Brown’s dangerous interventionism

Yesterday, Downing Street was keen to take the credit for the Lloyd’s HBOS deal. But Brown is playing a dangerous game. First of all, there is the issue highlighted by Alphaville of whether there has been tinkering with the deal to make sure that Edinburgh remains a major UK financial centre. It also appears that someone has leaned on Lloyds not to make the maximum efficiency savings.

Then, there is the question of what Brown is doing apparently telling Lloyds to lend in the way that HBOS did. The FT’s Westminster blog reports Brown as saying, “We’ve also insisted on assurances from the new company [Lloyds/HBOS] about their mortgage lending in the market place so they will not reduce it.”  Now, as the FT points out, Lloyds was in a position to step in because it had been more cautious, so Brown’s comments suggest he doesn’t realise what the problem was.