I was on the Guardian's blog late last night saying:
In the single biggest spend by any chancellor of the exchequer ever, Alistair Darling has committed up to £500bn to saving the UK's banks from a crisis of their own making. This level of commitment is essential - yet Alistair Darling's plan is fundamentally flawed.
Listening to Darling speak, it would be easy to think the investment he is making is in a modest portfolio of shares for his personal pension fund from which he hopes to make a little dividend income and a long-term capital gain. It isn't. It's enough to have purchased Lloyds TSBH, RBS, Barclays and HBOS outright last night.
That means the investment is enough to let him demand a paradigm shift in the way in which British financial services are managed forever. It's a shift most commentators realise is needed. Anglo-Saxon capitalism has failed. Our "light touch" regulation has been a disaster. The directors of our banks have been reckless. The shareholders - in effect, our pension funds - have lost enormously, and so, now, will all taxpayers. The investment in equity alone is almost half of NHS annual spending. There will be no government spending programme, whether it be health, education, law and order or the environment that will not be adversely affected by this commitment of funds for years to come.
Despite that, Alistair Darling is asking for almost nothing in exchange, just some modest pay caps and restraint on dividends: dividends the banks will not be able to pay in any case, since they are, for all practical purposes, bust right now.
As a result, Darling is missing the chance to take control of our banks: to demand they repatriate profits to the UK from those locations where they have hidden them offshore and out of his clutches in years gone by. He is not sacking those most responsible for creating the mess when he should. He is not forcing the banks to close down their massive speculative activities and to turn instead to investing in the real capacity of the UK to make a living for itself. He's not requiring that immediate action be taken to protect investors or mortgage holders who are in trouble: the people who will be paying for this bail-out. He's not asking the banks to float off their profitable activities to pay back his cash at the first possible opportunity as any commercial investor would. He's not putting his people in charge to ensure that these banks comply with the requirements of regulation, disclosure and accountability henceforth. Unbelievably, he's simply gifting more taxpayers' money than has ever been spent in a single day to those who have proven their unlimited capacity to lose it.
This will be a disaster for us all - and all because he and the Treasury are still frightened of bankers. It's a fear they need to be put behind them. These people are fallible. So is the system they have promoted. It's time Darling placed his faith in the awkward squad: those who have stood outside the system and criticised it, even when all around said it was delivering wealth. It is they who saw through the illusion. It is they who should now be sitting on the boards of these banks.
Now, it is the job of the House of Commons to make him change his mind about this. The House of Representatives demanded that Paulson be held to account. Can our MPs do the same for Darling? It is their democratic duty to do so.