Speaking Sense about Bank Bailouts

Other people are starting to notice: BANKS ARE THE PROBLEM, NOT THE SOLUTION.

Unfortunately, the only lawmakers seeming to notice this are in Britain. . .


Vince Cable, the Liberal Democrat treasury spokesman, signalled that his party would oppose the plans. He said: "We cannot have a situation where the taxpayer makes open ended financial commitments to the banking system when the banks then wilfully put their own short-term self interests ahead of the national economy.

"The banks are currently on strike, refusing to lend, and the Government is going to have to play the role of the strikebreaker as earlier governments did with disruptive strikes in the past. We cannot be held to ransom by senior bank managers.

"At present the Government is both confused and weak in its approach to the banks. It has got to set a very clear sense of direction since it is now the principle shareholder in much of the banking system, and then insist that the priority is maintained for keeping the British economy going through continued lending to sound businesses."

John Redwood, chair of the Tories' economic competitiveness commission, said the taxpayer could not afford to own more bank shares, and should not be expected to take more risk.

"The banks may lose a lot more money before this crisis is resolved," he said. "They are currently in a vicious circle. They cannot afford to lend more, so they are forced to undermine the companies they do lend to, as these companies are starved of additional working capital by the banks, and face less and less revenue from customers who cannot get access to new loans or do not seek new loans as they fear for their jobs.

"It is possible RBS (Royal Bank of Scotland) has already lost the £20 billion the taxpayer was made to put in recently. When you go to the aid of a bank with a £2 trillion balance sheet you need a very long pocket. The last lot of share subscriptions did not lead to more lending to the corporate sector – just to lending it back to the Government. This is the worst possible option. It is so dangerous that the Government must rule it out."