Like my colleague Stephen Glenn, I too found Alex Neil's comments about seeking an alternative to the Lloyds-TSB deal for HBOS to be extraordinary.
Stephen's comments are well made and I would only add that yet again the Gnats are more concerned with largely symbolic issues rather than the realities of financial regulation and ownership. Let's face it: as a publicly-quoted company, HBOS's ownership hasn't been in exclusively Scottish hands for some time. Why should a collection of the Scottish banking great and good necessarily be a better option to run HBOS than Lloyds-TSB? There's no particular reason to think it would be, especially as HBOS's chairman says that the Lloyds deal is the only one in town.
If I were being uncharitable, I could point out a marked contrast between the Gnats' attitudes towards an English-based firm wanting to take over a Scottish institution and their rolling over in the face of Donald Trump's blandishments. The difference wouldn't be anything to do with anti-English prejudice, would it?
And we also need to be clear about why the Lloyds-TSB takeover makes sense. HBOS got itself into the position it did as a result of irresponsible lending, which made it more vulnerable when things turned bad. In contrast, L-TSB had far less involvement in the credit mania, making it an ideal partner to ride to the rescue of HBOS.
But the whole issue does raise wider questions than just the future of one particular bank. In particular, would Scotland be in a position to carry out effective financial regulation if it ever became independent, as favoured by Alex Neil and Alex Salmond?
I suspect not. For a start, an independent Scotland would need to set up its own central bank, its own FSA, its own Competition Commission, its own Stock Exchange and so on, all of which would come at a cost.
And even if the cost issue weren't there, would an independent Scotland really have the clout to act if, at some point in the future, the Royal Bank of Scotland wanted to take over the Clydesdale Bank, for instance? I doubt it.
The current crisis does show the need for effective regulation of the financial sector, but I think it shows why that regulation should be international in nature. Independence would not only be ineffective in dealing with the issue, it would also be potentially damaging.
The Second Referendum, or, Obliquity
1 week ago