A curious juxtaposition in the modern world of politics (although isn't every thing associated with politics a contradiction?) is that politicians urge bankers to lend more.
Banks will lend if they have security, the most common form of which is property. Even stocks and shares can ultimately be based on the value of property- see Sainsbury's as an example.
However, new guidelines mean that banks cannot lend heavily to property and most UK banks are trying to divest their property loan books to bring their ratios back into balance. So if a bank is heavily exposed to property and they are supposed to be reducing the risk associated with that, how on earth are they expected to lend more money which will contradict the edicts from the FSA/ BoE?
We need to realise that the country's economy is based on land and property and those of us whom earn a direct living from it are not pariahs. (The least popular members of society are sometimes viewed as estate agents, solicitors, bankers, developers and builders!!).
We do want banks to lend more, and make more normal profits. Let them do this and don't shackle them with knee-jerk targets. If they get it wrong, let them go bust as does any firm that gets it wrong.
Profit is the reward for risk. Interest rates for both savers and borrowers reflect this: There is no safe investment that pays a return.
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