My disappointment is partially the idea itself - a glorified giveaway - and partially its source, the Liberal Democrats.
A straight share giveaway would obviously just be a way of putting cash in people's pockets and might make them feel they had got a little something back from the banks for the huge pain they caused most of us but would achieve very little beyond that. This proposal is rather more complicated than that, however, as it seeks to put in place measures to ensure that the government recovers the £66bn it forked out on our behalf to rescue RBS and Lloyds. The trouble is the mechanisms needed to achieve this create complexities that most people will not understand. This will almost certainly lead them into the hands of financial advisers who will devise schemes for extracting cash from the shares for a fee. This already looks like a mis-selling scandal and regulatory disaster in the making.
There is a lot of naive talk around this scheme about creating a shareholding democracy, a rather barren political concept dragged up from the 1980s. It won't work. One of two things will happen. Either the scheme will be drawn up in such a way that it will be so hard to sell the shares that most people will just chuck the share certificates in the proverbial bottom draw and forget about them, or ways to sell them will be devised and the majority of shares will end up back in the hands of institutional investors. My money would be on the latter.
The missed opportunity
My real disappointment is in the Liberal Democrats for allowing this ill-formed idea to get this far with their name attached to it. It is a massive missed opportunity for them.
First, there is nothing I can see in it about addressing the structure of the banks in advance of implementing any exit strategy. Should these two institutions be broken up? Are they fit for purpose, by which I don't mean fit for a return to what they were before but fit for a new financial order where financial institutions are more responsive to the diverse needs of their customers and where they can't just shut up shop when the easy profits are no longer there? Neither of these questions seems to have been properly investigated.
Second, where are the imaginative solutions that you might have once expected from a party like the Liberal Democrats? Why no talk of mutuality? Where are the community banks the third party used to promote? These ideas briefly surfaced in the run up to the election campaign but now seem to have disappeared once again as the Liberal Democrats take on an old Tory policy and dust it down.
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