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The Bank of England's Financial Policy Committee accuses British banks of possibly misleading...

The Bank of England's Financial Policy Committee accuses British banks of possibly misleading investors about the health of their finances. In its semi-annual report, the panel says banks may be overstating capital levels by not recognizing potential losses on loans and playing down risks. Banks may also not have made enough provisions to cover the costs of compensating customers for the mis-selling of certain financial products.
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  • Lee Siu Hoi
    , contributor
    Comments (26) | Send Message
     
    Think about what would trigger any company to go bankrupt - fail to meet any payment. In the case of banks, as long as the central bank is willing to lend and the clearing house is willing to honor payment, this will never happen, even if the bank has negative net asset. In the case of Lehman Brothers, if Fed should have bought enough bonds from Lehman so as to provide liquidity for a year or two, Lehman would not have failed any we might not be in all these troubles.

     

    Bank of England is playing with fire to have made such a statement.
    29 Nov 2012, 10:09 AM Reply Like
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