Wednesday, September 17, 2008

If HBOS Goes Down...

In truth, nobody really knows whether the slump in HBOS's share price is simply caused by an unwarranted speculative attack by Kaletsky's short sellers, or whether it's more serious.

What we do know is that HBOS has big exposure to the housing market and they've been aggressive lenders in the buy-to-let market. Plus, they've developed a reliance on the very wholesale funding that triggered the Crock collapse.

So what to do?

First, the government has to act. This share slide is becoming self-fulfilling. Frightened depositors (Mr and Mrs T among them) are probably already forming Crock-style pavement queues. We need a clear statement that depositors will be protected, just as they already are with the Crock.

Second, the government must make absolutely sure that any taxpayer support is put in above shareholders. Hank has shown the way.

AH... WAIT...

According to BBC R5 Live, Lloyds have galloped to the rescue... they are to take over HBOS... hurrah!

Presumably Lloyds have demanded - and this time been given - some kind of taxpayer guarantee on the HBOS assets. So we'd better be getting something back on the other side...

Let's pause here while we find out...

Meanwhile... WTF DO WE STILL NOT HAVE DARLING'S SPECIAL BANK RESOLUTION REGIME? Anyone would think the government were no longer at the controls...

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