Unequal Shares

Thomas Jefferson, third president of the US, once said, “I believe that banking institutions are more dangerous to our liberties than standing armies. If [we] ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations that grow up around [the banks] will deprive the people of all property until their children wake up homeless.... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs,”  and if the 8,500 mortgage litigation cases against them are anything to go by, HBOS and Barclays are about to prove Jefferson’s words of warning  are correct.

A recent report warns banking giants Barclays and HBOS may well have to reimburse their customers for charges amounting to hundreds of millions. This is because HBOS’s and Barclays' shared appreciation mortgages, which offer an interest free capital sum in exchange for seventy-five percentage of the borrower’s equity, have harvested vast rewards for the bank at wholly excessive expense to the mortgagees. Some homes have appreciated by £300,000 in the 10 years since the loans were made meaning homeowners have had to pay more than £200,000 on loans as little as £25,000. These products were designed and targeted at low income customers who were quite often elderly and have proved doubly lucrative for the lenders because properties values were in the doldrums when many of these products were sold. This gave the banks the perfect window of opportunity to acquire a  substantial slice of an often vulnerable individual’s future equity for a minimal outlay throughout the depressed years of property growth during the 1990’s.

Hilary Messer of RWP solicitors is waiting for more people to come forward before she brings this proposed class action formally to the attention of HBOS, Barclays and the courts but it cannot have made it any easier for those Barclays shareholders aware of this pending lawsuit to know there could be a demand for a further 850 million pounds on top of the ongoing costs of the PPI claims and the impact of the government bailouts. Neither can it help to be made aware that less than half of Barclay’s chief executive Bob Diamond’s pay packet is to be growth related. Little wonder so many shareholders were vocal in their discontent to discover Bob Diamond is to enjoy a 2.7 million bonus on top of his 1.35 million salary in addition to the 5.7 million he has already received to cover his tax bill. However, it must have been nothing short of incendiary to find Barclays staff bonuses of 2.25 billion pounds in 2011 were triple the 730 million pounds paid out in dividends to share holders.

While David Cameron says the lack of economic recovery is, “very, very, disappointing” and Ed Milliband blames the present governments “catastrophic”  polices and lack of meaningful banking reform, it is clear from the actions of Barclays and HBOS they remain blissfully detached from the effect the first double dip recession we’ve had since the 1970’s and the impact it is having on the rest of us. Instead their executives continue to feather their own nests and, in the case of the Bank of Scotland, attempt to paper over the cracks with an advert created  by London-based advertising agency RKCR/Y&R and developed “to reassert traditional values”. It tells us, “You never know what is going to be round the corner, or what twists and turns life is going to take.” I beg to differ. I have always found past performance to be a reasonable indicator of what’s on the cards for the future and in the case of HBOS and Barclays it is clearly going to be more of the same. It is because of this my personal battle with LLoyds and HBOS is destined to be a long one as is, I suspect, any hope of economic recovery.

Thomas Jefferson also said, “It is error alone which needs the support of the government while truth can stand by itself” and sadly for us, it seems he’s right again.

Brave New World

In order to limit the distress my sixteen year old son foresaw if he had to endure a family holiday without teenage companionship, I suggested he invite a friend from school to come too.  It was during a conversation with his friend, who plans to do a law degree, I discovered the Inland Revenue spend vast sums of money on legal cases involving people who find their tax bills a distressing infringement of their human rights.  Having been a self-employed 40% tax payer for the much of my working life I can  most definitely relate to finding a tax bill distressing but have to admit I have never considered it a violation of my human rights but merely the bane of the fortunate.

In the same way it would not occur to me to take the Inland Revenue to court on an issue of this nature, it did not occur to me, to seek human rights or equal opportunities advice when HBOS told me it was too late to save my home in October 2008.  I believe HBOS profited from a naivety on my part and when they decided to forego scruples, morals and decency in favour of seizing an opportunity to rail-road me out of my home in an effort to replenish their under capitalised coffers.Until recently, I  did not understand why my mortgage paying proposals fell on deaf HBOS ears. I have Stop HBOS campaigner Nicolette Turner (and victim of the HBOS Reading scandal) together with Ed Milliband’s recent speech on the feral elite to thank for my Eureka moment.  Their words have helped me see not only did I borrow too little to register above the radar for help but they have also enabled me to see I fell into financial difficulties too early to enjoy the benefit of government recommendations to lenders that followed, via the Ministry of Justice Pre-action Protocol in early 2009.

While I was looking to work with HBOS to reach a solution which worked for both of us, the HBOS executive were busily shouting from the roof tops “ it wasn’t me” to every accusation which came their way.  I believe the capital within my home became part of their hurried re-capitalisation plan which was supposed to sweep their recklessness towards risk management under the carpet and save them face along with their jobs. I can think of no other reason why my home saving proposals got me nowhere at a time when the media were declaring help was on its way in the form of government funding and FSA guidelines aimed at helping those caught in the credit crunch crossfire.Regrettably for me, our meritocratic culture encourages the celebration of the good fortune of the early bird without giving a second thought to the bad luck of the early worm. When it came to the forced sale of my home I fell foul of being one of the very early worms which was consumed by unbridled HBOS self interest.

When Ed Milliband recently said, “The powerful are very good at talking about the responsibilities of the powerless but they aren’t very good at looking at their own responsibilities,” he could have easily been referring to HBOS and the way they have continued to expect me to pay the price of their mistakes. Unaware of Franklin Roosevelt observations, “In our personal ambitions we are individualists but in our seeking of economic and political progress as a nation, we all go up or else all go down as one people”, Lloyds and HBOS have continued to offer victims of their greed nothing but contempt for the stressful HBOS created predicaments they find themselves in.

I can only hope the newly launched Public Jury Campaign provides  a definitive step in the right direction towards a brave new world which limits the power of " the cosy elite" because, again in the words of Roosevelt, as a rule,"men are moved by two levers, fear and self interest” and while “we have always known that heedless self interest was bad morals: we now know that is bad economics.”