9th February 1966. Crash!

The unregulated Banks were deluged with cash which was then passed on to their customers and into the general economy: the result was the 2007/8 financial crash.

Things were different Today in 1966 when we read in the ‘City’ page of Punch Magazine that: the banks and various other financial bodies were instructed by the Bank of England last spring to increase loans by no more than 5% during the financial year 1965-1966.

Lord Cromer’s letter said that advances are not to rise until further notice above the limit originally set for March 1966. Bank loans were to be restricted to companies which helped the Balance of Payments and were to exclude non-essentials.

The policy of the Thatcher Tory government from 1979 was to encourage free market economics and reduce state control, though with attempts at controlling money supply.

Then came Blair’s Labour government from 1997 with little control of money supply when Chancellor, Gordon ‘Prudence’ Brown believed ‘Boom and Bust’ had been abolished!

‘Fundamentalist Communism’ collapsed in 1989 and no doubt psychologically gave a boost to unfettered ‘Fundamentalist Capitalism’. Increasingly banks, traditionally involved in retail outlets took on the more speculative Investment side.(1)

Whiz-Kids at their screens whose activities were beyond the ken of their superiors could bring down banks.(2) Fiendish ‘sophisticated computer models’ were invented by a shadowy elite who harnessed the computer to make wealth for themselves and the banks.

Bosses such as ‘Fred the Shred’ Goodwin of Royal Bank Of Scotland (RBOS) were feted with honours, couldn’t hope and didn’t want to understand, as long as the profits were rolling in.

The highly leveraged boom in house building both sides of the Atlantic turned to bust. Debt was parcelled up and sold on to other institutions: products were mis-sold.

Only nominally was there any close regulation via the many institutions including The Bank of England (BoE) which acquired independence from government control over setting base rates.

Retribution came too late for thousands who had lost money. In 2000 Regulators IMRO, PIA and Security and Futures Authority fined Nat-West over £1 billion for a series of administrative failures dating back to 1993.(3)

RBOS was nationalized, along with Halifax Bank Of Scotland (HBOS) which were subsumed under Lloyds Bank. Many once mutual Building Societies went bust.

Then came the need to find scapegoats with censure raising the culpability of former directors of HBOS, Lord Stevenson (Chair), Andy Hornby (CEO), and Peter Cummings, Head of HBOS Corporate Bank who faced legal charges.


Cheap apologies were offered to a public who couldn’t understand what happened who stood shoulder to shoulder with Nobel Prize winning economists, Regulators, Federal Reserve Chairman, Governors of the Bank of England and Prime Ministers.

The philosopher’s stone a way of turning debt into profit that held us all in thrall through mass hallucination, turned to dross. Lord Cromer no doubt turned in his grave.

(1)  On November 12th 1999, President Clinton repealed one of the last of the Great Depression era regulations, the Glass-Steagall Act of 1933.

(2) As happened with Barings Bank 1995.

(3) Investment Management Regulatory Organisation and Personal Investment Authority.

Ref: Punch Magazine Issues as dated.

Ref: alexjamesanderson.wordpress/what-caused-the-economic-disaster?

Ref: wikipedia.org/banking_scandals.



Tags: , , , ,

About colindunkerley

My name is Colin Dunkerley who having spent two years in the Royal Army Pay Corps ploughed many a barren industrial furrow until drawn to the 'chalk-face' as a teacher, now retired. I have spent the last 15 years researching all aspects of life in Britain since Roman times.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: