On 8th October the government and the banks came to an emergency agreement to prevent financial meltdown. The government agreed to commit:

• £50bn for bank recapitalisation

• £200bn in short-term loans to boost liquidity

• £250bn debt guarantee for inter-bank lending.

The banks committed themselves to – nothing.

The government offer did not lay on the table for long before greedy hands reached out from the banks to stake their claim. A few days ago RBS and Lloyds TSB/HBOS alone claimed £31.5bn of public money. The final bill could come to £75bn. As a result the public sector will hold 60% of RBS stock and more than 40% of Lloyds TSB/HBOS (which are due to merge). This is a controlling interest. Effectively we the public control the commanding heights of the banking sector.

The agreement with the banks was spattered in curry sauce and written in haste. It is vague. At the moment the British banks are making all kinds of ‘concessions.’ They’ll do everything they have to in order to get their hands on our money. Bonuses have been frozen, some failed executives have been shown the door, loans to small business and homeowners are to be maintained and dividends are likely to be restrained. But, once they’ve got our money in their pockets, they’ll sing a different tune.

Since this is our money, we should be able to say:

• We decide who the directors are
• We decide on the salaries and the bonuses
• We decide what they spend our money on
• We don’t want our money leaching out in dividends to private shareholders.
• On repossessions, it would be grotesque for state controlled banks to evict workers who can’t afford to pay their mortgages after we have bunged billions at the bankers. Repossessed housing should become public housing stock and their residents allowed to stay on as tenants.

Brendan Barber, general secretary of the TUC is right when he says, “"It is vital that the vast sums of taxpayers' money are used to change bank behaviour, not just bail them out." But that’s not how the government sees it.

What we want is not how private banks are usually run and how the private sector would like them to be run. The private shareholders and board of directors watched supinely as Fred ‘the shred’ Goodwin relentlessly drove RBS (founded 1727) into the ground with his greed and stupidity. Their natural instinct would be to abandon small business and let homeowners swing in the wind in the teeth of a crisis by calling in the loans. If it was up to them they would shower shareholders with dividends and directors with bonuses milked from the public purse.

The present arrangement is a half way house. If the private interest prevails, all we’ll have achieved is to save the banks from their own incompetence and give them another chance to lord it over us all later after we’ve paid to clear up their mess.

Why should we compensate the bankers who have taken the British economy to the edge of disaster? Make no mistake - it is the banks and the bankers who are being bailed out with this plan. If there are any little old ladies with a couple of shares in HBOS we’ll see them all right. But there should be no compensation for the fat cats.

In other words we want full nationalisation, not socialisation of losses while profits still accrue to the private sector. But New Labour still crawls before capitalism. As John McDonnell explains, “The bail-out is nothing but a subsidy by the taxpayer to the very people who have brought our economy to the brink of collapse.” We want nationalisation of the banks, but under workers’ control and management, as part of a socialist plan of production.