Barclays plc (LON:BARC) has appointment Dennis Watson as its new Head of Asset Finance within the Corporate Bank.Watson is already responsible for the bank’s real estate, project finance and mezzanine debt origination teams and will assume control of the Asset Finance business, taking over from Alex Brown who has moved across to spearhead Barclays representation in the education, local authority and social housing sectors.
The change of leadership comes as Barclays reshapes the way asset finance is delivered to its corporate banking clients.
Dennis Watson explains: “We are not changing our appetite for asset finance, far from it, but what we are doing is bringing asset finance alongside our other asset backed and working capital debt propositions, enhancing the client experience by identifying needs earlier and supporting them with the right capital structure from a wider range of products.
"In today’s uncertain world it is important that a client’s debt needs are viewed in the round rather than on a single asset or transaction basis.
"Alex ran the asset finance business with great success in recent years, putting the business on a solid footing for the future and it is only through the efforts of him and his team that asset finance has become such an important instrument in the debt toolbox for Barclays”.
Virgin Money cuts interest-only maximum LTV to 70% - Money Marketing
Virgin Money has reduced its maximum loan-to-value for interest-only mortgages from 75 per cent to 70 per cent.
The revised policy applies to all decisions in principle generated from May 31.
There is no impact on existing customers with interest-only loans.
All pipeline applications which have been agreed prior to the new policy will be honoured.
Borrowers wishing to use the sale of another property to repay an interest-only loan will only be able to borrow up to 60 per cent of the property’s value.
Existing customers wishing to port their mortgage to a new property are able to do so, providing there are no changes to the loan size or the term length.
In the past two months, lenders including Santander, ING Direct, Leeds Building Society, Nationwide Building Society and Coventry Building Society have all cut their maximum LTVs from 75 per cent to 50 per cent while Skipton Building Society has cut its maximum LTV from 75 per cent to 60 per cent and The Co-operative Bank has pulled out of this type of lending altogether.
Earlier this month, the FSA revealed a number of lenders have asked it to ban interest-only lending as part of the mortgage market review.
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Out of the Mouths of Babes: Twelve-Year-Old Money Reformer Tops a Million Views - HoweStreet.com
The youtube video of 12 year old Victoria Grant speaking at the Public Banking in America conference in April has gone viral, topping a million views on various websites.
Monetary reform—the contention that governments, not banks, should create and lend a nation’s money—has rarely even made the news, so this is a first. Either the times they are a’changin’, or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it.
Basically, her message is that banks create money “out of thin air” and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.
She said her own country of Canada actually did this, from 1939 to 1974. During that time, the government’s debt was low and sustainable, and it funded all sorts of remarkable things. Only when the government switched to borrowing privately did it acquire a crippling national debt.
Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for these bonds is ultimately created by private banks. For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:
Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.
Towers was asked, “Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?” He replied, “If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament.”
In other words, said Victoria, “If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks, and then clear the debt to the Bank of Canada.”
Problem solved; case closed.
But critics said, “Not so fast.” Victoria might be charming, but she was naïve.
One critic was William Watson, writing in the Canadian newspaper The National Post in an article titled “No, Victoria, There Is No Money Monster.” Interestingly, he did not deny Victoria’s contention that “When you take out a mortgage, the bank creates the money by clicking on a key and generating ‘fake money out of thin air.’” Watson acknowledged:
Well, yes, that’s true of any “fractional-reserve” banking system. Even before they were regulated, even before there was a Bank of Canada, banks understood they didn’t have to keep reserves equal to the total amount of money they’d lent out: They could count on most depositors most of the time not showing up to take out their money all at once. Which means, as any introduction to monetary economics will tell you, banks can indeed “create” money.
What he disputed was that the Canadian government’s monster debt was the result of paying high interest rates to banks. Rather, he said:
We have a big public debt because, starting in the early 1970s and continuing for three full decades, our governments spent more on all sorts of things, including interest, than they collected in taxes. . . . The problem was the idea, still widely popular, from the Greek parliament to the streets of Montreal, that governments needn’t pay their bills.
That contention is countered, however, by the Canadian government’s own Auditor General (the nation’s top accountant, who reviews the government’s books). In 1993, the Auditor General noted in his annual report:
[The] cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.
In other words, 91% of the debt consists of compounded interest charges. Subtract those and the government would have a debt of only C$37 billion, very low and sustainable, just as it was before 1974.
Mr. Watson’s final argument was that borrowing from the government’s own bank would be inflationary. He wrote:
Victoria’s solution is that instead of paying market rates the government should borrow directly from the Bank of Canada and pay only token rates of interest. Because the government owns the bank, the tax revenues it raises in order to pay that interest would then somehow be injected directly back into the economy. In other words, money literally printed to cover the government’s deficit would be put into circulation. But how is that not inflationary?
