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Taxpayers to insure £500bn of bank assets

Robert Peston | 21:45 UK time, Monday, 23 February 2009

Taxpayers may become liable for £500bn of poor loans and investments made by Royal Bank of Scotland and Lloyds TSB.

Negotiations are at an advanced stage on what the Treasury has called its Asset Protection Scheme, which would involve taxpayers insuring banks against future losses on their less prudent lending and investment.

It is understood that each of Lloyds and Royal Bank hopes to insure £250bn of their loans and investments.

They are working towards a deadline of Thursday for Royal Bank and Friday for Lloyds to agree the outline of the deal with the Treasury.

If £500bn of their assets are insured, this would be a bold attempt by the Treasury to achieve two outcomes: first, to strengthen their balance sheets to avoid having to nationalise the banks fully if their losses increase; second, to release resources within the banks to generate perhaps £30bn or £40bn of new lending to companies and home buyers.

It would also, however, lift the total of British taxpayer support for our banks since the start of the credit crunch - in the form of loans, guarantees, insurance and investment - to a remarkable £1.3 trillion, more or less equivalent to the entire annual output of the British economy or GDP.

Sources close to the negotiations said that there are still important disagreements between the Treasury and the banks on the terms of the deal.

One contentious area is the size of the loss - known as the first loss - that the banks must incur before taxpayers pick up the tab.

The Treasury wanted the banks' owners, their shareholders, to be liable for the first 10% of the loss.

But on £500bn of assets, that 10% loss would potentially destroy their balance sheets - and thus end up weakening the banks, rather than strengthening them.

Second, is the size of the fee payable by the banks.

This would be in the form of participating preference shares to be issued to the Treasury and would probably be classed under banking regulations as core tier one capital - which means they would reinforce the financial robustness of the banks.

These shares would carry no votes. So the government's voting control of Royal Bank would remain at 70% and 43% for Lloyds TSB.

But if the fee were set high, the government's economic interest in these banks - it claims over the banks' assets - could approach 100%.

In the sense of rights over the banks' profits and assets, there would be little or nothing left for Royal Bank's and Lloyds' private sector shareholders. This would represent "economic" nationalisation of the banks, if not formal nationalisation.

The banks and Treasury officials, together with teams of City advisers, are struggling to construct a formula that avoids this economic nationalisation.

Update 2009-03-03: In the first paragraph of this note, I referred to "Lloyds TSB". Following the acquisition of HBOS, the bank is of course now called "Lloyds Banking Group". For Lloyds, most (but not all) of the assets to be insured by the new Asset Protection Scheme are expected to be loans and investments that were originally made by HBOS.

Comments

Page 1 of 4

  • Comment number 1.

    I wonder if Del and Rodney would like a go at running the economy?

  • Comment number 2.

    MORE LUNACY FROM THE LUNATICS!

  • Comment number 3.

    PSST!GORDY WANA BUY MY BAD DEBTS OFF

    ME FOR 33,000,000 STERLING? I WILL TAKE

    40,000,000 TO LET YOU HAVE THEM.

    A SPECIAL PRICE FOR THE MAN WHO THINKS

    HE IS SAVING THE WORLD!!

  • Comment number 4.

    Let's keep our fingers crossed this does get liquidity flowing. The DOW has been in free-fall ever since Tim Geithner surprised the market with his lack of a detailed plan. Right now the market's need leadership from Government to put some kind of confidence back into the market. The is first sign that there is a detailed plan emerging that is more than the empty rhetoric the markets keep hearing. Let hope for all our sakes it works!!!

  • Comment number 5.

    Robert said

    "Taxpayers may become liable for £500bn of poor loans and investments made by Royal Bank of Scotland and Lloyds TSB, the BBC has learned."

    Once it was decided that these institutions were too big to fail the tax payer had become liable for these losses in all but name anyway. Also the losses of any other UK too big to fail institution that has solvency problems.

    By making the banks absorb the first 10% loss all you would be doing is taking out the capital that was put in by the Government last year. So pointless.

    If this underwriting is sufficient to allow these banks to operate properly and commercially then it has to be done. The alternative is them to be zombie banks which are no good to anyone. But the government should prescribe rules about investment in British businesses (not houses) as it is the British tax payer that is underwriting them. I mean real rules not just 'we would like you to...'. The British tax payer has no desire to support employment overseas, but wants UK banks to underpin the UK economy.

  • Comment number 6.

    A while ago I came to the view that Gordon Brown is pursuing a scorched earth strategy.

    This news doesn't do much to change my mind.

  • Comment number 7.

    It makes no difference.

    A total crash is coming somewhere near to you (and all of us) soon!

    Sorry to be a doom monger. In fact, no, I'm not sorry..... I'm just a realist.

  • Comment number 8.

    Bonus Hunger
    There is a basic question under Bonus-malus system based on insurance customer’s point of view, that is, “Should an insurance customer carry an incurred loss himself, or should he make a claim to the insurance company?”. Hence, an insurance customer prefers to choose self-financing an occurred loss by carrying a small loss himself in order to avoid an increased future premium, instead of financing the loss by compensation from the insurance company. This strategy is called bonus hunger of the insurance customer. In this strategy, the insurance customer prefers the most profitable financial alternative, after a loss occurrence. A well-designed Bonus-malus system must take bonus hunger into consideration.

  • Comment number 9.

    I don't know about you but I don't think I can afford this anymore. Crash has destroyed my savings, wrecked the value of my pension fund and is now asking me to pay for the mistakes made by Fred Goodwin and Co all of whom have left with their huge pension funds intact.......

    I'm beginning to really hate Brown.

  • Comment number 10.

    i wonder how long before Barclays joins the asset protection scheme?

  • Comment number 11.

    The traditional method is to split RBS (and the Lloyds Banking Group) into two companies and allocate all existing shareholders shares in each company. The court would have to approve such a reorganisation, but it is not without precedent.

    Then the market will set a price for RBS(good) plc and RBS(bad) plc etc. (similarly for Lloyds, CitiGroup, Barclays etc.)

    However the first thing to be able to do is the value the assets and liabilities of the companies concerned - and this is (I surmise) where the problem still remains!

    (I have talked before of the way in which these organisations have structured themselves and the nature of the synthetic financial instruments and the lack of a valid mark-to-market valuation of these assets and liabilities - as the market no longer exists!)

  • Comment number 12.

    I note that "Sources close to the negotiations said there are still important disagreements between the Treasury and the banks on the terms of the deal."

