Insights from the UK and beyond
Don’t turn back into Stalin, Gordon
But many worried about how the government will now use its huge stakes in the banks and several had words of warning.
“Gone is Mr Bean but don’t turn into Stalin,” said the Daily Mail, noting how the financial crisis has transformed Brown’s political fortunes from the days when Lib Dem Deputy Leader Vince Cable launched his infamous jibe in the Commons.
“It is imperative that ministers keep well out of the day-to-day running of the banks they now control,” the paper said. “But can they be trusted?”
“Will they find it impossible to resist forcing banks to lend unwisely — for example to ailing industries in Labour marginals?”
Some papers noted that Brown has already talked of making banks restore their mortgage lending to 2007 levels, a rate of lending, some suggested, that might reinflate the housing bubble.
“The prime Minister is now the ultimate paymaster of institutions that are responsible for a substantial share of British mortgages and deposits,” said The Times. “The measure of the rescue will not just be a short-term restoration of confidence but evidence that the banks’ behaviour is not perverted or politicised in years to come.”
The Sun added its own warning, saying: “The banks cannot power the economy back to life with the dead hand of governmental red tape bogging them down.”
Yet change there must be. The papers were united in their applause for the conditions attached to the package that aim to bring to an end the era of fat-cattery, such as no cash bonuses for two years and a return to more prudent lending.
Several asked why the bank directors who had let the crisis build up for so long were getting off so relatively lightly and some demanded reforms to the system of bank regulation itself.
The Financial Services Authority has been found wanting, said the Daily Telegraph. ”As was the case before 1997, the Bank of England should be re-established as the banking regulator,” it added. “The Bank of England, too, should seek to boost its expertise at the top: it needs a governor with hands-on experience of banking.”
The Guardian borrowed a title from Tom Wolfe when it called the banking meltdown “Bonfire of the Certainties.” It said what needed to be changed was not any particular type of financial instrument but the behaviour of bankers themselves.
“Now that the British public has an interest in the banking industry, it has a right to define how banks can best serve its interest,” it said.
A lone voice in the debate over whether government should interfere in the running of banks, the left-leaning paper added: “Ministers should direct banks to lend on preferential terms to projects of vital public interest, such as energy infrastructure.”