Do we have a nationalised banking system

A strange thing is happening. First Northern Rock, then HBOS and now Bradford and Bingley. All different and yet all the same.
Each of these banks has in a way all become nationalised or subject to government intervention in recent months after exposing themselves to toxic loans or suffering from the collective failure of the world banking community to trust each other enough to lend to one another.
Northern Rock has been taken into effective state ownership and the Government has exposed the UK taxpayer to an unknown billion pound liability. The Government has effectivley guaranteed the whole of the savings in Northern Rock, something incidently that no other bank has the luxury or. The result of this is that the bank has been swamped with depositors cash from other banks who don't have this safty net. The result is that this bank cannot now take more deposits.
On the flip side the the loan book is looking pretty rotton. The bank is taking on no more loans, it is actively seeking to shrink it's loan book, by working away mortgages and raising it's lending rates to drive away customers. The result of this is that all that will be left are the Together Loans which were 100% mortgages combined with an additional 25% unsecured loan. These can't be passed onto anyone else as no-one is doing 100% mortgages. The poor old tax payer is stuck with these. So if these customers default on their repayments and houses are re-possessed either by the bank or in a bankruptcy situation, it is us as taxpayers who will carry the can.
In our business we see many Northern Rock customers who cannot service their loans and mortgages anymore. Some we are walking through bankruptcy.

HBOS was worked away from the edge of a cliff because the government engineered a deal with Lloyds which prevented a run on deposits. It remains to be seen what sweeteners were promised here to Lloyds.

Finally Bradford and Bingley was saved from collapse by a fire sale of the deposit book to Santander Group and the Government again taking over ownership of a horrid looking buy to let book which is already in serious default. It is said that the banks themselves will be taking the first £15b of losses through its deposit scheme.

The chancellor has repeatedly said that it will do what needs to be done to prevent a bank collapse without actually saying that it will guarantee 100% of deposits. How much longer it can do that with the Irish government and now the Germans, Greeks and Danes saying that they will all protect 100% of deposits remains to be seen.

For more information see http://www.helpwithdebt.org/