George Osborne has written for today’s London Evening Standard
(not yet online). Here are the key quotes:
This taxpayer-funded bailout became necessary: "Millions of Londoners earning salaries of £15,000 or £25,000 are using their tax money to bail out the bankers who were paid ten times or even a hundred times that. They had to; because if the banking system fails then everything fails."
Labour are wrong to attempt to profit politically from all of this: "To regard today as a triumph, as some in government seem to do, is bizarre. And it misjudges the public mood. For this is no triumph. It is a necessary but desperate last ditch attempt to prevent catastrophe."
Other nations’ regulatory systems did not fail as badly: "Our banks could and should have behaved more responsibly and taken fewer risks. Indeed, those that did, like HSBC, have been rewarded for their prudence by emerging relatively unscathed. Our regulators could and should have spotted the risky bets many of the banks were taking and stopped them. That’s what some bank regulators around the world did, such as in Spain; but not here in Britain."
Brown’s Britain is less prepared for these events than other nations: "Our government could and should have used the good years of global growth to set aside money for a rain day. That’s what many governments did by building up budget surpluses, such as they did in Australia and Sweden; but in Britain, Gordon Brown racked up the biggest budget deficit in the western world."
Brown’s Britain is more fragile than Bush’s America: "When I hear Gordon Brown claim that all the problems we face ‘came from America’ and the expensive solutions devised around the world were ‘made in Britain’, it makes me wonder whether he is prepared to learn anything from his own mistakes. It was in Britain not America where families borrowed more than any in the world, and where we became so dependent on the success of financial services. It was in Britain nor America that a government based its entire economic policy on the delusional belief that boom and bust had been abolished."
Taxpayers must benefit before bank executives if the recapitalisation works: "I want to make sure that everything is being done to keep the risk to the taxpayer to the minimum possible. That means asking existing shareholders first to stump up the cash. It means ensuring that taxpayer benefits if the value of the banks increase as a result of this deal. And I will want to know that the money we are providing is not going into the bonus packages of the bankers who helped get us into this mess, let alone the golden handshakes of those executives who now quit."
We now need help for the real economy: "Conservative plans to freeze council tax, abandon the new car tax, keep businesses facing bankruptcy afloat and help low income families with heating bills could all be put in place in the coming months."
George Osborne’s concluding words (emphasis added):
"I can promise you Prime Minister, we’ll help you with the emergency action to save the economy but we will hold you to account for your failures. You presided over the biggest economic disaster of our lifetime and we will not let you forget it."