Should we Nationalise RBS?

[youngmafbog]

There are rumours afoot that the Govenrment is considering buying more RBS shares. Current estimates are that it would only be £5Bn more to fully nationalise it.

IMO it was a mistake bailing it in the first place, it shoudl have been allowed to sink if it could not swim. However having gone down that route I personally reckon a National Bank is a good idea.

No one is in doubt that the Banking Industry has to change. What better way to drive that change than by a Nationalised Bank. For example, with regard to lending money to business, the Nationalised Bank could take up the challenge, reomving red tape without adding risk so forcing the competition to do the same.

The downside of course is that to attract the best we would still be stuck with Bonuses although it could cut the Bonus for Failure of course. It woudl still have to have an investment arm too (Generally this is why we have free Bank accounts as Retail Banknig is relativley not very profitable)

So, shoudl they go for it?

[jake-the-peg]

Allowing it to sink would have been fine if it were the only one.

As I'm sure you know better than anybody a bank lives or dies on confidence and there was a very real chance that had RBS been allowed to go under it would have sparked a run on the banks and we'd have been in a whole world of pooh!

Even if that had not have happened people who had loans or mortgages with RBS would have found themselves foreclosed on and getting a replacement lender at that time and at short notice would have been nigh on impossible.

I think you're in a rather small minority in your opinion there.


As for having to pay big bonuses to attract the best

http://www.dilbert.co...ips/comic/2012-08-02/

[youngmafbog]

I quite possibly am Jake, but thats what free thinknig is about. I do see your points though, the Lemming mentality can be a problem.

Still, that was not really my question. What about completing the job and Nationalizing it?

Like the Dilbert by the way !

[Gromit]

Darling considered fully nationalising it at the time of the crash but rejected the idea. Which is why the Government are thinking of doing the opposite.

[jake-the-peg]

Nationalisation has issues and restricts organisations from doing things like borrowing money

That sounds like a very difficult situation for a bank and particularly one the size of this one.

Nationalisation is also typically used in key infrastructure monopolies where there is a national interest justification in having them owned by the nation.

Things like the National Grid, water supply, road and rail are where nationalisation are most suited.

Having a nationalised bank competing in the open market doesn't really fit the model and is at best ugly

I'm not sure I see the advantage to having a fully nationalised organastion as opposed to one in which the Government has a controlling stake.

[bazwillrun]

As long as they know that they wont be allowd to fail and will be bailed out they will keep on doing what they do

Its practically win win for the banks.

Theres hardly a country on the planet that would let a bank of this size go under

[lcg]

even though i bank with rbs, i was appalled when the govt. bailed it out. it should have been left to sink and the banking code/method of practice tightened up far more. now, the taxpayer are footing the bill for extortionate wages/bonuses; continued rubbish service and a bank that isn't lending to businesses decently (along with all the others) to help the economy - rather than their own profits. it will be outrageous if any more money from the public purse goes to more banks (or further bailouts) x

[BayBoy1]

Bazwillrun you are so correct ,

[pdq1]

If Stephen Hester was regarded as one of the best no wonder the banking industry is in such dire straights. He might have waived his bonus but he should have been given the sack!

[Hopkirk]

How could it have been allowed to fail? Imagine the consequences.