A possible way out for the UK and IoM governments?

  • AJM UAE
  • 11/10/08 31/05/09
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Posted: Mon, 17/11/2008 - 03:15

Something blindingly simple occurred to me yesterday. It's probably something that has already occurred to many of the rest of you but, at the risk of stating the obvious, I thought I would post it here.

The biggest issue from the UK and IoM governments' perspectives (other than where to get the money from) regarding compensating all of us in full (c.f. UK savers with Icelandic banks based in Britain) must surely be that they don't want to set a precedent that will return to haunt them in years to come. This mood has been evident in several recent news articles along the lines of 'where do we (i.e. the UK taxpayers) draw the line?' and 'why should we bail anyone else out?'.

My idea is this: we (and those in Guernsey who are similarly affected) should be 'bailed out' as the final gesture in restoring faith in the UK and IoM banking systems. After this, compensation should be strictly limited to that specified by the two governments (i.e. 50k).

Surely there is no-one in the world with access to the Internet or newspapers who might be considering investing in the UK/IoM who is not now aware of the need to split savings amongst bank accounts, preferably in different countries? The compensation limit (50k) should be prominently displayed on all banking websites and in their literature. This should be required by law. Once the government (UK or IoM) has restored our money to us and made it quite clear to savers that this is the last time, then the ball is no longer in their court and they do not have to worry about this happening again.

What do others think? Is it worth making these simple points to the two governments?

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Way out reply

  • steveejeb
  • 10/10/08 31/05/09
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  • Mon, 17/11/2008 - 16:16

Another point is that we do/did not need bailing out. If the £550+ million locked in the UK was to be unfrozen and returned this would not have to be seen as a bailout rather a return of our KSFIoM funds. In this way the UK government could come out smelling of roses after having "kept the money safe for us during the crisis"! The alternative is to come out smelling of what one put's on roses.


Deleted

  • Bromley86
  • 27/05/09 31/05/09
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  • Tue, 03/11/2009 - 15:07

Sorry, didn't see that it was a year old :).


Way out

  • christaylor
  • 24/10/08 31/05/09
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  • Mon, 17/11/2008 - 12:52

Seems a very sensible thing to put across to both Governments. Can we ask our leaders to write to them, and also to put out a press release saying we've made a suggestion as to how to bring this to an end ?

I think at this point we need to look reasonable and helpful, and by making this suggestion we would perhaps gather support.


A possible way out

  • AJM UAE
  • 11/10/08 31/05/09
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  • Mon, 17/11/2008 - 14:07

Thanks for your reply, Chris. What do others think? Should we make the points (see top of this thread) to the UK and IoM governments at this stage before it's too late?

One other thing I'd like to add - if the UK/IoM governments need a reason to justify why they are 'bailing us out' then the parental guarantee is reason enough. The situation as we all now know it (i.e. nothing is guaranteed except for what is explicitly covered by depositors' compensation schemes) was not the same when all of us put (or left) money in this bank. At that stage none of this was clear.


A possible way out

  • steve
  • 14/10/08 31/05/09
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  • Mon, 17/11/2008 - 14:32

Yes a sensible solution, in an ideal world. I know this isn't an option for everyone but if we get out of this jam I for one would declare I would never bank outside the UK ever again, no matter who they were and whatever wording they used in their useless guarantees


UK <> IoM

  • dawes
  • 24/10/08 31/05/09
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  • Mon, 17/11/2008 - 16:00

The simple fact is that UK regulate and compensate their own banks. The IoM banks are not regulated by the UK and the only way this would work is if the UK bailed out a IoM bank - which isn't going to happen.


UK<>IoM again

  • steveejeb
  • 10/10/08 31/05/09
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  • Mon, 17/11/2008 - 16:14

Another point is that we do/did not need bailing out. If the £550+ million locked in the UK was to be unfrozen and returned this would not have to be seen as a bailout rather a return of our KSFIoM funds. In this way the UK government could come out smelling of roses after having "kept the money safe for us during the crisis"! The alternative is to come out smelling of what one put's on roses.


Possible way out

  • AJM UAE
  • 11/10/08 31/05/09
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  • Mon, 17/11/2008 - 16:28

I take your point, steveejeb. What you are saying is in effect a variation of the ideas given in my original posting (see top of thread) in that:

A. The government(s) give us our money back - by whatever means - and therefore come out of this as having safeguarded the interests of savers in a UK constitutional territory.

B. The government(s) can close this door firmly behind them after passing through it as it will not establish a precedent, particularly if the financial regulators insist that all banks make it extremely clear from now on which level of protection depositors are being offered.


No bailout for KSFIoM and no cost to UK taxpayers

  • steveejeb
  • 10/10/08 31/05/09
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  • Mon, 17/11/2008 - 16:59

AJM UAE Yes exactly. As we were lead to believe our part of the bank was understood to have been solvent. Thus a return of those funds "held in safe keeping by the UK" and then returned to us (now), would reflect very well on the UK government. They would be seen as not having bailed us out, but as having "protected" our interests. The government would come out if this looking very good indeed as having "cleverly" looked after the deposits of UK citizens around the world.

Pie in the sky stuff, probably, as it is far too neat a solution to our particular crisis isn't it? However we do live in hope that someone in the UK would see this as a very good opportunity get this particular monkey off their backs while showing that another banking crisis has been averted by quick and clever action by the UK government.

There would be nothing to explain to the UK taxpayers/electorate as there is no bailout, merely the safekeeping of of our deposits and their return (now). HMG is happy that a problem is solved BUT ALSO get good publicity from it. IoMG is happy for the same reasons. UK taxpayers are happy as no bailout is required and we of course can all go happily to the bank with it!