Banks tighten screws and draw up secret blacklists (Times of London)

[FarCenter]

London Times, Richard Kerbaj and Dominic Kennedy - http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5119663.ece

Banks are drawing up secret black-lists to ban businesses from overnight borrowing as the credit crunch moves into a damaging new phase, The Times has learnt.

The diminished trust between banks is spreading into the wider economy as bankers lose faith in customers' ability to repay these unsecured loans.

Hundreds of clients have been included in lists being drafted in the City of London. Their identities are confidential but are understood to include international trading and commodities companies that supply the small-to-medium-sized business sector.

A well-placed City source said that several banks were compiling blacklists to protect themselves from the growing risks of defaults and bankruptcies. Some banks are slashing lending periods for companies still able to access short-term funds to a maximum of three months.

The slump in lending by banks to business can be seen in Bank of England figures published last week showing a sudden fall since June. Vincent Cable, the Liberal Democrats' Treasury spokesman, said that the squeeze on overnight lending indicated that banks were failing to pass on Gordon Brown's £500 billion bailout of the banking sector. “There is a very serious problem on that score,” he told The Times. “There is a clear conflict of interest between the banks acting in their narrow short-term self-interest and the wider interest of the taxpayer.

<snip>

[MNReformer]

1. Combined with the increased surveillance, the media controls,

the surveillance everywhere,and the latest "terror" threat in London--what do you see?

[FarCenter]

2. The commodities speculators and hedge fund operators are being scrutinized

The banks don't want to be holding their paper when they go bust.

My guess is that whatever is happening in London is also happening in New York, since most large banks operate in both cities. They might keep the lists in London for legal reasons.

[MNReformer]

3. The New York Fed is the Bank of London. n/t

[aquart]

4. Then take the money back.

They've broken faith and the contract is void.

[KakistocracyHater]

5. short-term self-interest

that is the heart of the problem, everywhere.