RBS was insolvent, i.e. worth much less than its outstanding debt. It had a negative value, to the tune of tens of billions of pounds.
It would have been a far better deal for the general public to let those banks go into receivership and then bail them out and get 100% of the RBS shares. That's what happens to mom and pop shops when they go bankrupt, if an external investor thinks the business is worth salvaging (sans the bailing out bit).
"Bailing the banks out" without receivership was simply theft: the general public should now own all of the bank - not just 'preferential shares'. It is not a question whether the general public made any (paper...) profits here, the question is, was the general public ripped off or not?
The thing is, the Treasury had the funds while these insolvent banks did not - so why was this situation not handled in the same way as one private bank handles another private bank going bankrupt? Do you ever see competing banks 'bailing out' insolvent competitors? Why not? Because it makes no economic sense: they instead wait for receivership and buy the useful parts of the business on the fire sale. They also fire all of the management that led to the bankruptcy and definitely do not pay them any bonuses. For what? For losing tens of billions of pounds??
The executives should also stand trial for bankrupting those banks, if they did anything illegal or reckless in the years leading up to the bankruptcy. Those bonuses are not just outrageous, they are, in a moral sense, stolen goods.
Slashdot Mirror
RBS was insolvent , i.e. worth much less than its outstanding debt. It had a negative value, to the tune of tens of billions of pounds.
It would have been a far better deal for the general public to let those banks go into receivership and then bail them out and get 100% of the RBS shares . That's what happens to mom and pop shops when they go bankrupt, if an external investor thinks the business is worth salvaging (sans the bailing out bit).
"Bailing the banks out" without receivership was simply theft: the general public should now own all of the bank - not just 'preferential shares'. It is not a question whether the general public made any (paper ...) profits here, the question is, was the general public ripped off or not?
The thing is, the Treasury had the funds while these insolvent banks did not - so why was this situation not handled in the same way as one private bank handles another private bank going bankrupt? Do you ever see competing banks 'bailing out' insolvent competitors? Why not? Because it makes no economic sense: they instead wait for receivership and buy the useful parts of the business on the fire sale. They also fire all of the management that led to the bankruptcy and definitely do not pay them any bonuses. For what? For losing tens of billions of pounds??
The executives should also stand trial for bankrupting those banks, if they did anything illegal or reckless in the years leading up to the bankruptcy. Those bonuses are not just outrageous, they are, in a moral sense, stolen goods.