Why the City’s not scared of the publicly-owned mega-bank

Auntie’s economics wonk Robert Peston explains the motives behind the world’s newest banking group, UKFI plc:

The great fear in the City about the Treasury taking stakes in three of our biggest banks is that this partial nationalisation will turn them into non-commercial public services.

No bad thing, some might say.

But it’s not what the chancellor and prime minister want.

So they are putting the shares that will be acquired for taxpayers in Royal Bank of Scotland, HBOS and Lloyds TSB into a new company that will be owned by the Treasury, but will be managed at arms length.

That company will be chaired by a former finance director of Lloyds TSB, Sir Philip Hampton, who is currently chairman of the supermarket group Sainsbury.

So Sir Phil’s an Establishment figure, and he figures that he’ll be able to both increase cheaper lending to business AND quickly return money given by taxpayers.

No doubt New Labour wants to help the banksters get back to their normal business of fleecing workers, consumers, and small businesspeople.

But that promise of helping out the local businesses that provide so much employment has been made loudly and repeatedly.

Since Sir Phil is likely to side with the City over this issue rather than with the general public, New Labour are delaying a conflict – just as Brown’s policy of the credit bubble was designed to stall industrial conflict.

Robert Peston goes on to say,

And there’s a further risk in its decision to create the vehicle for owning the bank stakes as a formal Companies Act company.

How so?

Well as the chairman of a proper company, Sir Philip could not be formally directed to take this or that action by ministers.

So that promise of helping out small businesses was just that – a promise and no more…

Which begs the question, will the promise to ensure that public money isn’t used to fund lavish pay-offs?

At a time when ordinary people are being asked to show restraint and businesses across the land are preparing lay-offs, the inability of the government to keep these promises could be as haunting as the 10p tax affair.

That’s to say nothing of the HBOS/Lloyds job losses and the future of the Scottish Labour party…

And to think it all started with a former building society called Northern Rock.


2 Responses to “Why the City’s not scared of the publicly-owned mega-bank”

  1. anglonoel Says:

    As Tony Benn wrote in 1980 (Arguments for Socialism, p.60): ‘We have had enough experience now to know that nationalisation plus Lord Robens does not add up to socialism.”

  2. charliemarks Says:

    I do love you and your quotes Noel. I must get around to typing up more of the ones I’ve underlined in books…

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