So, another day, and another bailout.
The Government now owns a majority share in the Lloyds Banking Group, controlling 65%, up from 43%, meaning that the taxpayer will now be insuring toxic loans worth £260 billion.
The reaction put out by shadow Chancellor, George Osborne, attacking the Government:
"This massive second bail out is proof that Gordon Brown’s first bail out failed, and the real test of it will be if credit starts flowing again in our economy. It is also clear that the takeover of HBOS, which the Prime Minister helped orchestrate, is responsible for dragging Lloyds into majority public ownership."
In a second statement released at 2.10pm, he added:
“For the size of the British economy we have now spent more than any other country on bailing out our banks and there’s precious little to show for it. If this second bail out of Lloyds is going to be any more successful that the first, then we have to see credit flowing in our economy again and that will be the real test.
“On Monday we will be demanding a full Parliamentary statement from the Chancellor of the Exchequer on both this latest bank bailout and the announcement on quantitative easing because it is shocking that the Government has not been prepared to subject either of these huge decisions to proper Parliamentary scrutiny. The taxpayer deserves better.”
John Redwood, on his blog, describes it as "far too big a risk". He continues:
"We need to control the risks, sell the foreign assets, wind up the
casino banks within these banks, take the losses and create a more
stable and smaller footing from which they can trade sensibly. Doing it
Mr Brown’s way means the taxpayer has to foot the bill. What have we
done to deserve such brutal treatment? We need the government to get a grip on these wayward banks. They do
indeed need to be “cleaned up” and cleared out”. So why is there no
statement of how this will be done, how much it will cost, how long it
will take and when it will start? Why can’t public and Parliament see
the business plan, as we are paying dearly for it."