretty irrelevant to lending.

So your mortgage will have been priced off LIBOR and the higher the LIBOR the higher the interest on your mortgage as banks will need to maintain their profit margin.

Your pension will also have been affected indirectly via the investments the fund has made as the companies the funds have invested in will have borrowings priced off LIBOR. In terms of pension savings, savings accounts are priced off base rate so LIBOR will have little influence.

But we can't shout too loudly on this point! LIBOR accelerated away from base around 2007 when toxic debt was on the rise (that's us) as banks were less able to service their debt to other banks and the risk of lending to one another increased. Where we can feel as aggrieved as the solvent population, is that the bankers began to use the increased risk of default to further increase their profit margins on their loan book.


Clear as mud [:)][:)]

The last part was supposed to say the bankers used the increased risk of default as an excuse to raise LIBOR higher than It probably needed to be.

They made sh** shine basically [:)]

Sorry all - I don't know how to edit [:I]

Thanks for explaining (i think) i'm just off to punch the wall [:(!][:(][:(!][:(]

I haven't read the papers on this so don't know the story being talked about but banks have to be commercially viable.

So when their existing loan book starts defaulting they have to raise the quality and profitability of new lending to offset the loss as best they can (new borrowers cover costs of bad debt essentially). The only restriction on how high lending rates rise is the need not to price themselves out of the market.

There's very little money to be made in savings accounts; which is why I expect we'll see a return to irresponsible lending practices in the not too distant.

Am i being a bit thick but, dont the shareholders also get stiffed when the CEO's start playing these games?

The more the bank is worth the more the shareholders benefit. So anything that improves the profitability of the bank is good for the shareholders.

Unless its morally questionable and backfires with commercial and reputationsl damage [:)][:)][:)]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Broke of London

The more the bank is worth the more the shareholders benefit. So anything that improves the profitability of the bank is good for the shareholders.

Unless its morally questionable and backfires with commercial and reputationsl damage [:)][:)][:)]

.....like ...ooooooh ... I duuno ..... has happened !!!

It's all fun and games until somebody gets caught with their pants down [:)]