Adam Price’s Blog

The Blog of Adam Price AS/MP, Carmarthen East and Dinefwr

Adam Price MP / AS - Carmarthen East and Dinefwr

Chwilio Blog Search

Deiseb / Petition


Calendr Blog Calendar

February 2009
« Jan    

Archifio Blog Archive

Yearly Blog Archive

Datganiadau'r Wasg
Press Releases

Cysylltiadau Blog Links

30th January 2009

Fool us once shame on you….fool us twice??

It is now increasingly clear that a perfect storm of reckless and irresponsible bankers and spineless and unprincipled politicians on both sides of the Atlantic have driven the world economy to the edge of a precipice.  What we are seeing now is those same politicians handing out a parachute, paid for with our money, to those same bankers who are busy pushing the rest the rest of us over the cliff.  If this continues for much longer then it’s not just the streets of France and Greece which will see rioting.  People are angry at bankers who drove us into this crisis and who are now seeking to profit from it - in the sure knowledge that the taxpayer will bail them out if they get their sums wrong again.

Take Timber-Frame Developments which employs 18 or so in Llandybie in my constituency.   A small company - but  in a village that has already seen the loss of the local Corus plant this week, every jobs is vital.  The company has been driven into liquidation by the apparently unscrupulous actions of Halifax Bank of Scotland (HBOS) now part of the merged Lloyds Banking Group. 

TFD were contracted by Birmingham -based developer Whitefire on a new apartment building, The Horizon Building, in Sheldon, near the West Midlands, financed by HBOS Corporate .  As is normal in construction projects contractors were paid on a monthly basis by the bank after the receipt of a drawdown valuation.  This proceeded as normal until October 2008 when HBOS became engulfed in the wider banking crisis and the Government was forced to step in with its injection of £37 billion, most of which has gone to HBOS and the new merged Lloyds banking Group in which the taxpayer is now the biggest shareholder.  Valuations of the work done in November and December were received on time by the bank and the bank, it would appear, assured Whitefire Group that they were fully supportive of the project and of the company.  These assurances were conveyed by Whitefire Group to all contractors working on the site.  Only on Christmas Eve was work suspended on the project by the owner of Whitefire group, Mr Richard Whitely, until the bank released the monies owed.  This had now grown to £1.3 million.

On Tuesday 13th January 2009 the bank suddenly announced they were withdrawing their finanical support, that they were not releasing the money owed for October, November and December, and were effectively forcing Whitefire Group into administration.  As a secured creditor the bank now stands poised to recoup all of its money (plus interest and fees) while companies like Timber frame Developments have been driven to the wall.  Effectively by providing Whitefire with financial assurances for three months while refusing to release monies for work conducted the Bank has saved itself £1.3 million and gained from three months of work and material completed at the expense of the contractors.  This is not prudent financial management; this is a bank, under-written by the taxpayer, exploiting its privileged position to exact maximum advantage with scant regard to the consequences in terms of jobs and the wider good.  It is exactly the kind of amoral, unjustifiable behaviour that has dragged us into the morass in the first place.   Incredibly, HBOS have pulled this same trick with this company elsewhere as well leaving a trail of destruction behind them.

I think there can be but one public policy response to this kind of behaviour now and that is to nationalise the entire Lloyds Banking Group (we own 43% already….buying the rest of the shares would cost a mere £2 billion).   When Labour loyalists like John McFall and City figures like Jon Moulton are making the same call you realise that this is now mainstream.  The only way now to get credit flowing again and then rebuild and restructure banking so that it works for us, not us for them, is to bring the entire sector (or at least the lion’s share of the banks) into public ownership.  For the moment, bankers, not builders, are the ’cowboys’ of capitalism.  It’s time to round them up.

2 Responses to “Fool us once shame on you….fool us twice??”

  1. Negrin says:
    January 31st, 2009 at 5:08 pm

    I am really looking forward to John McFall’s Select Committee receiving evidence from the Hedge Fund Managers on the impact of short selling on banks particularly HBOS. Does Parliament have any plans to regulate these ’spivs and speculators’ (Alex Salmond’s words)who are behind the short selling and the use of complex derivative instruments?

  2. syncretist says:
    February 1st, 2009 at 6:25 pm

    Nothing short of scandalous. I have put something about this on the Welsh business news blog at

    I am hearing that HSBC are also playing these games (again). When HSBC took over the Midland Bank they gave a list of the business sectors they wished to continue to support to the managers with instruction (accompanied by ‘unspoken’ threats to their positions and pensions) to get rid of the rest by whatever means - this usually meant immediate withdrawal of any overdraft facilities (no reason needs to be given if you read the small print). Over 300 businesses collapsed in the Swansea area with job losses in the region of 5K. The only business that did well out of this were the asset strippers and the accountants that they used.

    The banking ombudsman who was called in was totally useless.

    Innovative financing solutions are needed based on credit unions that are owned by the local community. These work well in the US (most of the time) and should be studied by WAG and adapted for our use here. No small businessman in the US will touch a high street bank for business finance if they can possibly avoid it.

Leave a Reply

You can comment on this article. but you must register first.
Your reply will be moderated and not appear immediately.
You can prepare your text in a word processor before pasting it into the box, but formatting such as bold and colour will not appear.

You must be logged in to post a comment.