tag:blogger.com,1999:blog-8764541874043694159.post4376284971240651094..comments2024-03-29T10:48:38.142+00:00Comments on Coppola Comment: Something's rotten in retail bankingFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8764541874043694159.post-7664482934864582282013-04-08T18:39:42.992+01:002013-04-08T18:39:42.992+01:00Not really. It's too reliant on flawed risk we...Not really. It's too reliant on flawed risk weightings. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-52428503103102777772013-04-08T18:36:00.902+01:002013-04-08T18:36:00.902+01:00Will Basel III prevent either Lesson 1 or Lesson 2...Will Basel III prevent either Lesson 1 or Lesson 2 in future?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-37267776478255556532013-04-08T08:55:06.014+01:002013-04-08T08:55:06.014+01:00All of the necessary skills exist in the banks, bu...All of the necessary skills exist in the banks, but the staff that have them have had no voice. I have been a banker since 1976 and have never missold, ot taken a risk that I was not comfortable with. There is a solid strata of such people in the industry, but who wants to listen to prudence and reason when there is a pot of gold for poor behavier. I am proud to be a banker but accept that our industry acting badly. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-34184497752602105512013-04-08T08:25:36.814+01:002013-04-08T08:25:36.814+01:00Thanks for the link. Thanks for the link. Matt Bird - Investment Bloghttps://www.blogger.com/profile/18164706201439776224noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-14903772948725428732013-04-08T07:52:18.869+01:002013-04-08T07:52:18.869+01:00QE is entirely different. It is not debt in any me...QE is entirely different. It is not debt in any meaningful sense of the word. It is more accurate to regard QE's money creation as an expansion of equity. The risk of course is that equity is not only expanded, it is diluted.<br /><br />I haven't looked at the multiplier effects myself. I'd recommend the IMF's paper on this: http://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-31747508546109043132013-04-08T07:34:03.768+01:002013-04-08T07:34:03.768+01:00Hi Frances,
Does your 'lesson number 2' a...Hi Frances,<br /><br />Does your 'lesson number 2' apply to government QE or <br />do you think this is different?<br /><br />I feel very sorry for anyone who held Lloyds shares before the HBOS deal. <br /><br />P.s. do you have a blog post about government spending levels that focuses on multiplier effects? <br /><br />Thanks,<br />Matt.<br />Matt Bird - Investment Bloghttps://www.blogger.com/profile/18164706201439776224noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5502840805451095302013-04-06T20:54:16.589+01:002013-04-06T20:54:16.589+01:00Depositors who DO want to place their money "...Depositors who DO want to place their money "at risk" are still entitled to have their property respected. It is reasonable for them to expect that their money will not be placed unnecessarily at risk through inadequate and unprofessional risk management and an inappropriate capital structure. Domestic mortgages are by no means a "safe" investment even with good LTVs: it would be wiser to diversify investment. Mass market depositors should be able to expect that banks will manage the portfolio of investments made with their money to generate the best returns for the lowest risk. That retail banks do not do this is the core problem in retail banking. <br /><br />Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-81666778660762242002013-04-06T18:04:22.812+01:002013-04-06T18:04:22.812+01:00If we sit around waiting for those “core skills” t...If we sit around waiting for those “core skills” to be put in place “from within” (i.e. wait for banks to make the change voluntarily) we could be waiting for a very long time, and experience several credit crunches during that time.<br /><br />Why not just make it illegal for banks to play silly bug*ers with depositors money where a depositor specifically doesn’t want that? That should be easy enough to enforce. E.g. if a depositor wants their money invested just in UK domestic mortgages where relevant mortgagors have a decent equity stake, that’s where their money goes. And if the relevant bank does anything else with the money, then the relevant bank employees go to jail.<br /><br />In contrast, if a depositor wants their money to fund dodgy derivatives, that’s fine by me. They might double their money, or they might lose the lot.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com