So. We're about to Nationalise a bank. No idea how much it's going to cost, no idea how long it's for, no idea how much the assets are worth. And now, flicking through the Draft Statutory Instrument which accompanies the Banking (Special Provisions) Bill, we find that it will also be exempt from Freedom of Information legislation for the duration of its ownership by the Treasury!
One other thing. Some estimates put the liability to the taxpayer at £55bn, others closer to £100bn. Either way, once this liability appears on the books, isn't this going to blow to smithereens Gordon Brown's self-imposed rules on government debt?
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All of the above makes total sense. There's not anything about this that doesn't stink.
But they (we) have been boxed into a corner on this one. I see nationalisation as the only, lousy, option (and so, incidentally, does The Economist).
One suggestion though, couldn't Northern Rock customers be persuaded to sell their mortgages to the RBS' of this world at a local level?
That would certainly ease the strain on the public purse if everyone played ball...
The 'rate tarts' of this world could be expected to move on at the end of their deals. But if the mortgage rates for new borrowers are kept artificially low (just as the interest rates for new savers seem rather high at the moment), then the chances are the book of business will increase at the expense of other, better run providers.
Then again, if the rates are set at a level such that borrowers decide to go elsewhere, we'll be left with only the 'sub prime' end of the motgage book. Nationalisisation might have been the least worst option in the end, but for the life of me I can't work out why the government waved away Lloyds TSB when they were expressing an interest the weekend before the crisis became public knowledge.
In the UK, it seems you can't alter the private ownership of a bank on a weekend, but you can take it into public ownership. It's a funny old world.
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