    One important disagreement might be the position of HMG plc's CEO. It is EXTRAORDINARY that the mug who led us into this mess (remember he claimed full credit for Britain's "success story" before it was recategorised as a disaster) is not only still around but is also now Prime Minister.

    Before we throw another trillion around, how about checking with the taxpayers what they want and who they want to be doing it for them. Bailing out banks was not (I think) included in any party's manifesto at the last election. We would be truly stupid to think that we had no choice but that the man who got us into this mess is the right man to get us out of it.

    But (of course there's a but - I am stupid after all!) the disagreement is "between the Treasury and the banks". Maybe it's forgiveable for HMG plc to assume we're stupid given that we've scarcely bleated so far. Time for change?

  • Comment number 13.

    Robert, Please forgive my ignorance but can you please tell us what legislation the government is using to legitimately take on these liabilities?

    I find it worrying to see that the government is still trying to shore up capital adequacy, which is afterall merely a regulatory requirement. The real underlying problem is that the combined external gross debt of the UK is 10.745 trillion GDP according to the world bank et al (http://devdata.worldbank.org/sdmx/jedh/jedh_instrument.html)

    Much of this is short term debt. Is quantitative easing intended to shore this up too?

  • Comment number 14.

    I don't remember voting to insure private businesses. If I had I wouldn't have voted for it to be the banks.

    This is disgrace it's nationalisation without any of the benefits thereof.

    I'm seriously thinking about not paying my tax in protest. Why should the bankers get it?

  • Comment number 15.

    #9 Wee-Scamp

    You`re spot on the mark - couldn't have put it any better!

    People are at boiling point now and with the news not likely to get better any time soon is it any wonder that the Police are preparing for the public to take to the streets by summer.

  • Comment number 16.

    The greed of a few, crushed the aspirations of many....

  • Comment number 17.

    On another (but related) tack...

    I can see the Metropolitan Police's fears of civil unrest from armies of passbook waving ladies of a certain age and their similarly retired partners.

    If they get wind of money for bankers on this scale and also notice that their savings set aside for their retirement now yield nothing they will put two and two together and march down Whitehall (with or without permission!) crying "Gordon Brown stole my savings", or similarly after the election "David Cameron savings thief". I cannot see the Metropolitan Police being prepared to baton-charge the mass ranks of the elderly. My guess is that they will refuse to do so even if the prime minister of the time ordered them to do so.

    It is absolutely imperative that savers are kept quiet as there are 7 times more of them than borrowers. The only way to do this is to put interest rates up to at least 4 per-cent and it must be done on or by 22 April!

  • Comment number 18.

    OK, we've had the sweeteners...........when are we going to get the bad news?

  • Comment number 19.

    why dont they just guarantee the depositors (savers) and let the rest go to hell... why should i reward the corrupt bankers with my hard earned money? I fail to see the difference between RBS and Woolworths, both brought down by bad management...for those who say "too big to fail" i say rubbish, the market will pick up the good bits and the rest is a busted flush....the directors and auditors should be stripped of all their ill gotten gains and put on trial for fraud for it is obvious they have lied and lied to the shareholders....

  • Comment number 20.

    The Royal Mail pension deficit of £5 billion covering 450,000 people looks quite small in comparison to RBS's figures, guess which will be sorted first!

  • Comment number 21.

    Instead of this, why doesn't the government intercede directly in the housing market. Through local councils they could allocate (say) 1 billion punds to buy up houses that people are desperately trying to sell. If they targeted this to buy houses in the medium price range, it would achieve at least three things. It would stimulate the market, give people a way out of their crippling mortgage, give finance to the mortgage lenders instead of having to re-possess, and provide social housing for the expected number of families who will be turning for help to find somewhere to live. More importantly, they would have assets for their money which definitely could be sold later on. Simples No?

  • Comment number 22.

    #1

    If you haven't noticed, we already have a couple of spivs running the economy.

  • Comment number 23.

    rob think of our probs as
    human collateral damage
    not mark ups for crooks
    30000 GBP for each crook
    because they are professionals
    not amateurs

  • Comment number 24.

    What another stupid idea, but then we are in the realm of utter stupidity.

    The Government - and their advisers - are in complete denial and seem to think that they can just sweep the ever growing toxic debt under the carpet and carry on as before.

    They can't.

    And remember that £500bn is an estimate and fails to take into account what happens if and when the housing market collapses by 50%+, more businesses fall apart, unemployment rockets etc. Then the debt is likely to rocket above £1 trillion plus.

    How on earth do they think that one can a) pay off this debt? and b) create growth?

    They can't.

    Particularly, as the so-called 'golden decade' had been entirely based on debt. Without it there would have been - and thus soon will be - millions more unemployed. Full employment in an age of globalisation, technological advances and demographics is a pipe dream.

    Unfortunately, they will find out the hard way that Capitalism, which had a pretty good run, is on life support and is in a vegetative state.

    We are entering a post-economic age and the end of consumerism - and the sooner we all accept, rather than fight, it the better it will be for us all.


  • Comment number 25.

    MEANWHILE BANKERS GET THEIR BONUS

    PAYOUTS.

    MR & MRS JOE GET STUFFED BY HMG.

  • Comment number 26.

    I studied our Pension Statement for our UK

    Employees today the fund has lost 40%

    since 31/12/2007.


    THANKS GORDY!

    I dare NOT give it to the staff to read.

  • Comment number 27.

    RE PENSION FUND PAYMENTS?

    BETTER TRY THE 3.45 AT KEMPTON PARK

    OR THE EUROMILLIONS.


    FISCAL PRUDENCE?


    A NEW PRODUCTION RUN OF FISCAL

    PRUDENCE LAVATORY PAPER.

    NONE FOR GORDY ALLY MANDY & THE GANG.

  • Comment number 28.

    What a waste! The sad thing about this whole process is that all this money has been FOUND when for decades, public services have been starved of real cash at the point of delivery (or just wasted in layers of incompetant bureaucracy).

    Pity our children and grandchildren. What a legacy!

  • Comment number 29.

    GORDY IF YOU WANT A REVOLUTION??


    JUST KEEP UP THE MESSAIANIC WORK!!


    THEN YOU CAN CLAIM YOU NEED MARSHALL

    LAW AND DICTATE WITH ABANDON!!!


    THE MIDDLE CLASSES ARE GETTING HOT

    AND BOTHERED IT WONT BE GENTILE!

  • Comment number 30.

