Monday, 29 September 2008

Financial rescues

There are pertinent comments on the B&B nationalisation by economist Chris Dillow quoting ex-Halifax director John Kay.

I was surprised to hear Nick Ainger (Labour, Carmarthen West and South Pembrokeshire) on "Good Morning Wales" this morning criticising the US Congress for delaying the Bush/Bernancke/Paulson "rescue" package. He seemed to be saying that representatives and senators should have accepted, without question, proposals from the executive.

Leaving aside the matter of a MP questioning the democratic processes of a friendly power, did Mr Ainger not see the flaws in the original package? It was summed up in a phrase which cropped up frequently in reports from Washington: it favoured Wall Street over Main Street. Nor, rightly, would economic liberals in the Republican party accept increased tax-payer exposure to risk.

In the end, after intense weekend discussions delaying the break-up of Congress, improvements to the measure were hammered out.

In Westminster, given that parliament was in recess and that events were moving swiftly, the chancellor and the Bank of England were right to take over Bradford & Bingley, without having to use any taxpayers' money, a course endorsed in advance by Vince Cable. However, parliament needs to debate all the issues when it returns.

In particular, MPs should look at the decision to sell off the Bradford & Bingley branch network so swiftly to Banco Santander (owners of Abbey National and Alliance & Leicester) in view of the implications for employment and competition.

4 comments:

Anonymous said...

It would appear that Banco Santander is starting to have quite a monopoly on our banking industry in the UK; specifically deposits (rather than loans).

On the subject of Monopolies, I understand that the Old Lady of Threadneedle Street is now the second biggest mortgage lender of our money in the country.

Frank H Little said...

- and not very good mortgages, either.

Representatives in Washington are still not totally satisfied with the rescue package. Asian stock exchanges are down as a result, and presumably London will follow later today.

Jewish New Year is apparently going to delay further consideration of the Paulson package.

Anonymous said...

Thought just crossed my mind - the Government is happy for listed companies to go under, but why not banks?

Frank H Little said...

See Tuesday's posting ...