From Robert Peston this morning about the conditions of the rescue deal:
1) Taxpayers are injecting £37bn of capital into just three banks, RBS, HBOS and Lloyds - with RBS and HBOS taking £31.5bn of that (this is nationalisation Jim, though perhaps not precisely as we know it);
That's a lot for the tax payer to stump up. Government has to borrow and add to already spiralling national debt. Tax will go up.
2) RBS and Lloyds TSB/HBOS have promised to the government that they'll maintain mortgage lending and small-business lending at 2007 levels - which is massively more than they are currently lending (this is hugely significant - given that a shortage of credit is to a large extent behind the economy's deceleration into recession levels);
Wasn't the massive lending that got us into this? ....and what if they don't maintain 2007 levels of lending? RBS LTSB and HBOS, although big in the UK, fairly small players on the global stage. What happens if other world banks don't come to the party, because there is no guarantee they will, and if they don't, I cant see how the rescue will work.
3) Lloyds TSB is paying less to buy HBOS than it originally announced, to reflect the disclosure that HBOS's problems are rather worse than it thought just a couple of weeks ago;
How does one failed bank take on another failed bank?
4) Barclays is raising £10bn from selling new shares and securities to private-sector investors, abandoning its dividend for the second half of this year, and taking other actions;
The only bit that makes sense to me.
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The rescue raises as many questions as it does answering existing ones
Stock markets have stabilised this morning, I would not call it a rebound. Look at HBOS, LTSB, RBS shares, all down significantly.