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The London market is relatively stoical today in the face of successive shocks to the financial system. Chaos on global stock markets followed the US Congress's rejection last night of the $700 billion bail-out deal for the banks cobbled together by the treasury secretary, Henry Paulson. Yet Britain would face its own version of a Paulson-style rescue deal if the Lloyds TSB takeover of troubled mortgage provider HBOS failed to go ahead. The City is unenthusiastic about the prospect of the merger of a relatively well-run bank with an institution with so many toxic assets. And the marked difference between the valuation of HBOs shares in the deal and the present market price is a reflection of those doubts.
At present the merger is still going ahead, although it may have to be based on a more realistic valuation. But if it should fail and the Government steps in, the scale of any taxpayer-backed takeover would dwarf the Bradford & Bingley bail-out. This, no doubt, was one of the subjects discussed today in the meeting between the Prime Minister and the Governor of the Bank of England, Mervyn King.
Given this scenario, David Cameron has taken a sensible approach in his emergency address to the tory conference today. He has offered a bipartisan response to the crisis, with the tories ready to cooperate with the Government in key areas. These include enhanced protection for savers and rapid payouts of their money, in addition to which the party would drop objections to the Banking Reform Bill enabling the Bank of England to intervene to rescue failing banks. He is anxious to avoid any replication here of the damaging divisions in the us Congress which led to the rejection of the Bush administration's rescue package. George Osborne, the shadow Chancellor, will be meeting the Chancellor, Alistair Darling, to discuss the crisis. It is a responsible approach but it could raise problems for the Tories, who may find themselves so closely associated with the Government's attempts to deal with this unprecedented situation that they will find it difficult to criticise its shortcomings. That is a risk but the scale of the problems facing the markets is too great for old-style partisanship.
C-charge change
The business group, London First, wants to modify the western extension to the congestion zone by cutting its operating hours to 7-11am with a reduced rate of £4. There is a good deal to be said for this.
Modifying the charge in the western zone would reduce early traffic queues while allowing free access during less busy periods. There is a case for treating the two parts of the congestion zone differently. Arguably, the westward extension has done little to ease jams because it has allowed far greater numbers of cars with residents' discounts to drive throughout both zones.
London First is also proposing other ways to ease traffic flow. One is to cover holes in major roads with metal plates when work is not under way and to recruit extra inspectors to check that roadworks are finished on time. This is sensible thinking: roadworks in a strategic area can cause intolerable delays to tens of thousands of people.
Towering error
English Heritage and Westminster Council are launching a joint objection at the High Court to the Doon Street development, an enormous block of flats in Lambeth which would, they say, ruin the views towards Whitehall from St James's Park. The decision had gone to the Communities Secretary Hazel Blears, who says that the objections are outweighed by the community benefits from the project. It is intended to fund a swimming pool and leisure centre. She should give way. The impact of tall buildings on the city's skyline and on historic views is even more important for the city than local facilities and a low-rise development would deliver benefits without diminishing an historic vista.
Reader views (2)
David, God knows I hate everything Crash represents and stands for .... but what PRACTICAL solutions are you offering when it comes to resolving the financial crisis ... never mind feel good factor?
- Marianne, S W France
It would be good to read in the Evening Standard some detailed suggestions as to what our leaders should consider when attempting to rewrite the rules for the future finance industry. They need all the help they can get.
- John Problem, Hackney Wick, London, UK
