localyokel Posted June 21, 2009 Share Posted June 21, 2009 Evil Goblin, responsibility for the liquidity and solvency of the banks lies with the banks. The Directors have a responsibility to ensure the businesses are properly run, and you are grossly overstating the power of regulators in other jurisdictions. The banks are also compelled to operate within the respective banking regulations. If those regulations include exemptions that allow them to legally not do things that responsible banks should do then its hardly their fault as the directors have acted fully within the law. The fact is that Manx banking regs specifically have exempt provisions which have been used to avoid the need for risks to be suitably diversified. Link to comment Share on other sites More sharing options...
Evil Goblin Posted June 21, 2009 Share Posted June 21, 2009 Yes, there is an ultimate responsibility on the Directors and Managers of Banks to ensure they remain solvent and adequately liquid. However, it is also generally acknowledged that the Banks cannot be trusted to reliably do this (witness many historical and recent events) and that regulatory oversight is necessary to prevent the Bankers' inherent greed (in which respect they are no worse than anyone else in business) from endangering their solvency and hence depositors funds. The question is - just who should be responsible for regulating a bank? Should it be a bunch of people of questionable ability and experience in a minor jurisdiction where they actually only see the little bit of the overall structure and so cannot judge that overall structure themselves or the home authority of the Bank in question, who can regulate ALL that Bank's operations and have an accurate overall picture? TBH, the reality is that the FSC and its' equivalents in places such as Jersey, Guernsey, Cayman, etc. are effectively incapable of doing the job they want people to believe they're doing but are not. So yes, the idea of purely local regulation is flawed - conclusion - when it comes to banking regulation the FSC is totally redundant and should be chopped accordingly. There is actually everything that Bottler and his like could have been doing to control the credit juggernaut - the problem was it suited them and their short-sighted political viewpoints to let it carry on. In the case of the UK, add in Bottler's stupid tripartite regulatory system and you had ideal conditions for bankers' greed to run riot with the result of tears all round. Link to comment Share on other sites More sharing options...
Evil Goblin Posted June 21, 2009 Share Posted June 21, 2009 A further thought - if such a huge proportion of an IoM bank's funds are, of necessity, upstreamed to a parent or fellow subsidiary, how on earth can the local Directors and Management have any ability to ensure that their local institution itself is solvent and has access to adequate liquidity? Surely they cannot do so? Seems to make the central regulation by the home regulator more appropriate than ever. There is a substantial advantage for the IoM if this were so - people would have known that if they put their money with Kaupthing they could only look to the Icelandic Authorities for compensation; if they place money with, say, RBS, they would only look to the UK for compensation if things went wrong. The IoM Government could legitimately get off the hook if a bank goes wallop. Link to comment Share on other sites More sharing options...
Bobbie Bobster Posted June 21, 2009 Share Posted June 21, 2009 A further thought - if such a huge proportion of an IoM bank's funds are, of necessity, upstreamed to a parent or fellow subsidiary, how on earth can the local Directors and Management have any ability to ensure that their local institution itself is solvent and has access to adequate liquidity? Surely they cannot do so? Seems to make the central regulation by the home regulator more appropriate than ever. There is a substantial advantage for the IoM if this were so - people would have known that if they put their money with Kaupthing they could only look to the Icelandic Authorities for compensation; if they place money with, say, RBS, they would only look to the UK for compensation if things went wrong. The IoM Government could legitimately get off the hook if a bank goes wallop. Banks and insurance companies use regulatory arbitrage, in part, to decide where they may set up subsidiaries, for example IPA regulations on insurance solvency margins and admissible assets are different to the UK/EU and allow local subsidiaries to do things that wouldn't be possible under other regulatory regimes. (Note it does not follow that there is a definite correlation between "tighter" and "better" regulation.) Using home state regulation would remove a significant advantage of, inter alia, the IoM and would also raise the question of how that regulation would be paid for by offshore firms and jurisdictions. Link to comment Share on other sites More sharing options...
Evil Goblin Posted June 21, 2009 Share Posted June 21, 2009 There is no small body of knowledgeable opinion which believes that the banks' use of regulatory arbitrage is a major factor in enabling such an unholy mess to be constructed. As to how the regulation is paid for, that's up to the home bank - they can pay for the lot and then apportion it out appropriately amongst their subsidiaries. Your comments about regulatory regimes could be read as advocating that "a race to the bottom" is permissable. I suppose it just might be if prospective customers were proactively made aware of the fact that they were contemplating dealing with a company which was subject to "lighter touch" regulation than they might otherwise have assumed. But then, that truth would not sell well in marketing the IoM insurance industry, would it. So, are we saying we should connive at misleading people? Link to comment Share on other sites More sharing options...
Bobbie Bobster Posted June 21, 2009 Share Posted June 21, 2009 Your comments about regulatory regimes could be read as advocating that "a race to the bottom" is permissable. Only if you didn't read the bit that said: ...it does not follow that there is a definite correlation between "tighter" and "better" regulation... Having just realised that I'm in danger of falling further into the troll-feeding trap, I have only one more thing to say in this thread. I am just going outside and may be some time. Link to comment Share on other sites More sharing options...
bellyup Posted June 22, 2009 Share Posted June 22, 2009 Fuck me you lot are dishonest. First you say "it was a breach of the regulations", then, when it is conclusively shown that it wasn't, it's "well it may not be a technical breach, but now you're just making excuses". It's this simple: if bellyup and the Pimpernel stop LYING, I will stop having to put them right Tugger/Sedof which ever one or both of you. Constantly calling people liars only draws attention to the fact that you are making endless excuses for undue diligence and poor banking procedures. Twisting words will not take away the moral responsibility that the IOM has towards innocent depositors who entrusted their money to a bank in the IOM. under the fiduciary auspices of the FSC. Lies is promoting a DCS ( when it is nothing of the sort but merely a loan that will be taken back.) In a bank in the IOM it seems the IOM is happy to take the profits but none of the risks or responsibilities. Link to comment Share on other sites More sharing options...
