Why is New Labour hurling yet more of our
money at the banks? The London ‘Metro’
screams that the latest deal is the “World’s biggest bank bailout.” It’s
costing every household in Britain £2,000, on top of all the money wasted last
time round
This plan costs nearly £40bn, more than the
£37bn the government pumped in to the banks a year ago. £40bn would build more
than 1,500 schools, but the banks, we are told, are more important than our
kids’ future. Brown boasted last year that he had ‘saved the world.’ Not quite,
it seems. Now the banks are in further financial difficulties and back with
their begging bowls.
The government is preparing to privatise
Northern Rock and to withdraw its controlling stake in RBS and substantial
holding in Lloyds over time. This is the opposite of what they should have
done. The banks failed, and in failing destroyed the livelihoods of millions of
workers. The Labour government should have implemented the socialist
nationalisation of the entire financial sector.
This would have been the right thing to do,
but it would have sent alarm bells out to the rest of big business, who New
Labour are ever anxious to grovel to. So what have they done instead? They have
just given Northern Rock £8bn of our money and now propose to put £33.5bn more
into RBS and £5.7bn into Lloyds.
Let’s take Northern Rock first. Famous for
financial recklessness and 125% mortgages the privately owned Rock was wildly
driven into the ground and then taken into public ownership in the face of
inevitable collapse in February 2008. As a so-called nationalised bank it has
adopted a harsh policy towards borrowers. For instance it repossesses homes and
makes people homeless four times as often as other banks do. The government,
which owns the bank outright, just lets them get on with it. Darling’s plan is
to divide the Rock into a ‘good’ bank with all the safe loans on its books, and
a ‘bad’ bank with all the toxic stuff in its portfolio. The good bank will be
privatised, sold for a song, while we taxpayers will get lumbered with the bad
bank and its rotten debts.
The question at the top of Dan Roberts’ column in the ‘Guardian’ – Why do they keep bankrolling Rock?” – can only be answered
by New Labour’s desperation to privatise it at all costs.Roberts was particularly
scathing about this procedure (28.10.09): "I thought I was having a hallucination myself when I first saw
the announcement this morning, but no, this is exactly what it seems: the
government is proposing to invest yet more of our money in the infamously
over-extended
to allow it to lend guess what? – yes, more mortgages.” The house
price bubble has burst and brought the banks low. The government’s answer? –
Blow the bubble back up!
Then there’s RBS. The
bank would not now exist without the government’s bailout last year. It’s still
in intensive care, and we pay the ‘hospital bills,’ called the Government Asset Protection Scheme. Now Mr. Darling is pumping billions more of our money in as a
transfusion. That’s very generous of
him. Since nobody else wants to put money into RBS the government share in the
bank has gone up from 70% to 84%. Let’s not forget that Fred ‘the shred’
Goodwin, who destroyed the 300 year old Royal Bank of Scotland with his greed
and misjudgment, will get a pension worth £1 million a year for the rest of his
life, courtesy of New Labour. That’s the reward for failure!
Lloyds is the most disgraceful case of
all. Darling has allowed the bank to make a rights issue of shares, that is to
give the option to existing shareholders to buy more bank shares Since it’s not
in such a plight as RBS, the government now ‘only’ owns 43% of the shares,
despite the latest handout. This means that Lloyds escapes from the Government
Asset Protection Scheme (GAPS) that, at least in principle, gives the
government some sort of control over the level of bonuses they pay out and the
extent of lending they make. Now they can really party! Dan Roberts (30.10.09)
explains that Lloyds’ behavior is, “like taking out house insurance during a
fire, refusing to pay for it once the fire is out and sending the insurance
company a bill for a new sprinkler system.” And can anyone doubt that, should
Lloyds screw up again, New Labour would be on hand to throw still more of our
money at the bank?
The government’s fig leaf for this
massive surrender of our money to the banks is an agreement with the financial
institutions to curb bonuses for the time being. We agree with Vince Cable (who
has lived off the fact that he half-predicted the crisis in advance) who asked,
“Why is it a great discipline and hardship to ask bankers to wait three years for
their next Ferrari?”
The
ultimate aim of the government and the EU is to make the existing financial
behemoths divest themselves of some of their branches and create new banking
groups in the high street ‘to increase competition.’ Competition among banks
has always been a farce. Whichever bank we use, we’re all treated like dirt for
the privilege of lending them our money. And, as Phillip Inman explains
(Guardian 02.11.09): “A rebranded high street with several new banks will be
difficult to achieve without taxpayers losing billions of pounds.” But what’s a
few billion more quid to Brown and Darling? After all, it’s not their money.
Lloyds
management are celebrating the escape from the embrace of GAPS as ‘independence
day.’ Paul Mumford from Cavendish Asset Management claims that if Lloyds hadn’t
escaped from GAPS then that would have left, “taxpayers with the upside of
recovery, rather than shareholders.” There you have it. That would never do!
Taxpayers,
ordinary working class people, are regarded as mugs who save the banks’ sorry
livelihoods and are then expected to shovel ever more money into the maw of the
rich and the private sector. Let’s not put up with this any longer. The case
for socialist nationalisation of the banks is overwhelming.
