What do we want of our banks? In particular, what do we want of those banks in receipt of taxpayer funding? Should they be making a profit? Yes of course, so that they can be sold off and the tax payer reimbursed as soon as possible. Will the threat of punitive taxation make them more or less likely to be profitable? err, can we get back to you on that one... What about Alistair Darling's leaked Budget proposal to force banks to provide accounts for the homeless and 'financially excluded'? Socially just perhaps - but good for the balance sheet? Weren't there some state-owned US mortgage lenders just a year or so ago who were instructed to be more financially inclusive...? And today we learn that the Government is so unhappy with the banks' failure to make enough loans to business that it has set higher targets - notwithstanding reports of low demand for lending due to lack of business confidence.
I guess the banks could achieve their new targets by lending to higher risk customers on lower security and easier terms... if the loans go bad, well they can always repackage them and sell them on.... hang on a minute....haven't we been here before?
