Reverse Clause 4 moment?

So, we own the banks then, at least in part, and in the in the case of RBS we're the majority shareholder. The Government is, understandably, to some extent downplaying the significance of part-nationalisation of the banking sector. But let's not lose sight of the enormous failure of private sector management that this represents.

Already the Government has used its ownership to bring up some changes in behaviour. No cash bonuses this year, a shift to share-based bonuses in future (I'm not sure this is the right answer actually, but anyway...), and Pesto says that the banks also have to maintain 2007 levels of lending to individuals and small businesses (nice idea, but how does that work?). State direction of what the banks can and can't do may yet go further.

In political terms it's way too early to tell what the impact of these events will be. Certainly opinion within the Labour party is, rightly or wrongly, turning Left. And - so far - the crisis has brought the party back into line behind Brown and even reinvigorated some disillusioned supporters. (As a side point personally I think the whole crisis has also exposed George Osborne as a real lightweight and I'd like to see us direct a lot more fire in his direction.)

More broadly the obvious failure in the City is going to bring lots of ideas that had been off limits back into play. It may be that all that occurs as a result of all this is a minor tweak, and then the reconstruction of the financial system pretty much as it was. But there is a temporary opportunity to push for something a bit different (if you have any ideas as to what this 'a bit different system' is). If you don't ask you don't get.

PS. Here is the HMT statement. Here's what the Govt gets to do -

As part of its investment, the Government has agreed with the banks supported by the recapitalisation scheme a range of commitments covering:

maintaining, over the next three years, the availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels;

support for schemes to help people struggling with mortgage payments to stay in their homes, and to support the expansion of financial capability initiatives;

remuneration of senior executives - both for 2008 (when the Government expects no cash bonuses to be paid to board members) and for remuneration policy going forward (where incentive schemes will be reviewed and linked to long-term value creation, taking account of risk; and restricting the potential for "rewards for failure");

the right for the Government to agree with boards the appointment of new independent non-executive directors; and

dividend policy.