Bank bail-outs to be kept secret

With the BoE printing money like crazy, the pound sterling is going down.
The euro will soon be one of the only hard currencies in the world.

What about employees of other banks?

What about shareholders?

Don’t public companies not have a legal obligation to publish accounts?

This is the kind of thing governments do when they’re at war or at risk of systemic meltdown. They are very frightened, and the fact that they’re keeping it secret makes a total mockery of the very concept of ‘democracy’

The BoE and the UK Government are, maybe rightly, terrified of another Northern Rock … word spreads that Bank X has availed of support and then John and Mildred Public head straight down to their local branch and close their account … result … run on the bank and a bigger mess than you started with.

Actually, the current “bail out” should operate slightly differently. AFIK, it will be done by way of “asset swaps”.

Bank X will first have to approach shareholders for additional funding (we have seen 2 banks do this recently). After that, the bank will be able to approach the BoE who will swap, on what I believe is a £1 for £1 ratio, UK Government 1 year bonds (to be issued by HM Gov) for currently non-tradeable SIV’s/CDO’s.

The exercise won’t affect the banks accounting position as it’s a monitory 1 for 1 swap but should improve their liquidity as other institutions are then expected to be more likely to lend to them on the back of higher quality assets. UK Gov will issue 1 year Bonds which, I’m reliably told do not get counted in national accounts.

All fine and dandy, UK tax payer swaps risk of run on UK bank(s) for risk of US consumers defaulting, US economy further declining, US banks going under, Fall out on global markets, impact on UK economy, UK consumer being impacted, UK banks getting into difficulty.

So, if you want to know which bank is availing of the “bail out”, just watch for those with new rights issues.

Blue Horseshoe

So I take it ye don’t have much fate in the recovery of the £/€ rate. Will we see Jim Power’s 85p to the Euro prediction I wonder.