The mood towards the bailed-out banks turns on a sixpence. In the space of the past fortnight, the government has floated the idea of a giveaway of shares in Royal Bank of Scotland, ruled out a full nationalisation of the Edinburgh-based bank, and lowered the hurdle price at which the selloffs could begin of RBS and Lloyds Banking Group.
Just as it looked as if the debate had turned towards how to privatise RBS and Lloyds rather than plough more taxpayer money into them – an idea favoured by the business secretary, Vince Cable, and more recently Lord Lawson – Sir Mervyn King has made it clear he has other ideas.
The Bank of England governor told the banking commission it was a "nonsense" that the banks could be run at "arm's length" from the Treasury, through UK Financial Investments. King backs full nationalisation, which would allow RBS to be split into two: into a "bad bank" of troublesome loans and "good bank" that can make fresh loans to cash-strapped businesses.
It is a good idea, but one that has come five years too late.
The chancellor, George Osborne, thought he had shut down the debate last week when he ruled out full nationalisation and set 61p as the surprisingly low selloff price for Lloyds. The City thought he had been aiming for 73p.
King, now in his last three months as governor, should have shouted louder in October 2008 for full nationalisation, or at any point since. In making a noise just as he prepares to leave to office, he looks only as though he is trying to cause problems – not solve them.