    Im with Mr Curzon, the idea that the taxpayer is funding BONUSES while getting put on the hook for these obscene liabilities is nothing short of outrageous.

    The Brown administration is fumbling around in the dark, from one bungled policy to the next. Its our money! The sooner we unite and demand better treatment the better. I never thought i'd be saying the French have got it right but....

  • Comment number 31.

    Whoops there goes another trillion!

    I wonder though is this just the tip of the financial iceburg?

    We are apparently as tax payers are now going to insure the banks against their losses.

    What about insurance companies?

    I like many other money paranoids keep a close track of my investments and commitments and with all this banking mayhem got quite worried.

    So I pulled some of my savings out of my bank and re-invested them myself, they have risen in value when all around was sinking, not bad I thought if I can do it the big boys should be OK too.

    I was happy until this weekend when I received an update of my endowment policy, which after many years of doom and gloom last year was finally projected to make a tidy profit, this has now been wiped out with a larger than ever projected short fall. This works out to well over 10K!

    Where has all this money gone?, I can't be the only one can I? and if not is this going to be the sting in this Fianancial Fiasco's tail?

  • Comment number 32.

    GORDON BROWN?

    WHEN WILL YOU RESIGN?


    WHEN WILL YOU WAKE UP AND SMELL THE

    COFFEE?


    DO WE REALLY HAVE TO MARCH ON LONDON

    AND KICK YOU OUT?

  • Comment number 33.

    RE LDV COLLAPSE.

    SO UNITE HAD IT ABOUT RIGHT!

    ANOTHER 5000plus to JOIN THE DOLE

    QUEUE!

    ANOTHER NEW LABOUR GEM/MIRACLE.


    WHAT IS MANDYS ROLE IN THIS I WONDER?

  • Comment number 34.

    Re THE BANKS.

    It seems we only have one High Street Bank

    left worth dealing with THE COOPERATIVE

    BANK PLC.

    THE OTHER CLEARERS ARE TOO HOT!!

  • Comment number 35.

    Why give 500B support to banks to achieve 40B available to lend?

    a) Make 40B available to lend via NR or Bsocs and do the following
    b) force Lloyds and RBS to sell many of their assets
    c) split them up into smaller banks which would each be capable of failing (RATHER THAN BIG BANKS THAT 'CAN'T BE ALLOWED TO FAIL')
    d) guarantee depositors will not lose money from above
    e) Put houses repossessed by banks onto local councils books at current valuation (funded by government) and allow them to rent them out either to the defaulter or as social housing.

    This is all about FOREIGN debts at RBS and Lloyds (which US has probably told GB it MUST honour) the losses on the still relatively small number of repossessed houses is not that enormous even at 125% mortgage.

  • Comment number 36.

    Robert,

    I appreciate the banks are too big to fail (not in my opinion), but, surely what is happening at the moment is that the tax payers are making oportunities for someone to make money at their expense.

    As Mrs. T used to say 'You can not buck the market', and yet, that is exactly what the Government is doing by not allowing these institutions to crash and for the economy to quickly reset.

    And of course where tax payers future liabilities are concerned, there must be some who have worked out how to leverage our future tax payments into physical (or even virtual) cash with which they can play with no risk.

    If an investor puts 100 quid into a modern day investment, and it gets diluted into all these clever instruments that were created over the last 10 years or so, by the time the money actually settles to the bottom of the investment pool, so many fees have been charged it is likely to be worth in the region of only 95 quid (a figurative representation only).

    So if you assume it lost 5% on the way down, a sure as eggs is eggs, it will lose 5% on the way back to the surface of cash.

    Put 1.5 Billion of our money in there, and there is a great deal of revenue for people to earn a very nice and comfortable living off, even if it is just allowing these dodgy investments to surface (which apparently is the governments chosen aim, make the banks realise their (ahem ... sorry that should be our) loses).

    Perpetuating the unstustainable will bankrupt the U.K.

    As a final point, if annual GDP is the real risk/investment in our banking industry, then surely this was magic money created out of nothing. If that is the case, then surely money supply expansion must have been high over the last 10 years. It clearly isn't all foreign money, because the banks have lost it. The money supply must have grown to cover all these over-valued assets.

    Surely the real fault of government is that they managed an economy without the levers of restraint. Perhaps if the inflation gauge and the MPC levers were all tied to 'real' inflation measuring all asset classes and commodities, then runaway asset inflation and invisible money supply expansion, would not have occurred and a sustainable economy could have resulted.

  • Comment number 37.

    WELL GORDY YOUVE FINISHED THE UK

    BANKING SYSTEM.

    YOUVE GOT OVER 6,000,000 ON OUT OF

    WORK BENEFITS.

    THE JOBLESS FIGURES ARE GROWING BY THE

    HOUR.

    YOUVE GOT BALANCE OF PAYMENT

    PROBLEMS.

    A STERLING CRISIS.

    PEOPLE BEING THROWN OUT THEIR HOMES

    SET TO PEAK AT 70,000 PLUS FOR 2009.

    AN ILL EQUIPED ARMY FIGHTING TWO

    UNJUST WARS.

    A STATE SECURITY SYSTEM THAT LOOKS LIKE

    THE FORMER USSR SYSTEM.

    RECORD CORPORATE AND PERSONAL

    INSOLVENCY RATES.




    ARE YOU PROUD GORDY DO YOU THINK

    YOU DESERVE AN OSCAR?

  • Comment number 38.

    #29

    AC

    I think you made a typo... it should be masonic instead of messianic

    D
    B
    L
    E
    N
    U
    A
    I

  • Comment number 39.

    RE HBOS AS IT WAS CLEARLY INSOLVENT

    THIS BUSINESS SHOULD HAVE BEEN PLACED

    IN ADMINISTRATION.


    I CAN ONLY WISH I HAD PETITIONED

    HALIFAX PLC IN 2007 AND DONE THE JOB.


    HOWEVER WATCH THIS SPACE AS I MAY

    SOON BE PRESENTING A PETITION

    ELSEWHERE. GUESS!!!!!

  • Comment number 40.

    I am past being infuriated. This has really gone too far. Will the last one leaving UK PLC please turn out the lights?

    So we can offer another 500 billion to failed banks and not tighten up banking regulation and the bonus culture?

    Yet LDV are on the way out......does GB want to offer them a life line? Woolies? No.. No, of course not. Not great party donors perhaps.

    This is a disgrace, an absolute disgrace.

