Charles also points out how difficult, pace Kevin Maguire, nationalising the banks would be:
“Even with his abiding faith in the beneficence of government and of himself, Mr Brown must know that nationalisation of the banks would be a nightmare. Either it would require compensation (£125 billion on the latest book value of the banks concerned), which would cause taxpayer outrage, or expropriation, which might make markets lose all faith in this Government. He must realise that he would have to adjudicate, impossibly, between the needs of banks to restore order in their balance sheets and “national needs” such as lending to small businesses, or, more basely, pouring money into marginal constituencies. He would need legislation, and he would face court cases (as is going on in relation to Northern Rock). There would be endless rows with other banks and the European Commission and the World Trade Organisation about competition. He would collapse overseas bank business and undermine a once-huge tax base.”
There is a huge danger over the next few months that an increasingly desperate Prime Minister will take huge risks with the nation’s finances on the fly. Already those involved in these decisions are worried about the lack of due diligence that is being done.