Subordinated debt, however, takes a higher priority than equity so this is a good role for government.

It also prevents having to nationalise the banks which we really don't want to happen.

Most responses here still show the same need to blame the government for all problems. Damn the government for not raising interest rates to control us in our desire to indulge ourselves. Now if they had done so I wonder if any blog responses would have lauded them.

What is being overlooked is that there are solvent banks. Moreover even the insolvent ones have realizable assets. The notion that those who got into the mess are the best to get out it is absurd. The solvent banks illustrate the fact that is was possible to run a bank properly over the last decade.

The other point is that this crisis does not have its origins in the capitalism: just the opposite. the Clinton administration actually fostered the provision of mortgages to lower socioeconomic groups who, normally, would never have obtained loans. The Uk government and regulators stood idly by while mortgages of over 100% were offered and 6 times income.

The UK base rate was kept artificially low as a result of having property prices excluded from the inflation target. This is now working against reductions as the myopic Governor of the Bank of England has stuck to the narrow targeting.

As to the financial sector regulation is needed to ensure competition. We have had a state of oligopoly, which is going to be made worse by the "sweet heart" takeovers. Adam Smith never advocated "free for all". We need to have, not detailed regulation, as supplied by the FSA, top level regulation to preserve competition and ensure separation of functions.

Finally there is no crisis so bad that governments cannot make it worse. We will live to rue the day of the days of the packages in the UK and USA.

So, ID Cards still haven't been abandoned, the NHS Plan for IT still has not had a merciful stake through its heart, and lo and behold but the morons are planning a mega-database of communications, which will do little save for promoting the use of strong encryption.

Similarly their insanely-measured poverty targets are still having money thrown at them in the vain hope of finding a solution, and the low-paid and benefit-dependent classes are still subject to iniquitous rates of marginal taxation.

How's about these silly buggers in Government ceasing playing fast and loose with taxpayers' money, and putting their own house in order first?

And I do not think the Conservatives would in office have done much different.

It should remove the threat to business by offering taxpayer loans to business in order to keep them liquid and save jobs.

Russia did this a fortnight ago.

Limit the affects of banks 'power' on our society by making alternative funding available at interest rates and loan payments which are affordable and geared to the business, and put people first by saving jobs.
Our manufacturing base and infrastructure must be protected.

The banking sector should revitalise itself by raising more capital through the sale of shares.

No one is seeing the obvious problem by the USA's $250,000 deposit guarantee which will inevitably mean some European depositors will be moving money to the U.S. So savings rates here must either be improved or tax on the returns must be lowered to make saving here more beneficial.

Forget the free market because the only one's paying for it are British homeowners as the whole of Europe has enjoyed the ride on the British public's personal indebtedness.

Our home equity has driven Europe.
Our balance of payments deficit proves we buy more from Europe than they do from us, and its clear that without a housing boom in Britain enabling tens of thousands of British homeowners to take money from their homes, many European house builders would likely not be in business.
Same with European car manufacturers.

It is OUR debt that's keeping the "free market economy" on the road and it's time to put a stop stop it.