Monday, 21 April 2008
What was the alternative?
Many in the media and elsewhere are bashing the Bank of England for its U-turn on the Credit Crunch. Now the bank is to lend £50 billion, maybe even £100 billion more to the banks to try and end the crunch.
In return and taxpayers will guarantee the assets that the BOE is taking on, even though these can include some unsecured lending such as credit card debt.
All this seems a rum price to pay to the highest paid (celebrities not included) profession in the land. No hint of the bonus' being handed back and I note the share prices of the banks are rising. Shareholders may have taken a huge bath this past year, but if they hold on now they know all will be well within a couple of years.
I saw a BBC interview today with Simon Hills of the British Banker's Association, he blithely refused to answer any questions Declan Curry put to him and then condescendingly went on to note that the banks play such a key role that what else was there to too.
So what was the other option? To let the credit crunch drag us all down into a depression. I would not want for that and nor would most rational people.
However, with Northern Rock as the precedent and also with the actions of the Sovereign Wealth funds, the Government should have demanded some shares from the banks. Not much, but a few percent to make sure the taxpayers benefit from any upside. At the moment the risk is nationalised, not the profits or upside.
A cannier Government would have spotted the opportunity to balance the equation.
hat-tip: Bill Quango
Posted by CityUnslicker