State-owned banks.

Both Lloyds TSB and the Royal Bank of Scotland ( RBS) failed in the private sector and had to be rescued by  massive injections of  government money..  So we, the public, now own 39% of Lloyds TSB and 81% of  RBS.  Astonishingly our government, rather than planning to do something constructive with the two banks we now, serendipitously, own, intend  to return them to the private sector in which they failed.*

 Here are two suggestions:

•  Our 39% holding in Lloyds TSB could well be used to introduce elements of commercial democracy, with  employee, customer and community representation on the board, and a remit to widen the goals of the bank beyond short-term shareholder value and profit maximisation.

•  RBS could be split into a number of regional banks charged with the priority of providing low cost investment capital to small and medium sized enterprises (SMEs) in their areas.

We understand that Lloyds TSB is ripe for re-privatisation in the very near future.  (Presumably George Osborne is anxious to get hold of some "one off" income in order to make his borrowing figures look less dismal), but the sell-off of RBS  may be delayed for some time.

Since in this life it is not often that we can both have our cake and eat it, I hope that Liberal Democrats in government have agreed to a quick sell off of Lloyds-TSB as a quid pro quo  for a  a constructive form of continued public ownership for RBS, the details of which they are working on at this very moment.

*A fascinating article by John Lanchester in the latest edition of the London Review of Books (Volume 35 number 13, dated 4th July, 2013) recapitulates the failures, and indeed the scndals, in the bonking system over the past decade as follows:

1. Trading Floor Disasters: trading in credit default swaps and other bundles which were not really understood - eg the so-called London Whale of 2012 which cost JPMorgan  Chase  $6.2 billion
2. Toxic (sub prime, self assessed "liar") loans - prime cause of the failure of the merger of Halifax (former building society) with the Bank of Scotland, and then the failure of Lloyds TSB which, with government encouragement, took over HBOS.
3. The rigging of the LIBOR.
4. Money laundering - facilitating sanctions breaking and drug dealing.
5. The misselling of Payment Protection Insurance.(PPI)

Lanchester acknowledges that the first four can be explained if not excused by a "that's what testosterone-fired dealers do" if they are insufficiently supervised and regulated.  The fifth, PPI, is in his view the most serious as it represents an organised and deliberate defrauding of the banks' own customers by selling them insurances which would not be applicable to them, (essentially , to self-employed people when the "small print" specifically sated that they would not be covered in the event of losing their incomes and being unable to meet their loan repayments.)