I appreciated John Kay’s article in the FT this morning, of only because I agree with much of it. He says:
Nationalised financial institutions have often been badly run businesses which served neither their owners nor their customers well. But recent experience has shown that privately owned financial institutions have often been badly run businesses which served neither their owners nor their customers well.
Then he adds:
The British government has set up an organisation called UK Financial Investments. The intention is that UKFI should act as a relatively passive shareholder in these businesses ….rather like … a private equity house.
But this answer is not adequate. … The government owns businesses such as Royal Mail and the Nuclear Decommissioning Authority for a reason. The rationale of public ownership is that there is a strong public interest, not just in the financial returns from these activities, but in what these businesses do and how they operate. The government does not, cannot and should not have the same kind of relationship with the companies it owns as a private equity owner.
Quite right.
So as he says:
The government does recapitalise banks because there is a vital public interest in the continued operation of the payment system and the availability of finance to small- and medium-size businesses. So the primary purpose of the investment is not to ensure that the taxpayer gets its money back - although that issue should certainly not be neglected - but to ensure that these ordinary banking functions operate well.
We taxpayers have rescued these financial institutions for a specific purpose, and we should use our stakes in them to insist that this purpose is fulfilled.
I agree.
5 Comments
Richard,
Quite right:
to ensure that these ordinary banking functions operate well
If the noxious hand of governmentalism is at play this is what should be ensured. Not using the equity position as an “opportunity” to use these firms as a socialistic laboratory for governmentalist experimentation.
Get in, get out and above all else, do no harm.
The government has (unfortunately) appointed to do this task
Why do they become noxious when employed by the government?
Ownership has so little meaning: and people really do not change as much as you suggest
What is your point?
Richard
Richard,
The point is that this is not the time for a “shock doctrine” approach by the hard left governmentalists (and their adherents/devotees) in “transforming” these firms which have found themselves in the “helpful” hands of government.
Georges
So you’d rather they went bust then and the financial system collapsed around us?
What sort of ’shock doctrine’ is that?
Richard
Richard,
One issue is being discussed on this thread: governmentalists using the “opportunity” of tax-payer monies being inserted into private firms as an excuse to also insert socialistic “ideas” into the mix as well, in effect using these firms as testing grounds for all sorts of hard left crack theories.
Comment # 4 now introduces a different argument into the thread as a way to somehow turn the conversation. Pick a topic and stick with it and the responses will flow.
A hint as to an answer for # 4 above, yes ….. petard hoisting can be a positive thing.
Going back to the original content of the post and thread, what did Barclay’s do right in order to avoid having to suckle off the tax-payer?
Why not emulate and explore what was done correctly (in this case) vs. dragging all down to the lowest denominator?
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