Draw Breath

If ever people need an incentive to upgrade to firefox (3?) or to Internet Explorer 7, it's the British Banking Code. As LSN news points out (behind LexisNexis's paywall), section 12.11 of the code (here, pdf) tells you, regarding online banking. that "If you act without reasonable care, and this causes losses, you may be responsible for them. (This may apply, for example, if you do not follow section 12.5 or 12.9 or you do not keep to your account’s terms and conditions.)" Amongst other things, section 12.9 says "Keep your PC secure. Use up-to-date anti-virus and spyware software and a personal firewall" and "Treat e-mails you receive from senders claiming to be from your bank or building society with caution."

Apparently this policy has been in the code for a while, although it was updated in April just gone. While no bank seems to have invoked the clauses, you can pretty much bet that they will at some stage. Which will be bad news for the elderly and the ignorant when they discover that, having been pushed out of branches to save the banks money, they are also responsible for the security of the banks' alternative offerings.

While I of course recommend ditching dodgy Windows for altogether better operating systems, and while I find it perplexing that I still get hits from people using IE6 and IE5, I do think we ought to be sympathetic with people who simply don't know how the software on their machines works and who don't read the latest missives on internet security. If fraud does become sufficiently problematic as to make banks consider invoking the responsibility clause, there's an easy solution: publicly acknowledge that the internet, Windows-style, is not an appropriate venue for financial transactions and take steps to encourage people back into branches. In other words: the banks should just swallow whatever is the cheaper alternative.

There's an interesting converstation developing over on politics.ie about the exposure of Credit Unions in Ireland to risk in the midst of the ongoing credit crunch.

I'm developing a small interest in corporate governance questions surrounding Irish Credit Unions, but I really don't know enough to verify anything that's being said in the politics.ie thread. Still, I'm not entirely a pessimist.

At a guess you'd probably be initially inclined to think that credit unions would not be as sophisticated as banks at filtering for risk. I imagine that that thought has probably gone the same way as America's subprime market (which is to say, while risk assessments in credit unions may or may not be particularly great, they are certainly not great in a number of banks, though perhaps for different reasons).

Second, I'd guess that CUs tend to have larger numbers of people from lower-income groups on their books, and are therefore slightly more exposed to risk than retail banks. If so, that may not look like good news. But there's risk and there's risk

The Irish banking sector is sure to be exposed to subprime in the same way that Northern Rock was: some of them are heavily dependent on the wholesale credit market (as opposed to funding mortgages from their own customers' deposits). And lord knows what may happen when repossessions increase in line with interest rates and property price declines.

In this context, given that CUs are more narrowly focused on a (hopefully) more robust version of the subprime market (as in, they haven't been playing the risk fire-sale game) and given that they lack other forms of exposure, they may ironically be in a more secure position than the commercial banks. Not that that would stop a run on the community banks...

Update: As we're beginning to discover, nobody involved in the credit markets will get away scot free.

Well that's a good thing to see: in following up on figures cited by O'Neill, over on A Pint of Unionist Lite, on the costs of a United Ireland, I noticed that the Irish Department of Finance allows you to download its budget figures in OpenOffice format as well as the ubiquitous and monopolistic Microsoft. Good to see Irish government sites accounting for proper standards. 

I may be jumping the gun a bit here, but I'm finding it hard to tally the BBC's World Stock Market Slump Hits Second Day with the BBC's own stock market data, especially if you take this snapshot of the One-Month View (this is a snapshot at the time of writing. The current state of play is here). It's quite a fall, but I wouldn't call it a slump. Compare it, for example, to 1987 or 2001.

At least the FT has updated its story between last night and this afternoon.