I HAVE read several letters over the past weeks blaming the last financial crisis on greedy bankers. As an ex-banker may I,  due to the restrictions of space,  give a potted history of what happened? In the early 1990's when the American economy was booming and property prices rising a senator introduced a bill which was passed stating that those living in rented accommodation should  join in the  prosperity and be able to buy their own homes.

Lenders had to lend to them or be sued under discrimination legislation and these became known in the  profession as ninjas (no  income/jobs or assets).

Because the risk was great, interest rates were higher.

The lenders, realising the risks involved, bundled these mortgages with others in blocks of $100 million as asset-backed, high-yield security  and used them as collateral  to obtain more funds.

They were not allowed to do this in America under a restriction from the previous recession of  the 1930s but they were in London which started an influx of foreign banks.

Because New York was losing business to London, American politicians were persuaded to rescind the restriction and the business proliferated.

Previously all clearing banks in the  UK had to keep seven per cent of their deposits with the Bank of England and a further 10 to15 per cent in one month available investments to prevent  instability in the banking system and a bank failing.

When RBS / NatWest went under the ratio was one per cent.

So my contention is that weak politicians had a hand in this and should bear some responsibility for their actions. By the way the American senator who introduced the bill was Barack Obama.

– David Harland, Yorkley.