    Brown and his stooges should apologise to the Tax payer and stand down now that they have finally destroyed the UK financially for the next 30 years. Time for a general election.

    It is interesting to see the tide finally changing on your blog Robert.

    I have lost all hope of this government getting to grips with the problem. They behave like cowards, too timid to stand up to the national theft witnessed by the humble tax payer.

    I agree, let the banks dissolve. Support depositors and lay waste to the rest. What have ordinary people got to lose now?


  • Comment number 41.

    31 - justhangonamo touches upon an interesting point.

    How on earth do you value all these assets on the balance sheet?

    If we value these too highly then we, the taxpayer, surely end up potentially having to overpay if the asset declines further in value.

    However, if we under value them then that means the banks have to make further write downs. That could then mean more money pouring into the banks (or outright nationalisation perhaps).

    Would not a necessary first step be for all these assets to be independently valued or at least all parties (the government on behalf of taxpayers and the banks) to agree a method of evaluating these assets?

  • Comment number 42.

    ANYBODY KNOW WHEN OUR ERRANT

    REGULATORS MIGHT GET FIRED??

    STARTING WITH THE BANK OF ENGLAND!

  • Comment number 43.

    You might think the Government may be interested in finding out where these "leaks" are coming from or may be not ?

    they have given/ dropped it into the messenger once again to ease the news in.

    Forgive me wasn't this heralded a few weeks back as the way to help liquidity.

    Insuring losses ....doesn't mean they ARE actual losses. The key word is is the first line It is MAY ..... Not certain, just a possibility. It might mean nothing at all although I would accept that is as unlikely, as it is to be, 500 bn

    This headline feature will make some believe they have lost the money already and encourage yet another ranting sesion and keep the author 's blogging profile high ... in time for the next round of pay rises.





  • Comment number 44.

    You refer to £500 billion of bank assets.
    I remember being taught at (UK) school(s) that £1 billion was £1 million million i.e. £1,000,000,000,000 but that in the USA $1 billion was one thousand million i.e. $1,000,000,000. Am I to assume that the BBC has now abandoned traditional UK values in favour of those across the pond?

  • Comment number 45.

    Bankslicker post 38

    An A too many whoops!

    In Brussels with tired eyes tonight.

  • Comment number 46.

    dormor1

    Re the BILLIONS?

    It doesnt seem to matter any more the

    money doesnt exist anyway.

    GORDY IS INTENT ON PRINTING AS MUCH AS

    HE THINKS HE NEEDS LIKE MUGABE.

    WE THE NUMPTY BRIGADE WILL PAY THE

    PRICE FOR 30 YEARS PLUS.

  • Comment number 47.

    Why can't RBS sell off Citizens Bank in the US

    According to the Citizens Bank web-site it might be worth a tidy sum

  • Comment number 48.

    Just get on and nationalise the banks properly. Are they in any position to "negotiate" Their assets are all our money anyway.

    It's highly amusing to note that the New Labour monster was born partly out of fear of the Leftist policy of nationalising the banks and taking control of the 'commanding heights' of the economy. It seems we are all Militants now. Pity is that we didn't have the foresight to do the necessary way back then. Capitalism, it seems, does need to be controlled.

  • Comment number 49.

    #35 blairwatchproject and others

    Your suggestion highlights an inconsistency in this story. One I trust Robert Peston will write on soon.

    There were reportedly 40,000 repossessions last year. Assuming each constituted a 100,000 GBP loss, which I believe is a sizeable overestimate, then the total losses would be 4 billion GBP. Of course not all these losses would have fallen on RBS and Lloyds-HBOS. Where is the rest of the money going?

  • Comment number 50.

    The reason, in my view, why all the governments' efforts will fail to solve the problem is clear.

    Time is needed to allow asset values to retreat back (30% in UK) to historically normal levels that can be supported by the free market. And time is necessary for the excessive debt levels to be attenuated to a level where they can be serviced without the Treasury/BoE artificially forcing interest rates down.

    Any and all attempts to prevent deleveraging and to prop up inflated asset prices and (insolvent banks) will cause years to be added to the healing process. The compulsion to intervene (the volte face in economic philosophy we are seeing daily) will just propel us deeper into the abyss through the most inefficient redistribution of resources. Let the speculators carry the can. They bought into the failed business model. They accepted the risk for higher returns. By all means guarantee all retail saving accounts. People did not take a risk when depositing and will need the cash to spend when they are good and ready. The shareholders and their mis-judgements deserve to be punished not the tax-payer in years to come.

  • Comment number 51.

    Does it really matter now? Gordon has totally destroyed our economy and to such an extent that we have no posibility of a decent future. Wish I was younger and could realistically leave the country and set up elsewhere.

  • Comment number 52.

    #49 and others:

    Mortgages are not the only story. There is the rest of the economy to consider. A lot of companies will not make it. There will be some big losses there, coming in multi-million pound chunks.

    My view is this. We need banks. We do not need THOSE banks. Liquidate and start over. Government seed capital with onerous coupon, then IPO. Who wouldn't love a chance to invest in the only game in town, and one without legacy debt?

    The reason it will not happen? Too many established interests with lots of political influence and lots to lose from a change in the status quo.

  • Comment number 53.

    #34 alexander curzon

    Funnily enough I changed from lloyds TSB ( illegal money landerers to Iran, guilty as charged in the USA, GB's servant taking over the HBOS -how nice of them)

    and

    I moved to The co-op bank who managed to pursuade Bob dylan to use 'blowing in the wind' for a bank advert. They passed his moral requirements it seems.

    Wouldent it be funny if eveybody else voted with their feet as well and sent a message to the banks and Gordon?

    Jericoa.

  • Comment number 54.

    just where is the opposition in all this? only 12 points ahead in the polls....it should be 50 points! this week the government is to bring in the bill to part privatise the Royal Mail....140 labour backbenchers will revolt, but the opposition is apparently going to vote with the government.......for god's sake cameron, this is your big chance to force an election ...just do your job and oppose!

  • Comment number 55.

    The middle classes will do as they've always done - tut into their copies of the Daily Mail.

    What should be of REAL concern to the so-called great and good of this country is when the ACTUAL workers decide they've had enough of this whole situation.

    The working class will not stand for their already tenuous quality of life being eroded still further for very much longer, and especially not by a Labour Party that's purported to be on their side yet have duped them for the last decade - as they usually do when they're in power.

    This time, the scales are falling from their eyes - and things could get VERY nasty indeed.

  • Comment number 56.

