Let's ban reckless politicians as well as reckless bankers

Some years ago I was sitting in the accountancy module B212 ‘window dressing and off balance sheet techniques’ during my Masters course when the lecturer at the time piped up that one of the biggest fears in finance was the fact that mortgages were lent long whilst money was saved or acquired from the market short. In principle short money can be called for very quickly whilst paying back a mortgage on demand is impossible. A interesting discussion took place as we considered the possibilities of savers suddenly loosing confidence and withdrawing funds to stuff under the mattress or inter-bank lending suddenly drying up. And the fact that as mortgagees we would be unable to pay our loans on demand loans so all chaos could result. We also in passing have a quaint notion that the money in the bank is actually ours to call on on demand – look to how Cyprus handled their [...]

The Banking Crisis of 1825

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Banking Crisis – Lloyds was a safe bank in 1825

The recent banking crisis and the failure of the Scottish attempts to take over the banking world in the UK two years back has set me thinking about the earlier attempts at setting up regional banks and in particular the setting up [...]