Posts Tagged ‘Credit Scoring Agencies’

Until Bankers and those within in the City regain some sense of what is right and wrong, Government must intervene so that the many in the world outside do not continue to suffer because of the profit hungry few left within

March 21, 2013 Leave a comment

images (52)The Banking Sector has become an object of hate for many. The accepted perception is that it equates to a world of greed; that it represents all of the bad things that we associate with money in its worst form and that the Sector is immune from the impact of its own actions; a fact demonstrated only too well when private Banks are bailed out with Public Money and bankers get bonuses even when the businesses under their control are failing.

Recent headlines and the role of bankers in the financial crisis and Libor scandal demonstrate a clear need for real and meaningful reform, even before the impact from the domino-effect of unethical practices is considered upon our lives elsewhere.

With Finance and the role that Banks play being so important within our lives, bankers can no longer consider banking services to be ‘products’, as it has never been a ‘product’ that they are providing.

Services are themselves measured by the direct and indirect impact of customer ‘experience’ and the physical risk to all others, and the Banks must now begin considering this in the same way that any other service industry is by its nature required to do so.

There is nothing truer than the phrase ‘money talks’. But the Banks and Financial Sector have failed to take a long view of their actions and now Government must legislate to provide a Regulatory Framework which allows profitability, but does not do so without consideration of unnecessary impacts and the unacknowledged consequences for businesses and individuals within the wider economy.

Here are a few thoughts:

RBS (Royal Bank of Scotland)

In response to the Banking Collapse, the Government at the time provided money to a number of the well-known Banks to prevent their closure, primarily because of the risk to the money that we all have invested in them.

One of the Banks which was ‘bailed out’ was RBS and this Bank is now effectively ‘public owned’.

Recent talk in the media suggests that the Government is now looking to sell off the Bank. However, with a significant need for a Bank which is not profit, but rather service-led, and can therefore take a more altruistic approach to lending and the provision of the banking services that it provides, Government should now take the opportunity it has to provide a ‘peoples bank’.

By doing so, they can provide the options for everyone that other Banks and Financiers are not prepared to provide such as ‘payday loans’ and higher risk start-up lending without unreasonable levels of interest or surety being required.

This will surely help the economy to progress forward by providing lending and support to small business in a way that other Government-backed schemes simply fail to provide.

A publicly-owned, people-centric bank would provide a cornerstone to people, to business and to Public Services alike when run only with the end-user and sustainability in mind. This is what Britain needs.

Credit Rating Agencies

In a recent blog, I talked about the unrealistic level of influence that Credit Rating Agencies now have upon us all.

Ironically, the UK had its Triple A Rating downgraded soon afterwards and Politicians really must now consider the influence that 3rd parties have in dictating the levels of interest that people pay to borrow from lenders, or indeed if they will be considered ‘credit worthy’ in the first place.

Government lending aside, nobody would sensibly deny that different levels of lending risk exist depending upon the financial history of an individual or business.

But it is often poorly managed lending which contributes to higher risks in the first place and improved regulation must therefore be used to restrict this process.

Through the Bank of England, the Government currently defers the setting of the base interest rate in a way which reflects needs in the wider market. All lending should reflect this rate; be realistic; be proportional and Government should drive Regulation to support this.

Pension Fund Management

Pension Funds are significant Shareholders of well known PLC’s across the Globe.

In the UK, their influence is felt by many of us each and every day through the profits we provide to Companies such as the big Supermarkets and Utility Companies, which is reflected in what few would disagree is a continual and disproportionate rise in the Cost of Living.

Businesses are of course created and managed for profit. But it is not normal for profit to be guaranteed within any business, and neither should the circumstances exist where any business can manipulate a market in order that it can be so.

It is therefore essential that Government Legislate to limit the influence of Pension Funds (owners) on the Management of Businesses which provide essential goods and/or services.

Prices of such goods and services should reflect their true value and not a level of profit that businesses of smaller size and with less influence through market share would not be able to reasonably sustain.


Buying, selling or speculating on products which do not exist would sound like madness to anyone but those who are actually doing it.

