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RealityLicks -> RE: I always knew I'd be rich one day... (2/18/2008 4:23:33 PM)
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I don't think there's any sense of caginess about getting the money back. A loan has been made and it must be paid back with interest and teh business plan will show that. Further, while the guarantee is no doubt a huge sum we should remember, it is just that - a guarantee, no more. Having a govt back you never hurt any bank.
The Tories are all saying it should have been nationalised earlier but we all know, if HM Gov had acted earlier, they would've been against it. The only real mistake I can see was listening to that bastard Branson, who wanted the best of all possible worlds. He would have been popular and a great lightning rod for any future mishaps but his offer was below even the latest price and yet still demanded large guarantees.
There may be a case to answer in Europe with regard to state protection but look at where we are: the only ones moaning are the small shareholders and the fundies, both of whom knew from morning that they were investing in a hugely aggressive bank that took big risks. Their greed is being paid out.
If they had run the bank down, they would still have had to guarantee deposits (beyond Govt liability) and possibly increased the likelihood of having to do so. If they had let it fail, who would take up the slack with those sub-prime mortgages? The same banks who are complaining its an unfair advantage? No way: they could give a fuck who loses their home.
The Govt had no choice but to wait and see if the private sector were going to cover their own avarice and find a solution offering a proper deal. There's also the prospect that if it went down, the lurking domino effect (because all of the banks have significant sub-prime exposure) would kick in. That would have massive implications across Europe (which the watchdogs there know) and especially America, because UK banks traditionally invest very heavily there.
My guess is that the contacts Brown has in banking - and there are many worldwide - will make an offer for the bank when and if the current uncertainty recedes. Its not great but its the best deal availbale. Lenders are protected. Most of the jobs will be, too. Shareholders can sit tight and watch the price climb. This is just a way-station and not a terrible solution, considering the alternatives. Meanwhile, they will be listening to offers; there is no desire to hang onto the bank. Its just another outcome of deregulation, for which we can thank Ken Clarke and a rampant greed for profit in the very financial sector which now cries foul.
Meanwhile, there'll be queues outside there tomorrow to put all the money back in.
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