Let’s see. The government can borrow money that ultimately comes from private banks, which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill; or it can borrow from its own bank, which also creates the money out of thin air, and avoid the interest.
Even a 12 year old can see how this argument is going to come out.
Money has changed – that’s the issue - New Statesman
Peter Selby responds to Nelson Jones's article Money and Morality.
When the St Paul’s Institute, working with JustShare, Penguin Books and the LSE, brought nearly 2000 people into St Paul’s for a public debate on the theme of Michael Sandel’s book, What Money Can’t Buy: the Moral Limits to Markets (see Nelson Jones, NS 25 May) it was because we knew the theme touched a nerve, not because we have an answer to peddle. The Institute has been engaged for some years, as an agency of the Cathedral, in seeking to get into debate with the financial institutions which are its ‘parish’; as such we could hardly think Sandel’s book unimportant, and we were delighted so many others thought the same.
That’s not the same as signing up to his thesis about the moral corrosion brought about by the intrusion of the market into all sorts of spheres to which it is not appropriate. Certainly we are signed up to the desire to get people thinking hard about which are the things that should be for sale and which should not be and, as Rowan Williams says in his review of What Money Can’t Buy, to do so on the basis of rational reflection rather than relying in feelings of revulsion when we see certain things getting a price.
Nelson Jones in his NS piece wonders whether things have deteriorated from some golden age when money didn’t play the part it now does, and points to many areas where things were much more monetised in the past than they are now. Tellingly, if slightly optimistically, he says we no longer sell people, and however bad the euro crisis gets we still won’t be doing that. There are examples he cites in the ancient world that are at least as unpleasant to think about as some of the examples Sandel gives of the intrusion of market thinking.
In my comments in the debate I voiced my own reservations about Sandel’s thinking, so much of which seems to me to address symptoms without digging deeper into causes. When he gives the example of prisoners being able to buy a cell upgrade, and when Nelson Jones points out that that has historical precedent, the deeper issue is not being faced by either of them: the selling off of incarceration as a business is common policy in the USA as it is increasingly in Britain. In the process of creating that market a financial interest is being created in locking people up. That can’t be unconnected with the fact that we in Britain lock up more people than other European countries and that a quarter of the rising number of prisoners in the world – and a third of all incarcerated women in the world, whose number has increased by a sixth in five years – are in the USA.
The figures that became a matter of public scandal during the Jubilee 2000 campaign for the relief of unrepayable third world debt showed all too clearly that the escalating power fo financial debt was depriving children worldwide of education, healthcare and life itself. The situation is infinitely worse than either Sandel or Jones portrays: the issue is not the buying and selling of things that should, or should not, be free, or whether people value things they pay for more than things they receive for nothing; in the end it is not about getting people to think more clearly than they do about whether markets should have moral limits though all these questions are important. What really matters is that in everything from the depletion of the planet’s resources to the requirement on Greek citizens to sell their democratic birthright to have their debts rescheduled money is deciding matters of life and death, and doing so more and more.
That’s why as a Christian and a theologian I am convinced money has acquired all the characteristics of an idol, aggrandising its power and claiming more and more of people’s lives. And that’s why, because of faith’s commitment to raise fundamental questions about anything that has the potential to be an idol, the St Paul’s Institute will go on engaging that debate at an ever more fundamental level. When it recently commissioned a report on the attitudes of those working in the financial sector (see Value and Values) we learned that most did not think the City should listen more to the Church’s guidance. But we now know, since the Sandel debate came to St Paul’s, that many people do want to know whether pressing economic questions have something to say about the meaning of life and whether those who profess faith are prepared to get involved in relating that faith to those questions.
Because, make no mistake, money did not acquire this power by accident. The last four decades, roughly since the massive oil price rises of the early 1970s, have seen vast increases in the amount of money in circulation, and technological advance has multiplied its speed of circulation. In the absence of means of regulating that the dominant policy has been one of deregulation, allowing the power of money to grow with its quantity. The results are not just the life and death issues I have described, but a situation in which all of us, rich or poor, are compelled to worry more and more about money and think more and more about it.
The issues of monetary reform, dismissed even by the independent commission on banking and widely ignored, are ones we need to press: just as ‘home ownership’ is a euphemism for housing debt, so ‘fractional reserve’ is now a synonym for debt multiplication: is one of the questions we need to ask about the post-2008 crisis whether the system on which we have relied for money creation for nearly a century fraught with inherent instability? I ask the question not because the Institute has a recipe or a policy to commend, but because it is our passion as a community of faith to ensure that these questions are honestly faced. The Sandel debate, and the Jones response are just a start.