Gambling in its most basic form, futures offer a guaranteed level of income for producers, and the promise of significant profits for those who are prepared to invest in what is little more than thin air over a period of time.

However, they also extend the number of links in each ‘virtual’ supply chain along with the number of businesses or agents looking for a profit. Basic prices for commodities and food are inflated way beyond their true market value as a result and the end-using customer suffers most.

Government must legislate against the misuse of Futures in goods which are essential to daily life such as crops which have not even yet been grown, or energy which has yet even to be created.

Doing so will remove speculation of this type, which always has an adverse affect upon the end users who inevitably pay the most. It will also protect producers and the markets from unforeseen circumstances that nobody can control.


As with many other industries, the Finance and Banking Sector has simply lost its way. Growing distance from the customer leaves decision makers without any true master other than profit, and this situation can only get worse if it is left unchecked.

Bankers must ultimately be left to make their own decisions. But until they regain ethics; a sense of what is right and wrong and the responsibility not to abuse their position, Government must lead by example and intervene where necessary so that the many in the world outside Banking do not continue to suffer because of the profit hungry few within.

image thanks to

Credit Rating Agency Standard & Poor’s to be sued for role in Financial Crisis: Government has the responsibility and obligation to protect everyone and it’s time that they began getting on with reform that would really make a difference to us all

February 5, 2013 Leave a comment

One of the most sinister, yet least reported stories that has highlighted itself in this mornings news is the power of independent credit agencies to wreak havoc not only on the lives of us as individuals, but also at Government level.

Credit Rating Agency Standard & Poor’s are set to be sued by the US Government for their assessment of mortgage bonds before the financial crisis, and the question must surely now be asked about the role that credit rating agencies play in our lives and if their methods of calculation are really that sound.

Much nearer home and in an article published by Observer last February, the causes of the banking crisis and its relationship with the ever increasing use of formulas in the financial world were made only too clear.

Formulas and their use it seems, are the logic and basis upon which many of the highly speculative – and dangerous – deals which now take place, are based. They are the very foundation upon which risk is calculated by apparent professionals who themselves would not be qualified or experienced to write such theories in the first place.

Odds on, it will be the use of such formulas which enable Companies like Standard & Poor’s to make such analysis upon which they are able to suggest that a financial ‘product’ can have the gold standard AAA rating or in fact go on to label the robustness of a whole Economy such as that in the UK. But it doesn’t stop there and each and every one of us have our lives touched by companies working in the very same way; albeit on a much more individual but nonetheless damaging scale.

Some of us will find it indeed odd that as consumers, we can actually run monthly accounts with credit scoring agencies, who for a charge, actually suggest that they can improve your credit rating. But how is it that they themselves harvest and hold the information which can make our lives so very difficult through their defacto credit scoring?

The parallels between all these situations are profoundly frightening and seriously so, as its seems that the ability of individuals, Government and even some brokers to gain credit on good terms is being governed by the very industries which seek to provide it.

Formulas have their place, but even the most simple have the potential to be proven wrong as has most recently been suggested in respect of Einstein’s Theory of Relativity and the work at the Hadron Collider which indicates that there are structures which can travel faster than the speed of light. Apply this to complicated Formulae where there are many variable inputs such as those in use within the financial sector, and you can soon see the need for disciplined use of parameters which there would appear no meaningful regulation in place to provide.

So how exactly is it that decisions which will directly or indirectly affect interest rates in all areas for Government, Business and us as individuals can be left in the hands of private companies who have so much to gain by having such horrific levels of power over us all. As has been proven by the misuse of statistics to represent information in a biased way, formulas can be derived to benefit the user, and no less so for the City than it would be for politicians time and again?

Tackling the use of these dark monetary arts which profit the few at the cost of the many can no longer be an uncomfortable truth which is swept under the carpet by politicians whilst lives in the real world are continuing to be ruined. Government has the responsibility and obligation to protect everyone and it’s time that they began getting on with reform that would really make a difference to us all.

%d bloggers like this: