Thursday, October 16, 2008

Oh Dear


The Audit Commission seeks to ensure that £180bn of public sector spending provides "value for taxpayers". It said it deposited £5m in Landsbanki in April this year - and a further £5m in July in Iceland's Heritable Bank. The commission said the deposits were in "full compliance" with their guidelines "on prudent investment".

Hmm. March 2008, This Is Money. The Audit Commission put their money in in April and July. With one bound they've managed to discredit themselves. This severely damages their right to a respectful hearing when they castigate others for mismanagement.

But the real horrors are in Iceland.

Credit insurance for debts at Iceland's biggest bank, Landsbanki, is priced at 610 points while that for Kaupthing is priced at a hair-raising 856. Given that these two have taken billions in UK retail deposits, it may be a sobering thought for savers to consider where they are putting their cash. These banks are now seen as the most unsafe in the developed world. Of course, no one can be sure that disaster looms for anyone, but the figures on credit default swaps show clearly where investment professionals think the big risks are.

You have been warned.


Umbongo said...

What is the Audit Commission doing with £10 million in loose change? It can't all be to finance Sir John and Lady Bourn's jollies.

Mark said...

Hmm indeed.
The BBC post goes on to state (re 2councils with the greatest exposure)that 'Ministers have sent a team of financial troubleshooters'(?) to the councils to assess their position...'.
They wouldn't be from...the Audit Commmission by any chance ?

Rob said...

It isn't their money, why should they care? They'll get bailed out.

One worry is the backroom political deal which will be done to save their faces. I get the feeling that the Audit Commission won't be auditing very aggressively for the next few years or least until the Conservatives get in.