Commentary: If US plan doesn't work, the finance system faces disaster

Now we know how deep the banking crisis has become, nobody is in the mood for grandstanding. The urgent need is to press ahead and deal with the casualties, to get them removed from the scene as soon as possible.

Having intervened on Northern Rock and got themselves into a terrible mess, the authorities are well-rehearsed. This time, they proceeded quickly and smoothly.

Any question of them having a choice was discounted. Having moved to take over Northern Rock, they couldn't ignore another former large building society in trouble. In the US, a bigger rescue package was being rushed through - for Britain to ignore its latest victim would have been perverse.

Now that B&B has been taken out, the expectation must be that this is it. All the independent mortgage lenders have succumbed in one way or another. The one remaining question is whether the giant, newly-merged Lloyds TSBHBOS will be strong enough to survive. HBOS is such a basket case that the City wonders how the takeover will provide a cure, that HBOS's problems become Lloyds TSB's.

The bank will be much better off under more conservative, better management - of that there is no doubt. Lloyds TSB will bring a rigour to HBOS that has been lacking. What has to happen is that the markets also believe and trust the new bank and extend it credit.

Much hinges on the mood. If the American bail-out doesn't provide the fillip the industry is praying for, doesn't kick-start the US economy and stabilise property, then another emergency looms. But in truth, if the American plan doesn't work, then we're facing financial disaster anyway.

HBOS apart, there is nobody else left. The other British banking giants have raised their cash and they appear safe.

A long overdue cleaning up of British retail banking has taken place - albeit in dramatic circumstances that no one wished to see. From the moment they left their regional bases and headed for the national and even international stage, the old building societies were playing with fire. Desperate to make inroads into an already fiercely competitive and crowded banking market, they carved out niches for themselves. The more they went down one particular path of growth, the more exposed they became.

The old way of relying on depositors for cash to lend was forgotten - they went to the money markets and obtained what they wanted. When those dried up, when credit became tighter, they found themselves high and dry.

There are losers with B&B, as with Northern Rock. The shareholders will receive next to nothing. For those small shareholders who stayed with the building society when it became a bank and never understood what it was they were owning shares in, there should be sympathy. As with Northern Rock, they have been disgracefully let down.

And as with Northern Rock, the taxpayer is left shouldering the liabilities. They should, in the longrun, be minimal. Again, if they're not and the credit crunch doesn't ease, here and in the US, then B&B and Northern Rock will look small against much greater worries.