Debate Magazine
From The Telegraph: In a wide-ranging series of comments on the UK economy, Lord Turner said that he thought the Government’s Help to Buy scheme was “a step too far” and should now be tightened by a price cap. He said that although he supported the Bank's original Funding for Lending scheme, he questioned whether the latest move to resuscitate the housing market - Help to Buy - was necessary. He argued that capitalist economies’ obsession with credit meant that the cycle of boom and bust is inevitable, with crashes likely every 15 to 20 years. Some of his most outspoken comments were reserved for the property market, and the way in which banks rely on real estate despite its role in the most recent crisis and many before it. “Where did HBoS make its losses? Where did RBS make its? It was commercial real estate.” Lord Turner said that bankers were always likely to revert to lending based on property as such transactions provide assets for security and require little or no relationship with the borrower. “At this point in the cycle, people convince themselves prices are going only one way,” he said. “It’s very easy for us now looking back to say ‘weren’t our bankers lunatics? They must have been crazy and irresponsible.’ But in order to stop it happening again, we can’t point to individuals; we need to look at why the system is bound to push them towards it.”