Peter Selby is one of the interim directors of the St Paul’s Institute, and author of Grace and Mortgage: the Language of Faith and the Debt of the World. He was until retirement Bishop of Worcester, and Bishop to HM Prisons.
Madison finance committee looking for answers - Everything Alabama Blog
MADISON, Alabama - The Madison City Finance Committee met Wednesday night to review the city's proposed semi-annual amended budget, but left with more questions than answers.
They hope to get some answers at a second budget review meeting scheduled next Thursday at 5:30 p.m. at the Madison Municipal Complex, 100 Hughes Road.
Finance Director Lillie Causey said the amended budget increase goes from $30.2 million to $31.9 million, which concerns the members of the finance committee - Larry Vannoy, chair, Tim Cowles and Jerry Jennings.
Several large-ticket items, including four new police cruisers at a cost of $39,000 each, and radios costing $$489,000 for the police department plus a request of an additional $37,000 for overtime pay for the fire department compared to last year left the finance members scratching their heads. Also, capital outlay requests from Public Works went from $336,717, to $1,495,275 this year.
"Midyear is the time to fix things, not go out and buy things," said Vannoy. "We've got to think hard about expenses and see if we can delay some of these things. We've got to come up with money to pay for the I-565 interchange. This is just a little out of the normal."
Vannoy asked Causey to check into the matter and invite the department heads to attend next week's meeting to explain their budget increases.
Causey reminded the members that Fire Chief Ralph Cobb did manage to secure a grant to pay for the department's radios, saving the city $140,000, not to mention another $1.2 million grant that covered nearly half of the cost of the new fire station. Also, she said Public Works sold a number of units of surplus equipment, which brought in nearly $468,000 in revenues compared to $117,000 this time last year.
The city clerk's office also asked for an additional $35,000 for new fireproof shelves to store official documents.
"We are out of space," said City Clerk Melanie Williard. "Every department has boxes stacked up and there are no more room for shelves. The proposed shelves will give us twice as much room. We have no more room for permanent files, which have to be in a fireproof box."
Although the committee members are keeping a close watch on the city's finances, Vannoy said the picture is looking brighter with an uptick in sales tax revenue and he is glad they are finally "over the hump."
MONEY MARKETS-US SA commercial paper market grows on week - Reuters UK
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John Edwards case mistrial declared - BBC News
"There is no one else responsible for my sins"
The judge in the campaign finance trial of former US presidential candidate John Edwards has declared a mistrial amid jury deadlock on most charges.
The panel in North Carolina found him not guilty on one of six charges of misuse of campaign funds, but could not agree on the other five.
It is not clear if prosecutors will retry Mr Edwards on the other counts.
Mr Edwards, 58, denied using donor funds to hide his mistress's pregnancy during his 2008 run for the presidency.
While the cover-up of the affair was going on, Mr Edwards's wife was fighting breast cancer.
Speaking outside the court, Mr Edwards said he had not done anything illegal but had done an "awful, awful lot that was wrong".
"If I want to find the person who should be held accountable for my sins, honestly I don't have to go any further than a mirror. It's me. It is me and me alone," he said.
He described his four-year-old daughter with his mistress as "precious".
The former North Carolina senator could have faced up to 30 years in jail and $1.5m (£945,000) in fines if convicted of all charges.
To prove him guilty, prosecutors needed to show he knew about the money used in the cover-up, and also that he knew he was violating the law.
Courtroom chaosThe 12-member jury in Greensboro - which had been deliberating for about nine days - reached its not guilty verdict on count three, which related to illegal campaign funds from a wealthy donor, heiress Rachel "Bunny" Mellon.
Mrs Mellon wrote cheques totalling $725,000 to her interior decorator, who then sent the cheques to an Edwards' aide's wife to co-sign using her maiden name.
Mr Edwards had denied knowledge of the money, which paid for private jets, hotels and medical care for mistress Rielle Hunter, a videographer.
The jury's decision followed a confusing day in court.
The judge initially called in the jury to read a verdict on all six counts, before learning that they had only agreed to one.
"I was obviously under the impression you had reached a verdict on all six counts," Judge Catherine Eagles said.
She apologised to the jury and sent them back to continue weighing the charges. But about an hour later, the jury sent a note to the judge saying it had exhausted its discussions.
Journalists scrambled to and from the courtroom amid the confusion.
Two years ago, Mr Edwards admitted fathering a child with Ms Hunter in 2007.
An Edwards aide, Andrew Young, had claimed paternity of the child to help his boss.
But during the trial Mr Young testified as a leading witness against Mr Edwards in a deal to shield himself from prosecution.
Mr Edwards's wife, Elizabeth, died in December 2010, having separated from her husband after he acknowledged paternity of Ms Hunter's child.
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