Brown must stop stalling and sort out these banks

He should have nationalised Royal Bank of Scotland and HBOS. The two Scottish banks (in the City the other day, an Englishman referred to them in sneering terms) should have been taken entirely under state control.

Instead, Brown bottled it and allowed them to carry on polluting the system. RBS announces a loss that is so far off the scale that the rest of the country shudders and the markets tremble.

HBOS, which is stuffed with bad commercial-property and private-equity loans, is pushed into a merger with Lloyds TSB. Result: a duff bank brings down a good one. Sir Victor Blank, the Lloyds chairman, and Eric Daniels, the chief executive, who pushed like mad for the merger, should take a long, hard look at themselves.

More's the pity that they did not take a long, hard look at the organisation they were buying.
There's solid as she goes, safe as houses Lloyds, paying out fat dividends year after year but determinedly not setting the world on fire. To hell with that, say Victor and Eric. Forget the quest for quality, it's quantity we're after now. And to help us make up our minds, Victor's friend Gordon, who is in a spot of bother, says we can.

Meanwhile, Barclays insists it's okay but nobody in the City believes it. It chased profits like everybody else, had an investment banking arm like everybody else and paid bonuses as big as everybody else but, somehow, it is immune. The way things are going, only Barclays' rich Arab friends will be able to verify if it's telling the truth or not.

Brown can still be decisive. As the Liberal Democrats' deputy leader Vince Cable says, "the immediate requirement is for the government to move from being a passive shareholder to an active majority shareholder, ensuring that loans flow to UK business borrowers, those worrying about how to pay wages because they lack liquidity".

At the moment, Brown and his colleagues appear haunted. Yes, he was brave with the original £37 billion bailout but that masks the lost year — the incredible and shameful length of time it took for Northern Rock to go down and for the Government to leap into action with the other banks.

Northern Rock itself took far too long to be resolved, mainly due to the protests of the minority shareholders, mostly hedge funds who hoped to make a killing. Instead of learning the lesson from that episode, that in future they should move swiftly to take all shareholders out and wrest control, the Government has adopted a slowly, slowly approach. Ministers seemingly can't bear the prospect of being tied up in knots by minority shareholders lurking on the RBS and Lloyds Banking Group (as the new home of HBOS is called) share registers.

The result is a drip, drip of more bad news and short-sellers' heaven. The City expects nationalisation — the share prices say so.
The Government should push on and do it. The halfway solution that we have at present is unsatisfactory and only prolonging the agony.
Please take charge, get in, find out what's there and start lending again. Our nerves can't stand much more.