Banking Crisis - Treasury Contents

Memorandum from Diane Ashby

  I would like to comment as follows:


  I am sure that most people agree with me when I say that the crisis was not helped by the media reporting on the issue. There was huge amounts of negative reporting from so called `experts', these were the very people that could not forecast the crash in the first place. Certainly my circle of friends and colleagues all feel that there should be more control on media reporting in such circumstances because they initially caused the loss of confidence in the UK banking system and our system of government.


  Everyone must be aware that to deal with the current economic crisis there has to be a pay day but once again this should start from the Government down. In the boom years this government has not proceeded with any caution, kept a "slush" fund to cover financial problems and has in fact created a part of the problem by tripling the amount of civil servants, and their pensions etc, and have not been prudent with the taxpayers money. We need a better "housekeeper" to run our economy so that we can reduce the amount of tax we need to pay back this huge debt.


  Despite the bale out of the banks by the Goverment, they have failed to ensure, by setting the correct conditions of service, that small businesses and homeowners have access to finance. This in itself has badly damaged the credibility of the Government when they need to create confidence in Mr Browns strategy. Most people feel that the managers of these banks have not felt the pain that their customers have and this should be visible to all. The budget was ineffective because it did not hit at the heart of the problem—If this Government want us to start to spend again they first need to stimulate the housing market so that those that can or need to move are able to at affordable rates and with at least 90% mortgages available, this will prevent the enormous unemployment that will hit the construction industry next year and will give people a better feel good factor than 2½% VAT reduction. The construction industry should be the priority as the direct and indirect companies that reply on it for survival would in turn create the spending again that we need.


  When the mortgage industry starts to lend again, hopefully in the new year, their rates should be attached to Libor and not Base rate. This would make mortgage lending less insecure and fairer for all. All other lending rates could also be attached to Libor so that consumers, whether they be business or private, would be better able to compare rates and control lending. Why the FSA allowed students and young people with no income to have access to credit cards, and young families to exceed their income by offering mortgages of 125% of the value of their homes was inexcusable and was obviously untenable and would eventually bring us to the present dcrisis. Most of the middle class in my age group knew this.


  There should not be any protection for investors that choose to invest in anything other than their own country. We should be supporting our own economy and not look for investment abroad that gives a small increase in interest because inevitably the investor does not know how safe these countries are and as Iceland shows us countries CAN be bankrupt.


  Consumer confidence is the key to prosperity in the UK but this is not helped by the continual negative reporting by the media. Get the housing market going again and see the rapid improvement.

November 2008

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