    I'm off to bed... with AlexanderCurzon carpet bombing in upper case cluster bombs and thinking about what £1,300,000,000,000 actually is my brain is aching.

    I cannot get past the feeling that the way this whole thing has been handled will be looked on in years to come as a complete disaster in that it has been almost the wrong call at every turn...

    There are only 60,000,000 of us so that is give or take..£22,000 for every single man, woman, child , baby in the country (It should be £21,660 but I am doing this in my head, and it's doing my head in).... for the average (no such thing I know!) family of 2.4 kids that is £96,000 ..

    10 rolling drunks on a stag or hen party rolling round the pubs on Saturday could be carrying £220,000 in debt, each group...... not counting their own debt on their cards and mortgages!!

    I'll be looking at the buses tomorrow and doing quick maths and thinking that bus owes well over half a million quid...and so does that one ...and that one has 3/4 of a million riding on it....

    Even Alloa Athletic's crowd could collectively be liable for over £5 Million Quid next Saturday!!


    It doesn't bear thinking about---except on the brighter side every football crowd this weekend will be able to buy their on club... even Chelsea from Abramovich, and Man Utd off the Glazers---


    And if just a the regulars on this blog get together WE'LL be able to buy out the Govt from RBS and take the bank over and become bankers------


    All it needs is to find a way to securitise the debt by parcelling it up and selling it off (after all it's AAA rated UK sovereign debt this is ...it's not any old rusty banger of debt...)... we won't have to make any repayments because the other suckers... er ...tax payers will do that and by the time it all unravels we'll have had our first year bonuses and be buying rounds in Monte Carlo

    What can possibly go wrong?


    Goodnight

    And what about the interest!!!!

  • Comment number 57.

    This a total disaster the UK tax payer can not keep pinking up the bill for inefficient management in the Banking industry.If this disaster continuos there will more people out work more business going bankrupt so less tax payers revenue to uphold the Banks.This is what should have happened the suspected Banks go into receivership and stated as bankrupt where they would have to pay their creditors this would have stopped us having our own money recycled back to us.

  • Comment number 58.

    There will still be the same number of fields, factories, buildings, people and workers the day after the economy dies as the day before.

    Let this system die and let us rebuild a new one.

    What has existed since the UK exited the gold standard has been a slow eradication of wealth by the use of fiat money. I.E government lies - lies from the left and lies from the right.

    As Charlton Heston said " Damn you all to Hell"

  • Comment number 59.

    Robert

    Is it too late to let them go bust?

    Only retail depositors need to be protected.

    So who is defaulting on these loans? Who has had the benefit from the billions that the british tax payer will be paying for decades to come?

  • Comment number 60.

    dormor1 (post No. 44).

    Like me, you must have gone to school long ago.

    However, I seem to remember that Denis Healey redifined billion to its current meaning during his tenure as Chancellor in the 1970s.

    I hate it too, but we are stuck with it.

  • Comment number 61.

    When will people realise that all of these plans being put into place are to stop us all from mass rebellion!! From what I see for nearly 8 years the uk and us the great consumer economies of the world have adopted a fundamentilist captilist approach. Our banks and financial institutions whicn in the uk in paricular under pin are economies have borrowed excessively form china and other emerging markets or anywhere they could get there grubby little hands on. Theyve proceeded to borrow all this money to us the consumers whove spent it on our nice plasma screen tellys that were probably mad in china and upsising o our bigger overvalued houses!! This was a false economy we spent money we didnt have which created growth in countries quicker than should have happened it was a vicious circle that would eventually collapse!!! Yet now it is collapsing the goverment want us to borrow money to start the whole process again??!!! Thats rediculous but they will never tell us the truth THAT ARE ECONOMY IS OVERVALUED, THAT THE RICH HAVE GOT RICHER AND WE WILL PAY FOR IT, THAT FUNDAMENTILIST CAPTILISM WHICH THE UK WAS THE FRONT RUNNER IN IS DOOMED TO FAILURE UNLESS WE KEEP ROBBING POORER NATIONS WHO JUST DONT SEEM WILLING TO PLAY BALL ANYMORE!!! BRING ON THE REVOLOUTION, ITS TIME THE MIDDLE CLASS REALISE THEY ARE JUST WORKING CLASS IN DISGUISE AND WE TAKE BACK WHATS OURS AND END THIS GREED!!!!!!!!!!!!!

  • Comment number 62.

    The Banks are bankrupt. The only thing keeping them alive is tax-payers money (present and future taxes). The past profits (and bonuses) were private but the debts are and will be paid by the British tax payer. The opportunity cost losses to 95% of the British people in terms of the productive value of their work is scandalous. Think what can't be done in the future because the taxes for all those things that we really know and believe should be done in the country will be used to pay the interest on the national debt to....bankers!

    The only real solution in the nation's interest (even Greenspan thinks so know!) is for the systematic nationalisation of all of the retail assets of the loser banks in that they go along the tried and tested route of Insolvency.

    The profitable assets are nationalised and quickly restructured with new, competent management (we have enough talent in the virtuous banks for secondments and I'm sure the Bundesbank could help out for a while) and then re-privatised with clear limits on their business plans to avoid securitised debt, money market borrowing (the source of our woes) and the perverse bonus culture. The banks then operate on the basis of deposits (which 99% of us thought anyway).

    The losers will be the speculating 5%. They will be cleaned out.

    We just have to get this nightmare over with. And punish our homegrown and international 'punters' who pulled this whole number off in their own short term profit maximisation interests.

  • Comment number 63.

    Message to Gordon and Alistair.

    In a recession you can tweak the money supply. In a Depression you can't. It failed Hoover and Roosevelt. Unemployment peaked in America in 1937/38, a full nine years after 1929. They tried it then and it didn't actually work. Roosevelt saved America for the type of capitalism which has led us to the present state of affairs. The Rich emerged richer and everyone else had to rebuild with uncounted personal tragedies on the way.

    The planet can't sustain the sort of world you two are trying to maintain anyway.

    Who will buy the treasury bonds you need to finance your policy?

    The Chinese, perhaps?

    Why should they!

    They have all the hi-tec kit they need now.

    They have a huge internal market to develop.

    They have barter deals in place to assure oil and resources outside the fiat reserve dollar which has stitched them up.

    Why should they see you as important enough to invest in.

    Even Hillary has tried to sweet-talk them because she knows that debtor nations have to treat their creditors with respect.

    Where did the Chinese go after Davos?

    Berlin and Paris.

    Not London.

