They’re always taking a risk. Everyone in business takes risks. Clearly they looked at you and decided you were high risk, so they offered you very expensive debt. According to some of your thoughts this is exactly right - you have said that you think there’s a problem with a surplus of cheap debt. I agree. But you can’t then complain about not being offered cheap loans, can you?

If the banks are going to crack down on cheap debt, then the poor will (overall) have less access to loans. This is the only way to go, right?

Vince criticised the private buyers like Branson, because Branson wanted NR for peanuts, and was only interested in making money out of other peoples’ grief.
At that stage, Vince said that he would have preferred a private sector deal provided it was fair. But no fair minded white knight came along. And the government dithered, for six months trying to persuade people not to take their money out and worrying about job losses in the north.
After NR had gone on bleeding to death for six months Vince said that the best thing was to semi-nationalise it, throwing out the existing board and appointing a crew to run it like a prize ship until it was stable.
Then sell it.

Bishop - to clarify: I wanted a small loan based on what I could afford. The only option I was offered was a virtually limitless credit card not based on anything at all. I will gladly admit that I should never have taken them up on the offer, quit the nightmare job that didn’t pay my expenses or on time two months in a row, and done something else. I cocked up but ended up paying far more than a proportionate amount for my mistake. And because I could just scrape by (and went on to earn more), the bank made a lot of money.

You could argue they took a risk, but it was a pretty bloody small one. The calculation is based on the fact that most people will struggle through rather than claim bankruptcy. If creating credit was less insanely profitable, there’d be less incentive for them to get so many people in debt.

I didn’t know that, thanks for clarifying. I wondered why he has been rubbishing Vince so vigorously lately, and now see it is because Vince has been criticising hedge-funders’ activities.
And I have been reading him trustingly, thinking he is an investigative political sleaze busting amateur journalist! A sort of blogging Private Eye.

But these hedge-funders have no financial morality problem. It is disappointing.

I read through the comments on his last anti-Vince article, to see if anyone supported the case with a good argument. But they seemed to be something of a rabble with abuse as their only debating weapon. And John Redwood as their financial hero!

Elizabeth Patterson

Clearly there does need to be better banking regulation, but regulation won’t eliminate risk and moral hazard, nor even will deposit insurance, although that is a good idea too.

Unfortunately I missed the debate, but my guess is that Vince’s rebuttal was sound.