Mortgages and Vultures

Fascinating programme on Radio 4 last night - about how the Mortgage Protocol is mince.

The woman who was about to be evicted from her home is an HBoS employee in arrears with an HBoS mortgage - the court (in Bristol) was powerless in spite of her proposing a repayment plan. Her solicitor reasoned that the only reason she got a deal eventually was that it was simply a response to pressure on the bank in the form of an email from Radio 4. The power of journalists ...

The web story has her home being saved 'days' before eviction. I think, though, that if you use the 'listen again' function you'll hear them say it was the evening before eviction.

Vulture funds
Something else that was touched on in the programme is that hedge funds and vulture funds have started buying up mortgages which carry a higher risk of default than average.

You may recall vulture funds from the Jubilee Debt Campaign highlighting their activities or from DfID's response to the Jubilee requests or from journalists pointing out that the activities of the vultures meant that international aid money was coming straight back to the developed world as profit on debt owed (interest paid, seldom any capital paid off) or from the odd politician expressing concern.

It's a lucrative business, one not easily dissociated from the UK.

There are some who put forward arguments in favour of the vulture funds, though, and it's worth reading what they say. Even when they don't say much. There are others who don't defend the funds but do point out that it's not necessarily easy to tell the good guys from the bad. There are always different stories to be told.

Vultures descending on property mortgage markets wouldn't be an original occurrence, and some banks have already tried to offload some debts at the beginning of this year's chaos (not that it did Lehman much good), and when we save HBoS from the takeover there will be a job to do in cleaning up the bank. US funds have already been eyeing up European assets.

It's often the same people doing the dirty deed and foreclosing who did the equally dirty deed in mis-selling. Selling banks will write off the debts at a substantial loss, the funds buying the debts (which may even be owned or partly owned by the selling banks allowing them to write it off the balance sheet but still keep repackaged debt as an asset whether it came originally from them or not) will demand full repayment.

For the people struggling to make the repayments it's very bad news. The vulture fund has little, if any, interest in looking at ways to keep you in your home and have you finish paying off your mortgage. It may actually be in their interest to repossess, sell for more than they bought the debt for (whether that's on the open market or at auction), and still have you owe them the rest of your mortgage. Banks get out from under the bad debt, the funds make money, it's a win-win-lose situation - and guess who the losers are?

There may be some good news. There was a chap who was interested in making sure that action was taken - strong action - to curb the activities of vulture funds. He's been vociferous, certainly, if not very effective. He was talking about vulture funds as they were attacking the poorer nations of the world, but surely Gordon Brown will want to stop the vultures wherever they attack?

See that there economy thingummyjiggerybobcat?

It would appear that Alistair Darling has a sense of irony unparalleled in modern politics - claiming that an independent Scotland might face some economic problems (no doubt it will) while admitting that he doesn't have a scoobies what to do about the incredible economic mess of the UK.

Meanwhile, though, Peter Mandelson thinks Gordon Brown is an economic Moses:

People really do look to him like some Moses figure who is going to lead them away from this economic mess to the promised land.

Imagine being able to say that with a straight face! I've just been listening to Norman Lamont on Straight Talk on the BBC News channel critiquing Labour's atrocious handling of the economy and the running of consecutive enormous fiscal deficits. He should know - he grew up on a croft near Lerwick called Loot ...

The person making the real movement, is Kevin Rudd, the Australian PM. Australia is so much better off than we are that there are Australians complaining that their budget surplus (yes, surplus) is only $5.2 billion (Oz dollars, so about £2.218 bn). The UK ran a £38.7 bn deficit last year. Likewise, Australia had a trade surplus of $1.5 bn in September while the UK had a deficit of £3.9 bn in the same month - which was a narrowing deficit.

Now then, advice for Ally the Chancellor from my position as pontificator to the wall -

1. There won't be a retail solution to this recession, people don't have the confidence to spend and a pitiful reduction in VAT for the first year of a three year recession just makes you look unambitious.

