The very notion of “safe” banking has been turned on its head by recent events.
Is it, then, back to piggy-banks, savings stashed under the pillow and the neighbourhood lender?
Well, not quite yet. But, certainly, the golden era of banking appears to be over after last week’s financial turmoil which saw some of the biggest and supposedly “safest” names in international banking on both sides of the Atlantic keel over.
In Britain, public confidence in banking is at such a low ebb that, in order to prevent panic withdrawals, the government has been forced to guarantee that individual deposits upto £35,000 would be fully protected if a bank collapses; and people are being advised not to put more than £35,000 in any single bank. While once the size of one’s bank account represented financial security (not to mention social status), today the bigger the bank balance the greater the sense of insecurity.
The very notion of “safe” banking has been turned on its head by recent events. Investing in speculative deals and losing is one thing (because you know the risks involved) but losing your life’s saving because your “friendly” bank was playing hooky with your money behind your back is something else. No wonder, bankers and self-styled financial advisers, once much sought after by anyone with cash to spare, have suddenly become hate figures.
Last week, even as the world’s attention was focused on the Wall Street crash Britain’s biggest bank — Halifax Bank of Scotland (HBOS) — teetered on the brink of collapse forcing the government to intervene and hastily arrange its takeover by Lloyds TSB in a £12 billion deal dispensing with normal rules of competition.
If HBOS were allowed to fail, tens of thousands of low and middle-income depositors may have lost their money — besides causing a bloodbath on the shop floor. More importantly, the political cost of allowing such a huge financial operation would have been far too high for Prime Minister Gordon Brown to be able to afford at a time when he is struggling to hold on to his job after a series of crises.
Indeed, some of his current difficulties can be traced to his government’s delayed reaction to the crisis in the Northern Rock Bank last autumn which ultimately collapsed amid scenes of panic with anxious customers flocking to its branches across the country to pull out their money. His government was accused of precipitating the collapse by acting too late. This time around, he didn’t want to make the same mistake — and taking a leaf from American authorities Mr. Brown moved swiftly to pre-empt HBOS’s collapse. Result: a sudden bounce in his personal ratings, small but significant enough to undermine a “plot” by rebel MPs to oust him.
Although the government’s intervention saved HBOS from bankruptcy, the crisis is not over as some 40,000 workers are likely to lose their jobs as a result of the proposed closure of hundreds of overlapping branches of HBOS and Lloyds now that the two banks have merged. Besides, more than two million small investors of HBOS are likely to suffer financial losses. No wonder, anger was palpable among staff and investors alike.
“Someone out there has made a fortune from all this. When the dust settles, I just hope they’re going to be held to account for what they’ve done to us,” one employee, fearing redundancy, told journalists.
Meanwhile, more than 4,000 staff employed in the London offices of the American investment bank Lehman Brothers face an uncertain future after the collapse of the bank. (The sight of young crestfallen Lehman executives leaving their offices for the last time clutching their possessions in little cardboard boxes had a softening effect even those who previously hated them for their “obscene” salaries and perks.) Many, especially those who had stocks in the bank, were said to be facing “financial ruin.”
With the job market already in a slump (unemployment figures released last month were worst for 16 years) the redundancies, sparked by the banking crisis, couldn’t have come at a worst time — either for the government at a time when it is struggling to “reconnect” with voters or those who must now look for new jobs. And with their savings in the hands of unreliable bankers their future doesn’t look exactly bright.
Bin Laden the poet?
Before he took to full-time terrorism, Osama bin Laden apparently wrote poetry to entertain his fundamentalist admirers. According to The Sunday Times, tapes of his poems were found in the compound of his house in Afghanistan after the 9/11 attacks; and an American academic has been so impressed that he plans to publish them in a literary journal. Professor Flagg Miller, who teaches Arabic poetry at the University of California, also plans to write a book analysing the role of poetry in jihad.
“Bin Laden is a skilled poet with clever rhymes and meters, which was one reason why many people taped him and passed recordings around like pop songs,” he told the newspaper.
Arabic critics, however, are less impressed and some have described the poems as “brutal,” “nasty” and composed with the view to influencing young “susceptible minds.”
“Whatever else bin Laden is, he is now exposed as a disgrace to two millennia of Arabic culture,” one Arab academic is reported as saying.
A British Asian lawyer Halima Aziz, who was suspended by the Crown Prosecution Service for being allegedly “security risk” after she jokingly told a court security guard that she was a “friend of bin Laden,” has been awarded £600,000 in damages!