Evil Goblin Posted June 22, 2009 Share Posted June 22, 2009 Your comments about regulatory regimes could be read as advocating that "a race to the bottom" is permissable. Only if you didn't read the bit that said: ...it does not follow that there is a definite correlation between "tighter" and "better" regulation... Having just realised that I'm in danger of falling further into the troll-feeding trap, I have only one more thing to say in this thread. I am just going outside and may be some time. Bobster - I am not trolling at all. If I was I'd make a far better job of stirring things! I did not miss your comment about "tighter" and "better" regulation - just that it's a red herring in the context of this discussion. Link to comment Share on other sites More sharing options...
Tugger Posted June 22, 2009 Share Posted June 22, 2009 Constantly calling people liars only draws attention to the fact that you are making endless excuses for undue diligence and poor banking procedures. No, it draws attention to the fact that they are liars. If you continue to say that every other jurisdiction in the world apart from the Isle of Man is ensuring a 100% payout to depositors after it has been shown to you that this is not the case, you are a liar. If you continue to say that the Isle of Man was in breach of regulations when it has been shown to you that it was not, then you are a liar. You might be a liar who has unfortunately lost some money in a banking crisis, but you are still a LIAR Link to comment Share on other sites More sharing options...
Slim Posted June 22, 2009 Share Posted June 22, 2009 No, it draws attention to the fact that they are liars. If you continue to say that every other jurisdiction in the world apart from the Isle of Man is ensuring a 100% payout to depositors after it has been shown to you that this is not the case, you are a liar. If you continue to say that the Isle of Man was in breach of regulations when it has been shown to you that it was not, then you are a liar. You might be a liar who has unfortunately lost some money in a banking crisis, but you are still a LIAR They're only a liar if they know their wrong. They could just be wrong, eh? Link to comment Share on other sites More sharing options...
manshimajin Posted June 22, 2009 Share Posted June 22, 2009 A further thought - if such a huge proportion of an IoM bank's funds are, of necessity, upstreamed to a parent or fellow subsidiary, how on earth can the local Directors and Management have any ability to ensure that their local institution itself is solvent and has access to adequate liquidity? Surely they cannot do so? Seems to make the central regulation by the home regulator more appropriate than ever. There is a substantial advantage for the IoM if this were so - people would have known that if they put their money with Kaupthing they could only look to the Icelandic Authorities for compensation; if they place money with, say, RBS, they would only look to the UK for compensation if things went wrong. The IoM Government could legitimately get off the hook if a bank goes wallop. Banks and insurance companies use regulatory arbitrage, in part, to decide where they may set up subsidiaries, for example IPA regulations on insurance solvency margins and admissible assets are different to the UK/EU and allow local subsidiaries to do things that wouldn't be possible under other regulatory regimes. (Note it does not follow that there is a definite correlation between "tighter" and "better" regulation.) Using home state regulation would remove a significant advantage of, inter alia, the IoM and would also raise the question of how that regulation would be paid for by offshore firms and jurisdictions. One point it is worth bearing in mind is that the application of so-called 'EU' regulation varies very significantly from EU State to State. The EU Financial Services Directives allow a financial services company to do business in one State if it is registered and supervised in another State. Thus, say, a bank or insurance company registered and supervised in the Netherlands can do business in Ireland or the UK or vice versa. The quality of supervision varies very significantly between member states. There is not one blanket standard level of supervision but there are common rules on basic solvency and professional staffing etc - but basic is perhaps the operational word. Companies will deliberately set up subsidiaries in EU states with more favorable tax regimes and with 'lighter' supervision. Link to comment Share on other sites More sharing options...
The Old Git Posted June 22, 2009 Share Posted June 22, 2009 They're only a liar if they know their wrong. Haven't the facts been pointed out to them several times already over three threads? Link to comment Share on other sites More sharing options...
pongo Posted June 22, 2009 Share Posted June 22, 2009 There is not one blanket standard level of supervision but there are common rules on basic solvency and professional staffing etc - but basic is perhaps the operational word. Companies will deliberately set up subsidiaries in EU states with more favorable tax regimes and with 'lighter' supervision. Interesting. Can you provide any examples of companies deliberately setting up subsidiaries in EU states because those states have lighter financial supervision (ie lighter administration of common regulation) than other EU states? Or link to any articles which identify this as an issue? Not the different taxes issues, which is a different matter. Link to comment Share on other sites More sharing options...
Slim Posted June 22, 2009 Share Posted June 22, 2009 Haven't the facts been pointed out to them several times already over three threads? True, but they could just not be listening. Most of the action group seem to want to real off the propaganda without much understanding. I just don't think shouting liar at them is particularly helpful in any debate. They might be ignorant, and they might be wrong, but I'm not sure they're lying. Link to comment Share on other sites More sharing options...
Tugger Posted June 22, 2009 Share Posted June 22, 2009 Frankly, if you shut your ears to the truth, and continue to spout off untruths, you're a liar in my book. There are a load of reasonable, truthful points they could make, but still they choose to focus on untruths. pongo: plenty of funds use the BVI or Cayman because of slack regulatory supervision. Link to comment Share on other sites More sharing options...
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