Forcing the banks
Can the government force the banks to pass on interest rate cuts and, if so, why won't they? That's the question I put not once but several times to the Chancellor this afternoon.
Alastair Darling's reply was instructive. It's "imperative" that banks pass on the cut he said but the government could not set the price of their financial products.
Hold on a second, you may cry. Didn't we the taxpayers bail out the banks? Weren't we told that in return the Treasury had demanded strict conditions? The answer is yes, yes and but.
The government helped every bank in the country by guaranteeing lending between banks. It got no promises on lending in return for that.
It fully nationalised two banks - Northern Rock which is obliged to lose customers and shrink its business plus Bradford & Bingley which is effectivley closed to new business.
It took stakes in three banks - RBS, Lloyds/TSB and HBOS - in return for promises that they stood ready to lend on the same scale as last year, that their loans would be "competitively priced" and that they would be properly marketed.
These conditions were designed to ensure that the banks didn't merely pass taxpayers money onto their shareholders. What they did not do is allow ministers to force banks to pass on individual interest rate cuts.
As shareholders the government clearly has huge power. However, as one Treasury insider put it to me, it's the power a Sainsbury shareholder has to raise concerns about pricing policy not the power to set the price of cabbages in Wigan.
But let's get to the nub of the matter. Ministers don't want to set the price of loans (let alone cabbages). They know that the the Bank of England base rate is not the price banks pay to borrow money on wholesale markets.
They are hopeful that that rate - the LIBOR - will come down.They believe that with the help of a bit of added political pressure the rates banks charge small homeowners and small businesses will come down. They accept that that might take a few days.
What if they're wrong and those rates still don't come down? That's one answer I didn't get.