Not long after we get confirmation that all £20 billion taxpayers put into RBS has been lost in the write offs and trading losses at the end of last year, we hear that HBOS has lost £10 billion. There’s not much left then of the £37 billion we put in so recently to the three banks.
It shows the expensive folly of setting a price and promising the money in a hurry. They then had to wait some weeks before they could actually pay the money in, whilst the documents were drawn up and shareholders agreed. Why not announce the intention to put money in, and then use the following time to get a new valuation of the assets and agreement over a price that was better for taxpayers?
Better still, why not offer cash and short term loans against security but not buy equity? These three banks are too big for taxpayer comfort, and the losses are eye watering. Why didn’t the government realise this? Why didn’t it protect taxpayers more? Never has there been so little pleasure for the expenditure of so much public money. Now we all have to work harder to pay those debts off, as it is all borrowed money they have lost.
This is an amended post. The media first reported a loss of a mere £8.5 billion, but the small print reveals it is £10 billion. No wonder departments in the government now have become even more casual about their budgets when huge numbers swing around in bank loan books owned by the state. This banking crisis is creating an unreal world in public finance. Labour’s dream of limitless spending will turn into a nightmare of debt.