Just as it looked as if the debate had turned towards how to privatise RBS and Lloyds rather than ploughing more taxpayer money into them – an idea favoured by Vince Cable and more recently Lord Lawson – Sir Mervyn King has made it clear he has other ideas.
The Bank of England governor told the banking commission it was a "nonsense" that the banks could be run the banks at "arm's length" from the Treasury, through UK Financial Investments. King backs full nationalisation, which would allow RBS to be split in two – into a bad bank of troublesome loans and good bank which can make fresh loans to cash-strapped businesses.
It is a good idea but one that has come five years too late.
Chancellor George Osborne thought he had shut down the debate last week when he ruled out full nationalisation and set 61p as the surprisingly low sell-off price for Lloyds. The City thought he had been aiming for 73p.
King, now in his last three months as governor, should have shouted louder in October 2008 for full nationalisation – or at any point since. In making a noise just as he prepares to leave to office King looks only as though he is trying to cause problems – not solve them.
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