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.
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.