A BOM correspondent in the City is fed up with being blamed for everything, and demands we finger the real culprits. Styling himself Disgusted of T Wells, he writes:
"Why is it that few people have pointed out that we do not have a British banking crisis? We have a Scottish banking crisis.
RBS and Bank of Scotland behaved so recklessly and incompetently that they would have failed with or without a crisis that started in America. They wanted to prove that they were as good as the London banks. They were not.
Lloyds has failed only because it took over Bank of Scotland. Lloyds assumed, without the time for proper due diligence, that BoS’ loanbook could not be as bad as it is (and remember that 80% of the bad debts announced by HBOS were in the BoS part, not the old Halifax)."
And just to be clear about the numbers, including the £585bn of toxic debt guarantees, we have now pumped in getting on for £0.75 trillion to shore up RBS and Lloyds/HBOS - or about half our annual GDP.
Meanwhile, despite all the turbulence, our two big City-based banks - HSBC and Barclays - are so far managing without direct taxpayer injections.
There was a time when your Scottish bank manager was a model of Presbyterian rectitude and prudence. Tyler used to know one who fitted that bill exactly, and was immensely proud of working for the Royal Bank, Drummonds Branch.
But something very bad happened up in Edinburgh over the last decade. A bunch of high rolling chancers took the controls and thought they could take over the world. As Dominic Lawson put it when he wrote on this last month:
"Both Scottish banks were much smaller than the English financial institution [NatWest] they wanted to buy, and both were openly dismissive of the fuddy-duddy "Captain Mainwaring" London management of NatWest who did not understand the modern style of banking, which believed in a much more 'dynamic' use of capital.
In the end... Fred the Shred... took control of NatWest. The deal, in terms of its ability to generate maximum income from a relatively narrow capital base, was the model for the later disastrous bid for ABN Amro, which as we now know, was the final hubristic act resulting in Sir Fred's – and Edinburgh's – nemesis.
I say Edinburgh, because it was Scotland's financial establishment which backed Goodwin to the bitter end. None more so than the once cautious and reliable Standard Life, which, when questions were raised by some London-based investing institutions about the sanity of taking over the deeply troubled ABN Amro, put its entire corporate publicity machine behind Sir Fred...
You might think I am exaggerating the element of specifically Scottish swagger in all of this; I offer as partial evidence the fact that at RBS's annual shareholders meeting in 2007, the directors took their seats to the pumped-in sound of the theme music from Braveheart."
Fantasy Scotland - again.
Lawson picked up a lot of flak for that article - he was predictably accused of being racist. But for English taxpayers this bank bailout is yet another example of one-way money traffic across the border. We already subsidise their economy and public services - even taking account of the oil (eg see here) - and now we're having to clean up their busted banks.
Of course, when it comes to the traffic in socialist politicos, it's the other way round. Our economy has been comprehensively wrecked by raiders from the North.
Now, that Hadrian - he had the right idea...
PS Talking of wrecked banks, I've just listened to an interesting podcast by Prof Julian Franks of the LBS. He explains in simple terms how the implicit guarantee provided by taxpayers to banks reduced their cost of capital, and permitted them to indulge in all manner of highly leveraged craziness. And he points out something we've mentioned previously, which is that before governments provided this guarantee, banks had to be much more cautiously capitalised: he reckons that 100 years ago the capital base of mainstream British banks typically comprised 40% equity, whereas now 5-10% is common. In effect, government has subsidised banks by giving them a free guarantee, which has allowed them to raise debt finance at artificially low cost. Going forward, that has to change. Altough given that the guarantee was never explicit, we still can't understand why taxpayers should have to bail-out the providers of banks' debt capital, and other wholesale creditors (see this post).