From a TimesOnline article:
Britain’s taxpayer-owned banks are selling repossessed property assets to their own subsidiaries to avoid billions of pounds of losses that would be incurred by selling them in the open market.
Royal Bank of Scotland (RBS), which is part-owned by the Government, has set up West Register to buy properties taken over by RBS after borrowers had fallen into default.
The strategy of our leaders (here and abroad) is clear. The problem is to be kicked down the road as far as possible. They have unfortunately chosen to gradually recognize losses (and hope for a rebound) over many years rather than dealing with the problem of nonperforming loans in one fell swoop. This is one of many headwinds we will face over the next few years. We clearly learned nothing from the Japanese experience of the last 20 years.
Furthermore, this specific activity is clearly not a sale. I would go so far as to call it fraud. This type of activity should result in firings for some while others should be made bunkmates of Madoff.
The same company executives who drove their firms to technical insolvency are still in charge. The same regulators who couldn't foresee or detect the credit crisis are still in charge. The same Washington elite that continues to waste taxpayer money, pick the winners, destroy the dollar, inflate the money supply, and exponentially boost our debt are still in charge. Nothing constructive seems to have been learned from this crisis. We will not adopt prudent financial policy until it is inevitably forced upon us.
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