    Put Britain first and nationalise those banks to make UK worth investing in again.





  • Comment number 64.

    I propose an alternative solution

    Let all the Banks fail, and keep the Tax payers money safe.

    The Banks will fail eventually anyway, but we will still have some cash to lavish on everyone who has lost their investments.

    Or alternatively let the investors rot, and spend it on rebuilding the economy.

    Whatever we do with our £Bn's is frankly insignificant compared to the US's £Tn's.

    Also, as has been proven again and again, you cannot fight the markets - so lets not try.

  • Comment number 65.

    This has to be a record, even for the Golem. Yesterday he was going to be putting people first (people like the everyday tax payer, I guess) and the banks were going to be the servants. Then, a day or so later, he's giving the tax payer a nice gift in the shape of a £500 billion liability.
    I suppose you do have to pay the servants well in this New Labour wasteland.

  • Comment number 66.

    This Asset Protection scheme is similar to what the US govt gave as assistance to Citigroup and other failed banks in the States. Watch rep Alan Grayson interview Citigroup CEO Vikram Pandit him about the assistance given. dont know if beeb allow me to give a link: http://www.youtube.com/watch?v=A-DOwLnQ4nk , otherwise its on you tube just look under Alan Grayson.it's well worth watching
    Let the banks fail if they are rotten and a new generation come up in their place. Let the CEO's and presidents of these noble institutions have their properties forfeited and their accounts seized and have the bonuses returned, as they don't seem to understand the error of their ways otherwise others will come behind them and it will be repeated.
    Are we to rebuild the already broken banks?they are broken because they don't work. Mr prime minister...THEY DON"T WORK!
    They don't work because it was decided that the market could regulate itself; now when it does the panic sets in...does the self regulation entail the destruction of the markets that they existed in?. of course it can, this is the self balancing act and from the ashes new banks will arise, healthy banks

  • Comment number 67.

    Personally I think there's a bit too much criticism of the banks going on. True a few of them messed up - a bit - but they were investing in things no-on understood, least of all them, and that takes a lot of courage. It would have been easy if we'd all known what we were doing but they didn't and it takes a man of rare ability to do the things they did, on the basis of blind faith; I salute them for it and believe they fully deserve any bonuses owing. Set a terrible example if we don't cough up - we may not be able to attract people of the same calibre into the City in future. Disaster if that happened. Sorry Peston but you got it wrong this time!

  • Comment number 68.

    Quite right. You can't buck the markets and the markets are screaming at the moment.

    Nationalise, restructure and reset on time-honoured principles.

    80% of Britons are not in negative equity even if assets stabilize at normal (ie -30%) values. Only the illusion of wealth has been blown away with the deflating bubble.

    Move house and you gain or lose nothing when the market stabilises after the tank in two or three years time.

    It will pay to build again instead of hogging building land and houses to 'flip' at a profit.

    75% of Britons are savers. How can they be made to pay for the mistakes of the bankers? Its immoral as well as wrong-headed.

    Most of us are tax-payers (direct and indirect taxes). Why should we pay for the losses of the banks and the hedge funds they fed to?

    Let them go to hell (and their private wealth clients) and let the rest of us build a viable, skill based ecionomy that can face the future in a real global economy.

    We really should not be paying for the losses of those unwise enough to have entrusted their wealth to the Ponzi scheme the banks created.

  • Comment number 69.

    No 67, you're right, there is too much criticism of the banks. It's criticism that is encouraged by policy makers like the Golem in order to hide their sins of omission and commission. When the history of this crisis is written, policy makers will be trashed. It's the likes of the Golem, King, Bernanke and Greenspan who are the primary cause.

  • Comment number 70.

    Sing to the tune of Beethoven's 'Ode to Joy':

    Moral Hazard, Moral Hazard, Moral Hazard, ev'ry day...

    Moral Hazard, Moral Hazard, Moral Hazard,
    ev'ry way!

    Banks screw up, and we all cough up,
    we're really fed up, been robbed blind...

    Moral Hazard, Moral Hazard,
    Brother, can you spare a dime?

  • Comment number 71.

    Sadly I have now come to the conclusion that there is only one solution to this mess.

    As a matter of national emergency
    All farmland/open spaces must be turned over to food production.
    All troops must be returned home.
    Domestic arms production to be highest priority.
    Full nationalisation of Ford/Vauxhall/RR/Corus etc. with production changed to military hardware.
    National service implementation immediately with all able bodied persons given basic military training.

    This must be done now.

    It is the only fiscal stimulus that will get our economy back up and running but we must be the first to do it and it requires the utmost commitment.

    War is coming.

    It took 50 years and an empire to pay for the last one because we had to buy tanks/planes etc. at the top of the market (enriching many americans in the process)

    If we are not well prepared and well armed, war will come here so there is no time to lose.

    Do it Gordon, declare a state of National Emergency, stuff the election, give the economy the only fiscal stimulus it understands.

  • Comment number 72.

    Many years ago I bought shares in Eurotunnel. My investment is now worthless. "The Banks" took the lot.
    So - tough luck if you are a bank shareholder. I know how you feel.

    I just count myself lucky I didn't buy shares in Marconi.

    All businesses, all shareholders, all investors take risks. Basically we are all gamblers. As an Irish jockey once remarked "If I thought the horse was going to lose - I wouldn't have put me own money on it!"

    Well - we've lost. And lost big this time. No wonder we are all hanging on to our cash.

    The sooner the bad banks are nationalised the better. A few less horses to put your money on.

    If the the Government does no better we can get rid of them the next time we visit the ballot box - and without a bonus.

  • Comment number 73.

    #67 and 69

    Probably so (and Clinton, Rubin, Thatcher, Reagan who among many others were the political lobby of the bankers who can also be named). The bankers called the shots for a quarter of a century since the mid eighties "big bang".

    Look at the economic statistics and the history.

    The Thatcher/Reagan revolution was a cultural revolution which (at the request of bankers) swept away the structures put in place after the Great Depression of the 30's to prevent a replay.

    Their model. It has failed.

    "The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy and more selfish than bureaucracy"

    Abraham Lincoln


    "They who control the credit of a nation direct the policy of governments and hold in the hollow of their hands the destiny of the people"

    Rt Hon Reginald McKenna (Chancellor of the Exchequer)

  • Comment number 74.

    I am at a loss, the Trader that lost millions goes to prision, the Guys that lose Billions get a Bonus.

    We are spending more on Public Servants that make the Country nothing but we spend nothing on keeping manufacturing going.

