John McFall, head of the Treasury Select Committee in the British House of Commons, added his weight to voices calling for the full nationalization of Royal Bank of Scotland Group plc and Lloyds Banking Group plc on Wednesday.
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McFall, who is an MP for the ruling Labour Party, said in a joint
article with private equity executive Jon Moulton in
London's Financial
Times that the likelihood of success for the "nearly nationalized
model" was low since it created "a conflict of aims."
Instead, they
said, they should be fully nationalized and used to restart the flow of
credit with public sector backing. The pair acknowledged the risks, but
argued that it was the "least worst option."
While Moulton, founder of
Alchemy Partners LLP, is a well known voice of doom whose analyses
haven't always been accurate, McFall has been influential during the
credit crisis. Fears that the government, which already holds a 68%
stake in Royal Bank and a 43% stake in Lloyds, could fully nationalize
the banks, have done nothing to help their share prices. Royal Bank
lost two-thirds of its value on Monday after the government unveiled
its latest package of help for the banks, and the stock has been
volatile since. Lloyds fell another 15% in early-afternoon trading on
Wednesday. -
Neil Sen
