It is over five years since the world was caught up in a
financial tsunami the consequences of which are still being felt today.
The irony of the situation is that the architects of the
crisis have by and large remained insulated from the results of the problems
they created.
They are benefitting from the cover provided by the “too big
to fail” position which they occupy.
Following the fall out in summer 2008 the widely heard
mantra was “never again” and the banking community was told to put its house in
order and build up sufficient reserves to support itself.
In reality the banks knew that whilst paying lip-service
they could carry on very much as before in the knowledge that they had a safety
net i.e. the tax payer. As an example, this year Barclays Bank paid over 400 of
their bankers bonuses in excess of £1 million.
The reality is that despite the rhetoric banks continue to
be afforded protection by the “too big to fail subsidy”.
In the UK for the financial year 2011-12 this subsidy
amounted to £66 billion. The IMF have now warned that plans to reduce bailout
costs for a bank in distress “may not be viewed as effective and that
announcements to eschew bailouts are not considered credible”.
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