And Northern Rock:
Taxpayers have every reason to be angry: with the private-sector managers and directors who behaved appallingly and have never been brought to book; the company auditors who passed last year\’s accounts without spotting the big holes in the company books; the regulators (the FSA) who also gave the Northern Rock a clean bill of health; and the government, which was at best naive and at worst dishonest when it claimed to have secured the government\’s loans. I could also add to the charge list the rest of the mortgage lenders – some of whom were almost as reckless as Northern Rock and who are now trying to persuade the government to provide loan guarantees or stamp duty relief to revive their battered businesses.
I agree that my memory isn\’t quite what it was. But shouldn\’t the taxpayers also be angry at one Vince Cable, one Vince Cable who was so highly vocal about the way in which the Northern Rock problem could only be solved by nationalisation?
Or is my memory failing me?
It has taken the government more than three months to get where it ought to be to safeguard the taxpayers\’ interest in Northern Rock. Public ownership is preferable to a bad private sale which leaves the risks and liabilities with the government and the profits with the private bidder.
It was clear from the outset that there was no practical alternative to public ownership once the government had committed £50 billion in loans and guarantees. I am tempted to say that I told you so; but the issue is too important for that. I will simply say that if Goldman Sachs present the Chancellor with a large invoice for financial advice he should reply that the best advice he had was available free of charge from the Liberal Democrats.
My own preferred option, though I do not advocate it for any ideological reason, is to take the bank into public ownership with a view to selling it when financial markets permit a satisfactory sale. It would of course be necessary to install professional managers. It is premature to say whether the bank has a good long-term future; the answer depends on a close examination of the loan book. Nationalisation keeps open a wide range of options. Since the taxpayer has taken all the risks involved in rescuing the bank, we should also participate in any gain from any disposal.
Hmm…these online archives are wonderful things, are they not?