So HBOS was in the doo-doo. It was "too big to fail".
So it would have to be nationalised like Northern Rock.
But wait ! There was a better answer. Why not steer it into the arms of a bigger, financially sound bank - like Lloyds. OK, that would create a "much too big to fail" bank and breach all kinds of competition rules - but what the hell ?
There were obvious risks. But HMG were putting on pressure. And the lure of all that market share was just too much for Eric Daniels and Victor Blank.
So they did it. And now Lloyds is in the doo-doo too. And is now controlled by HMG.
But rather than nationalise (sans compensation, no golden parachutes for directors etc) a la Northern Crock, Gordon and Co are doing all they can to prevent the failed banks from being nationalised. They're handing over our cash in exchange for non-voting shares, they're organising asset protection insurance schemes with a tiny taxpayer upside and potentially massive downside - all to prevent nationalisation.
I'm not a great believer in nationalising anything outside natural monopolies - rail and road infrastructure, water, electricity generation and supply, maybe some telecomms infrastructure.
But HBOS and RBS have manifestly failed. I fail to see how they could have done a worse job.
And if the banks were 'too big to fail', shouldn't we be thinking, both here and in the States, of breaking them up into units which could be allowed to fail - with appropriate protections for depositors ? Instead we're creating even bigger banks.
I suppose they're looking towards all those non-exec directorships from grateful bankers when they're kicked out of office.