We learn today that LLoyds TSB has to pay a large fine to the US authorities for its conduct over money transfers and sanctions. If this were private shareholder money it would be a matter for them to hammer out with their Directors. Now this bank has taken substantial sums from taxpayers who are co-owners, it becomes a matter for all of us.
I am not sure this was the kind of use for the cash the government had in mind when it put up new share capital. Did the government know this action was pending? Did they discover anything before they bought in, or did they studiously refuse to do any due diligence as they implied at the time? When I called for them to do proper due diligence, I had in mind not just the possibility that some of the loan books needed writing down more, but also the issue of any outstanding legal suits, claims, and other unusual liabilities.
I heard on the radio that the bank had made some provision for this potential loss, but even so the cash they need to pay the fine in one sense comes from the taxpayer. This is not the way I want my taxpayer pounds to be spent. We need to know from the government what questions they will be asking their bank, and what management action will follow over the people involved in creating and supervising the problem.