Newham Cllr John Whitworth labels RBS 'inverse floater' LOBO loans a "fraud on the people" at RBS AGM, demanding further disclosure from the bank.
Newham Councillor John Whitworth who is also the Chair of the Scrutiny Committee at the Council posed a series of questions to RBS Chairman Sir Howard Davies regarding RBS LOBO Loans- which Mr Whitworth likened to a: "fraud on the people" at the RBS AGM in Edinburgh.
Sir Howard Davies said during BBC Question Time that PFI was a fraud on the people because "it is always cheaper for Government to borrow than anybody else." Mr Whitworth proceeded to outline that Newham was having to pay an interest rate of 7.6% on its LOBO loans, borrowed in 2010, when RBS was accessing credit from the Bank of England at just 0.5% interest.
Mr Whitworth noted local authorities were still struggling financially having received the bulk of austerity cuts, caused in no small part by RBS, which was the largest bank in the world when it collapsed in 2008. Yet despite this, RBS was looking to extract the "maximum interest possible" from local authorities struggling with cuts.
Commenting for Debt Resistance UK, campaigner Joel Benjamin said:
"Sir Howard Davies admits that it is always cheaper for Government to borrow than banks, and that PFI and by extension LOBO loans are therefore a fraud. What Mr Davies fails to recognise in an act of cognitive dissonance all to commonplace in the banking profession is the role of his own bank in facilitating those frauds, as one of the largest PFI and LOBO loan lenders to UK public authorities.
Frankly, I would have expected more from the man who once ran the Audit Commission and Chaired the Financial Services Authority"
Newham Council currently pays around 70% of all council tax income on servicing interest on debts including £563million of LOBOs borrowed from RBS and Barclays.
You can read the full transcript of Mr Whitworth's AGM question here and watch the video footage, including RBS's response.
Other major LOBO borrowers including Leeds, Kent, Edinburgh, Manchester, Cornwall, Liverpool and Glasgow should now take action to ensure hundreds of millions in interest savings for local taxpayers can be delivered.
At least 240 councils across the UK have taken out LOBO loans, totalling £15bn. Auditors are currently considering legal objections from residents in 18 councils, filed under the Audit Commission Act last year, which could result in some LOBO loans being ruled unlawful.
Find out more about LOBO loans and if your council has them on the Debt Resistance UK website. For press inquiries email: firstname.lastname@example.org Phone: 07429637423
Links to further information:
UK Local Authority Debt Audit website: http://lada.debtresistance.uk/
Interactive map of local authority debt: bit.ly/LADAmap
What is a LOBO loan? http://bit.ly/LOBOLoan
LOBO Loans are potentially illegal http://bit.ly/DebtTrap
The conflicts of interest http://bit.ly/LADA3