Thursday, February 26, 2009

Get A Grip Darling, Taxpayers Are Revolting

Taxpayers and bank jobs will be hit as RBS is shored up in Brown's biggest ever bank bailout, while the former boss trousers a £650,000 a year pension and the company announces the biggest annual loss in UK corporate history. But taxpayers own 70% of the bank, so who's looking after the shop? 

RBS, which was bailed out last year, today announced an eye-watering loss of £24 billion and a shake-up which did not rule out substantial job cuts.

Meanwhile former RBS chief executive, Fred The Shred Goodwin, is already drawing a pension of £650,000 a year, despite being in his prime at 50, in a pension pot worth £16m. Nice work if you can get it and Brown's City pals certainly can. 

Hapless chancellor Darling reckons he only knew about the obscene pension pot after the BBC blew the whistle.

Both Darling and the treasury ministers looked like startled rabbits caught in the headlights and have promise to "look into the legal contracts." 

Darling told the BBC Today programme that when he found out it was very clear he had to go back to RBS to see who agreed this and why they agreed it and whether they have grounds to claw some of it back. Bolting horses and stable doors spring to mind. 

And, in what must take the prize as the understatement of the year, Darling added: "People will find it very difficult to understand how you can get paid £650,000 a year for the rest of your life when you look at the state RBS is in at the moment.

Er, too right. Ministers must have known this when they took over the bank back in October. If they didn't, they should have as they pumped in billions of pounds of taxpayers cash. After all, the pension was, in part, public money. That pension should have been stopped in its tracks then. 

Weasel words from the chancellor cut no ice with voters. Tear up the contract, call his bluff. No one wants their dirty washing hung out in public. You won't see Fred the Shred for dust as he sails off into the wild blue yonder, never mind in court. The Orange Party suspects treasury ministers have something to hide - how much did they know about Sir Fred's pension pay-off? 

Just to rub salt in the wound, the bulk of RBS losses came mainly from its disastrous 2007 takeover of ABN Amro with Goodwin at the helm.

These bank bail-outs are getting bigger by the day. Taxpayers are screaming enough is enough. The Orange Party loves it when the BBC's Robert Peston talks technical. A treasury stooge, sure, but he's a dab hand at the banking science bit: 
"The Treasury has announced that we as taxpayers will provide insurance to Royal Bank against future losses on £325 billion of loans and investments.

"First losses of up to £19.5 billion on those impaired assets will be taken by Royal Bank. But to prevent the losses wrecking the bank, we as taxpayers will be injecting up to £19 billion of new capital into it, in the form of non-voting shares.

"Also, losses greater than £19.5 billion will be born by us - by taxpayers. In a prolonged severe recession, those losses could be substantial.

"What we're getting in return is a £6.5 billion fee - in the form of yet more of these non-voting shares. And RBS has given a legally binding commitment to increase lending by £25 billion in 2009.

"We already own 70% of Royal Bank - and that stake could rise to a maximum of 75% after today's deal with the Treasury. Now the Treasury has announced that we as taxpayers will provide insurance to RBS against future losses on £325 billion of loans and investments."
Lloyds Banking Group is also expected to take part in the scheme, which could see taxpayers guaranteeing up to £600 billion worth of toxic debt as the government continues with its reckless borrowing binge and saddle taxpayers with a burden of debt for decades to come. 

RBS also announced a "sweeping" shake-up of the group's business as it aims to cut costs by £2.5 billion a year.

Translated into English that means job losses. A high price to pay for bank staff and the taxpayers but clearly not as high as the pension pay-off.

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