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| Catbin woman Mary works for Royal Bank of Scotland... scene of crime streetview photo |
The phoney war in terms of the dire financial morass this country finds itself in is alive and well, but shamefully Her Majestys Opposition is still clinging on the illusory financial genius of Gordon James Brown, alleged to be an MP in this current parliament but rarely seen brooding on the back benches these days. I say shameful as it's clear that now the ball has been taken away and the money box emptied. The opposition just will not play ball with the new coalition government and is content to sulk no matter what the fiancial damage to the electorate is. It is as if Labour collectively is wielding a big stick to hit the voter for not voting them back for a further term.
Whatever the failings of the last Government, and the list is very long, time is fast running out to turn this country around. It won't be done on service industries and it certainly won't be on the back of casino banking. People need jobs, proper jobs, jobs create products, products then need to be sold and all this requires funding.
This is where the logical progression stops, Banks now cynically use ultra low interbank rates as a vehicle for adding to their individual capital requirements, not easing the lending block, essentially building a blood bank but not actually allowing any tranfusions to take place, the result is the patient dies but the blood bank thrives and builds another store. It would also be part of the bankers operating licence to maintain a minimum level of lending to business . If lending slips below a certain level the licence gets pulled.
There is nothing in the rules to say that good solid businesses cannot be allowed to develop, equally the banks will say there is nothing in the rules to say that lending has to be unfettered. So how do we get out of this impasse and let UK industry start to generate jobs, wealth, income and so on?
Here is one possible solution. Radical but workable. All banks to be required to lend to business and industry at an agreed % rate over libor say 4%, no arrangement or set up fees, no hidden charges of any kind, clear simple open accounting.
In return for an agreed overdraft at a fixed rate on a fixed review term, the customer will be required to put an experienced non-executive director on the board with a mandate to report back to the bank and an independent government sponsored investment advisory panel, paid for through a levy on the banking community. A charge not to be passed back to the customer.
In addition the firm must allocate 30 per cent from existing issued shares to be vested in a blind trust, these will be taken from share allocations previously issued to board directors and major shareholders. This applies to both private and public companies. The purpose is simple, if you need an overdraft as opposed to a commercial loan, all your major shareholders, investors really need to know and understand the reasons for it. There has to be agreement by all concerned to take up the bank money.
Some shareholders may object and block the overdraft route, so the board will have to win them over before the bank approach is made rather than just on the whim or otherwise, of the managing or financial director.
It will stop all the bleating that banks aren't lending.
Such an approach of course could open up alternative forms of funding, as shareholders will be loathe to see any dilution of exisiting holdings and will have to ensure that any alternative money offered is on equal if not better terms than the original bank offer. This approach will also put the financial skids under weak 'coasting' companies and act as a reality check on auditors who have in previous years nodded through accounts on the basis of vague directors statements and assurances, in short the audit will now become an audit and not simply an expensive fee earning compliance vehicle.
For all our sakes, let us hope this works.
Contributor: Media Expert Julian Bray SKYPE: Julian.Bray.UK Landline: 01733 345581 Mobile: 07944 217476 ISDN2 down line ++44(0)1733 555 319 (Broadcasters) G722 & APT-X Dual Codecs GlensoundC5
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