2. Small businesses will be the driver of the recovery but they'll have to survive first - then they'll need to have the space to grow - that means that they'll need plentiful and long-lasting help.

3. People on low incomes are suffering and deserve consideration by their Governments, they need to cop a real break.

So, here's what to change your rescue package to:

1. Sod your silly VAT cut. EU regulations won't let you cut it below 15%, so let's leave it where it is, eh? Instead, cut the basic rate of income tax for the lowest earners and give them a wee break, you could cut it to, perhaps, 10%. An increase in the top rate is fine - as would be an extra couple of percent on the basic rate for those on the average wage.

2. Let's not have that rise in corporation tax for small businesses. Instead, let's be brave, cut it by a percent or two. Even better, cut it for the smallest businesses by a good 5% and then start looking at ways of making it easier for them to grow - that'll require flexibility; different solutions for different business sectors and different regions.

3. There's action needed to cut food prices and heating prices - what about support for food co-ops, for example?

I'll be back later with more sage advice.

Mind how you go.

Legal challenge to Mandelson decision

Another champion is rising.

The Merger Action Group has launched a legal challenge to Mandelson's decision to railroad through the Lloyds TSB takeover of HBoS.

Sign up and support them I say!

You can always rely on George

Ah, the good Lord Foulkes in chamber yesterday not asking the question he wanted answered:

Department for International Development (Headquarters)

3. George Foulkes (Lothians) (Lab): To ask the Scottish Executive what plans the Minister for Europe, External Affairs and Culture has to visit the headquarters of the Department for International Development in East Kilbride. (S3O-4977)
The Minister for Europe, External Affairs and Culture (Linda Fabiani): I have no plans to visit the headquarters of the Department for International Development in East Kilbride in the near future.
George Foulkes: I am absolutely astonished by that answer. The minister says that she has no plans to visit the headquarters, yet a few weeks ago she said that her international development plans were going to be closely integrated with the Department for International Development's work. Forty per cent of the DFID staff are at East Kilbride, including the civil society unit, which spends hundreds of millions of pounds in Malawi and elsewhere. When I was a minister there, I hosted a meeting with the President of Malawi.
The Presiding Officer: The member should ask a question, please.
George Foulkes: Would not the minister's rhetoric about integrating with the Department for International Development's programme and making her work complementary be more acceptable, and more like the reality, if she took the trouble to go to East Kilbride—it is not far away—to talk to the people who know what they are doing in international development, unlike her?
Linda Fabiani: I visited DFID's Scottish headquarters on Friday 7 November—three weeks ago. There are currently no plans to undertake another visit but, as always, we will continue to liaise with DFID.

Baccalaureates Launched

The Scottish Language Baccalaureate and Scottish Science Baccalaureates have been launched. They'll give Scottish pupils a competitive edge in qualifications.

Another election promise delivered!

Suffer the Children

Those free school meals for tiny little hungry children ...

The Statutory Instrument passed through Parliament today - a good thing! Once again, Labour, Conservative and Lib Dem members spoke out against it.

Amendments to the motion to pass came from Labour and from the Conservatives (I can't understand Liz Smith's positioning on anything much, she's a strange fish - maybe it was being a teacher in the private sector that skewed her views on state education?), but neither of these amendments

When Labour's Karen Whitefield rose to her feet to oppose feeding small children I was dumfoonert. She even said she visited a school breakfast club this morning (leave those kids alone woman) and that the school she was at didn't have enough money to provide free school meals. That'll be why there's money in the local government settlement from 2010 to pay for it then, eh?

The Lib Dems waffled about means-testing these 5-year olds, missing the point entirely about not stigmatising children.

28 MSPs voted against the motion - voted to keep food out of the mouths of small people. The Lib Dems were whipped to vote against free school meals!

Dram right!

I see the Chancellor is reviewing his crazy plans for whisky duty.

Must be a result of my excellent reasoning, eh?