Bank Chief: Savers should lose in bank failure

We tend to agree with Peter Sands, chief executive of Standard Chartered, who said "that people with savings above any sum guaranteed by law — £50,000 in the UK — should be hit with other providers of capital if a bank fails" (The Times). But we think that a small - but important - group that was left out in the proposals were the senior executives of the banks. Having their money at stake did not stop senior management of Bear Stearns and Lehman to run their companies into the ground but in this post-crunch area it would certainly be a useful addition to the armoury of regulators if managements would have more at stake than just their jobs in case a bank should get into trouble. Given the vast amounts of bonuses, share options and other perks the compensation beyond a reasonable basic salary should be mandatorily vested during their employment and for a minimum period after they leave the bank.

Dubai debt settlement leaves sour taste

With members states of the UAE sitting on reserves and investments worth hundreds of billions it is - to say the least- astounding that there is not enough money to pay off the contractors and creditors in one fell swoop. Do the 'authorities' think that this will increase their credibility (or do they need the money for urgent purchases of new race horses?). On a more serious note this is just another nail in the coffin of the internationalisation of bank lending. Closer to home the idea that lending to governments - at home or abroad - is a safe bet is being tested to the limit. It may well be a good idea to leave lending to governments to private and institutional investors. Why should it require the insertion of a bank balance sheet to fund government spending? This just increases balance sheet risk rather than remove it from the banking system. If governments become bankrupt the value of the outstanding bonds will decline in value and allow an orderly resolution of the situation via a reorganisation of debt.

Banks are still allowed to play in Private Equity?

The lack of banking reform becomes evident in the fact that Goldman Sachs is still able to play the private equity game with its own money.