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7 October 2008

Banks go from bad to worse as crisis deepens

For the past 3 weeks, it has been non-stop bad news for banks not only in this country but around the world. Lehman Brothers and Washington Mutual in the USA were allowed to go bust; others were taken over or merged with larger banks. Governments piled in with various guarantees and support. The US government has promised the staggering sum of $700 billion to support the system. In the UK, Bradford and Bingley has essentially gone bust with its deposits being handed over to Abbey's owners, Santander of Spain, and the dodgy assets acquired by the government. Halifax Bank of Scotland (HBOS) is also bust to all intents and purposes; the government is hoping that Lloyds will absorb HBOS, but their shareholders may think better of it and vote against the deal, at which time, the taxpayer will once again have to bail out a bank.

The Irish government has said that all depositers' money in Irish banks is safe; as has the Icelandic government. Since the population of Iceland is about 320,000, about the same size as Hull, and the government is guaranteeing tens, if not hundreds, of billions of pounds, I am not sure that I would too much faith in that guarantee!!

Today, Royal Bank of Scotland (RBS/NatWest) shares were down 39% on the day. They could be the next domino to fall.

It would now seem to be very likely that the whole banking system in the UK may end up essentially nationalised. What irony after we have all been told for the past 20 years that nationalisation was a failed policy and that free, unfettered markets would make us all rich. They have certainly made a small number of greedy City people astonishingly rich; but it looks like the rest of us will now have to pick up the pieces.

What does this all mean for the bank charges campaign? Who knows? All of the claims that I have in the court system may end up having to be settled by HM Government.

Published and promoted by Bob Egerton, TR2 4RS