    Last time I looked New Labour had enough MP's to keep safe those that enjoyed draining the Public purse but now they cannot stop the sale of the Post Office, what a load of GUFF we are expected to swallow.

    Now our Northern Rock is going to let people buy overpriced houses with money the Govt. has borrowed to get us out of the mess of their own making.

    You don't have to be mad to try living here but it helps.

  • Comment number 75.

    #74 (Fideafindimp)

    Because they are stupid enough to think they can buck the market. They think they can reverse gravity and that by saving the banks they are saving their reputation for economic savvy over the past 10 years.

    They have neither the moral bravery nor the integrity to concede they were wrong,

    Look at Tessa Jowell talking to Andrew Neil or to Paxman. It just beggars belief!

  • Comment number 76.

    Gordon,

    Just go and never darken our door again. And take that lot with you.

  • Comment number 77.

    I am so glad i left the UK, the thought of spending the rest of my working life paying tax for incompetent bankers who will never face the criminal charges for the disgraceful way they have destroyed the wealth of a nation and burdened the work force and business owners with so much debt.

    I guess it is the same old UK privatise the wealth and nationalise the debt, always money for wars and banks never any for schools, roads and hospitals.

    More than 2 million people left the UK for good in the last 10 years for all sorts of reasons. That amounts to more than 10 747 aircraft packed with people leaving on a one way ticket every week, anybody think of asking why so many people want to permanently leave or is everybody to busy bailing out the banks.

    It seems ironic that the people who work with money have no clue how to control it and yet if a retailer or manufacturer makes a complete mess of their finances they go out of business.

  • Comment number 78.

    I disagree with tonyyd1, this is not the first detailed plan.
    What happened to the detailed plans for healthcare, pensioners, Education, Education, Education.
    We have welcomed by force a bail out of the banks, only because it is our money sitting in there, that is if it is there, why do they need a bail out if they have yours and my money, or what have they done with it.
    Is it invisible money that banks are dealing with and for that matter the government.
    We are all going to get a big hit in about 5 years time.
    We have had investment in healthcare, and education admitted, but only in partnership with private companies, private companies work on profit, NOT Education,Healthcare etc.
    I applaud TimBJones for his comments,British business not houses, houses are owned mostly by the banks not by the people living in them, repossesions galore lately for the banks, are they building their stock up for the future to sell off at exstortionate prices and then earn more bonuses.
    Houses were not available 15 or 20years ago for the people of britain that needed them because the government would not give Councils money to make them habitable.
    Our neighbours from where we do not know arrive and all of a sudden all the empty houses are having money spent on them, to accomadate skilled people to fill our job crisis, no skilled people exist in britain!, as for bank bonuses, do they not earn enough, Iam not talking about the face you see,but more the face you don't see.
    I have never seen my bank Manager in13 years, we need to bring that back.
    By the way had a letter off my bank Ltsb today 23rd stating the service charge on my current account has increased by a pound, is there no end to the bankers greed.
    Final comment, I am still proud to be british, I only hope the government can hear the people for once, and not think in their small little Island called the house of commons, the common people need help, Mick

  • Comment number 79.

    So, the Treasury is working to have RBS sorted on Thursday and Lloyds sorted on Friday.

    Shareholders to be liable for first 10% of losses.

    Well then, expect RBS to tank on Thursday and Lloyds to do the same on Friday.


  • Comment number 80.

    "Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to take deposits, and with a flick of a pen they will create (ie print) enough to buy it back again. However take the power away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the SLAVES of BANKERS and pay the cost of your own salary, let them continue to create deposits."

    Sir Josiah Stamp Bank of England



  • Comment number 81.

    Straight off the RBS Citizens Bank Website about mortgages for ARM mortgages


    Save with lower interest rates
    Qualify for a larger loan amount than with a fixed-rate mortgage
    Protect your interest rate for an extended period of time
    Keep your monthly payment low with a 30-year term and amortization
    No prepayment penalty

    So what happens in 5 years time??????
    Where are these assets???? - the US?
    What is going to be insured????
    Against what????????/

  • Comment number 82.

    ARM is just the grassroots detail of the old system still trying it on. You, the mortgage payer, take the risk of the future when interest rates are adjusted not the bank. Like shooting fish in a barrel!That's the way they like it.

    Won't work stateside for quite a while. The housing market is still tanking or hasn't RBS noticed!

  • Comment number 83.

    it seems that one of the main reasons for the renewed nerves in the US and decline of the markets is to do with AIG, who are in deep trouble again and need another huge infusion of govt funds to avoid going bust and pulling everything else down around them; see this

    http://www.nytimes.com/2009/02/24/business/24bailout.html?

    also Citigroup in trouble and may have to be nationalised or split; automakers all begging for money to avoid bankruptcy

    and on and on it goes; a lot of this is way beyond Brown's or UK's ability to influence now

    it seems that the UK govt is copying the US initiatives or vice versa but they are not working; perhaps some of them will eventually begin to, but the crisis is moving too fast to tell.......

    and there's the whole confidence thing; they still can't find a bottom to house prices as unemployment now grips people with fear

    I believe that in the US you have to file your taxes at end of March and it's for the calendar year, so that all piles personal pressure on the tens of millions of individuals whose personal investment and 401k plans etc are currently in ruins

    I've read somewhere a complex argument comparing long-trend price/earnings ratios to the stock markets, which suggests that the Dow will fall to 4,000 and the FTSE to 2,500; but the markets are unpredictable spooked horses now, so who knows

    more importantly, the Anglo-American model seems dead at the moment and Obama/Brown should bite the bullet and begin nationalisations soon

    here in the UK we need a National Investment Bank, Natl Savings Bank and the beginnings of an industrial strategy like the Chinese; no choice but to try and pick winners and losers

    need to work out an agreed way of doing it EU-wide, which makes it even harder, but
    giving all our money to the losers (RBS et al) and in an unco-ordinated nation by nation manner doesn't work

    in the meantime don't forget your allotments folks; there will be green shoots to be seen there soon and a bit of shovelling will cheer us all up

  • Comment number 84.

    'The Treasury wanted the banks' owners, their shareholders, to be liable for the first 10 per cent of the loss.'

    Have I missed something but as we own 70% of RBS the reality is that we would still pay 70% of the first 10%.

    I just hope Flash does not decide to save M & S finnancial services because then my shirt will be gone as well.

  • Comment number 85.

