Alastair Darling cartoon © Matt Buck Hack cartoons

The government finally took a majority stake (65%) in the Lloyds Banking Group* over the weekend. In doing so it offered the same sort of ‘insurance’ deal for the bad loans and large debts which the bank has accumulated. The national taxpayer exposure to these debts is around £250bn.

The political chatter around this focuses on executive bonuses and the blame game among the politicians and the executives of the institutions, rather than on the liability which the nation is now carrying for the bank.

There’s a piece of period Lloyds advertising from the mid 1980s here. If you watch, you’ll see the effects of Mrs Thatcher’s financial deregulation legislation which was the political and economic fashion of the time. The advert shows the bank was starting to sell and tie in other financial products to its core retail banking business.

In some respects, the national problems we have now are a result of this growth of ‘old-style’ retail banking into areas of business, and into the selling of financial products, which were not well understood.

* Formerly Lloyds Bank and Halifax Bank of Scotland