Wednesday 13 December 2017

A cosy cartel of controlled lending may be part of what our nation needs

The cheers which greeted competition have vanished

OH, what one wouldn't give for a nice cosy cartel. The brutal departure of Bank of Scotland Ireland from these shores provoked a flurry of worry that we were now all going to be screwed by a not-so-cosy cartel of AIB and Bank of Ireland.

It probably is going to feel like that. One can almost hear the howls of complaints about lack of competition as rates go up and lending conditions tighten. Which suggests -- as do many other things -- that people have not fully grasped the implications of the banking crisis.

They do things differently in China. 'The Economist' magazine was puzzling over it the other week. Credit is certainly controlled and allocated to banks by some administrative process rather than market forces. But exactly what the process is, what the criteria are, and, critically, who is in charge, are questions even the learned article could not get to the bottom of.

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