    To paraphrase Winnie: "Never, in the history of man's development, has so much, been stolen by so few, from so many"

  • Comment number 86.

    # 14 MrT

    "I'm seriously thinking about not paying my tax in protest. Why should the bankers get it?"

    You may be thinking about not paying your tax. I can't afford to pay mine. By that, I mean my own small business faces a relatively modest tax bill of £4,560 for the Tax Year ended March 2008.

    Since then things, have got much tougher. For me to pay this tax bill, I shall have to draw money from my family savings to capitalise my small business sufficiently to pay the tax man.

    The cash from my personal savings will then presumably move seamlessly to a multi-millionaire banker's pocket. Something is going horribly wrong here.

    Small wonder the Met Police are predicting a summer of rage on British streets. I'll be the first out there.

  • Comment number 87.

    # 83 somali_priate_SP500

    "I believe that in the US you have to file your taxes at end of March and it's for the calendar year, so that all piles personal pressure on the tens of millions of individuals whose personal investment and 401k plans etc are currently in ruins"

    See my post at # 86 above. It's not just in the US that this is a problem!

  • Comment number 88.

    So after paying up to save a failed business, being kicked in the face as said business then uses the money to pay immoral and unjustifiable bonuses, I am now expected to stump up again to save said business for a second time???

    How about just letting them fail, the way any other business with a bad business plan and a total disregard for the views of it's majority shareholder would fail? Can someone please, finally explain to me why this is not possible?

    If it wasn't so tragic it would be a terrific farce.

  • Comment number 89.

    There is only one way out of this massive lash-up, and the gov is already doing it.
    They did it in Germany in the 1930s as well.
    If all countries do it at the same rate, the problem should go away, although the cash in your pocket will be worth a bit less.
    I hear this morning that the bankers want a pay increase. The farce gets bigger.

  • Comment number 90.

    You should have waited until the deal had been concluded, Robert. Do you have to make a "scoop" out of every bit of news?

  • Comment number 91.

    Yeah,well no doubt the shareholders will be whingeing again how the government is 'stealing' all their money. It's a damn shame that shareholders cannot be made liable for the huge debts incurred by these banks,instead the public now have to clean up their mess at the astonishing cost of half a trillion pounds. The chickens have finally come to roost for the Thatcherite years,the bankers and their investors have had a 30 year long party,siphoning out billions year on year out for their 'bonuses' and now the public are going to be paying for it for a very long time. Is it any wonder that the general public is angry?

    As well fomenting a major worldwide economic collapse;decent hardworking people are losing value on their pensions,savings and property, and it seems we will be taxed heavily as well over the next few decades to pay for this fiasco.

    Brown and the EU leaders are doing the right thing in strict regulation of the banking industry.Lets hope that such a situation never happens again.It's obvious now that big business can never be left alone to run it's own affairs without ' pesky state interference'.This has been tantamount to burglars complaining about street patrol coppers interefering with their own 'business practises'.

  • Comment number 92.

    Can the moderators stop multiple postings, and also those posting in capital letters?

    Usually those trying to grab the limelight and not contribute to the discussion.

    If we can weed out the non-contributory posts, the subject discussion gets a little more manageable.

    Peter

  • Comment number 93.

    Alexandercurzon... do you think your semi-literate rants actually add anything to this discussion?

    Please, let's at least try to discuss this very serious issue with a certain level of maturity.

  • Comment number 94.

    Face it, the UK economy is going over Niagara in a busted barrel.

  • Comment number 95.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 96.

    The main thing I have noticed being a regular reader is the increasing anger coming across.

    This government is treating the electorate with utter contempt, ignoring the advise of sound economists, and the bankers are laughing all the way from the bank.

    The police (under funded, but in some cases,over empowered) are right to be concerned about rioting and protesting in the near future.

    I personally know of many, normally placid personalities, whose blood is boiling with the way the country is being ripped off.

  • Comment number 97.

    why do the government want to start lending again? isn't this what got the economy in the deep crud we are now in?
    if a business needs to borrow money to do things or to pay for goods then obviously the business is filling the whole point of business is to make money not borrow it .
    the government should start the ball rooling by paying people in cash again every 2 weeks and that way once your money is spent yuo will feel the effects people dont have any idea of the value of money today because of credit how many times have you been in a shop and seen someone pay by credit card for items costing a a few pounds? this where the problem lies and this iswere it needs to be fixed first

  • Comment number 98.

    Dear Robert

    This crisis is a major case of Criminal activity within the bounds of the Finacial services in this country.The Government Know that Fradulant operations took place and they must be exposed and those responsible must be charged and put in the Dock.
    There is a MAJOR FAILING regards the FSO, AND THE FSA, both these agencies are at best useless, BECAUSE THEY KEEP THE TRUTH FROM THE PUBLIC DOMAIN,--- and they should be Got rid off,-- in their place a SINGLE REGUATORY agency responsible for Finacial Services across the board, nationally and the Ability to work Internationally should be instigated.
    UNTIL THESE BANKERS WHO STOLE OUR ECONOMY ARE BOUGHT TO JUSTICE THE PUBLIC WILL HAVE NO FAITH IN GOVERNMENT especially WHEN THERE IS EVERY POSSIBLITY SOME OF THESE MAY BE KNIGHTED TO KEEP THEIR MOUTHS SHUT.

    THESE BANKERS ACTIONS HAVE REALLY hurt A LOT OF ORDINARY PEOPLE AND THEY MUST NOT BE ALLOWED TO GET AWAY WITH IT, HEADS HAVE TO ROLE.AND FAST.

  • Comment number 99.

    #92 Hear Hear!

  • Comment number 100.

    We have to ask why this is being done.

    Most likley it is to keep "people" from thinking their money isn't safe in LLoyds/HBOS. Why not then just protect the depositers, unwind Gordon Brown's merger plan, then let HBOS be split into component parts? Perhaps a domestic mortgage business, based on retail savings could be spun out and start to offer sensible prodcust in the manner of one of the old Building Societies?

    HBOS shareholders will suffer, but their business is practically bust, and Lloyds shareholders should be better off. Anyone with all metaphorical eggs in one proverbial HBOS basket will suffer, but the world in general will breathe a sigh of relief if the right spin is applied.

    As the great leader, comrade Brown, seems to want to stick his fingers in everywhere, but unfortunately his track record of gold sales, pension-trashing, tax and spend, boom and bust, saving the world etc, makes him possibly the least qualified person for the job in the country.

    PS Did I mention the pension-trashing?

 

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