Just one of the many startling aspects of the latest bail-out package to boost lending is just how few lenders there really are.
Go back to before the credit crunch and the top UK 10 mortgage lenders were the Halifax, the Nationwide, Northern Rock, the Woolwich, Bradford & Bingley, Abbey, HSBC, Royal Bank of Scotland, Lloyds TSB and Alliance and Leicester.
Together they had the bulk of the market and the top five of them accounted for 75 per cent of it. The number of lenders had already shrunk dramatically over the previous ten years - Halifax had merged with Bank of Scotland, Woolwich was owned by Barclays and Abbey by Santander - but look at the list now.
Halifax Bank of Scotland has merged with Lloyds TSB, Northern Rock has gone bust and been nationalised, Bradford & Bingley has been split between Santander and a nationalised rump, RBS has all but been nationalised and Alliance and Leicester has been swallowed up by Santander.
Which leaves the package to rescue lending being discussed almost entirely in terms of just six institutions: RBS, Barclays, Lloyds Banking Group, HSBC and Santander.
Yesterday’s package seemed to have everything but the kitchen sink in it - asset protection insurance, Crosby-style guarantees for mortgage-backed securities, more help for RBS.
It remains to be seen how much it will help given that, as Alistair Darling told the Commons yesterday, over the last ten years 45 per cent of mortgage lending came from foreign banks (presumably Santander plus foreign banks lending to ours) and non-bank institutions. With the economy and the pound slumping, which foreign banks will be keen now?
However, one of the most eye-catching features for me was the decision to encourage Northern Rock to lend again - and to consider how it can support loans to creditworthy mortgage customers without a big deposit.
When the Rock was first nationalised it was told to run down its mortgage book by raising its rates and showing the door to any borrower who came to the end of a fixed rate deal.
The idea at the time was to avoid unfair competition with other lenders but for months it’s been clear that there is too little competition rather than too much. Britain’s mortgage borrowers (and housing associations) are in the grip of a small group of banks who can charge pretty much what they want for the limited number of loans available.
So encouraging Northern Rock is definitely good news. In the short term the government can play a big part in boosting lending through the nationalised banks. But in the longer term perhaps we could learn something from the only one of that top 10 list whose shares have not nose-dived.
What we need in the current situation is a series of institutions like the Nationwide dedicated to providing decent savings products and then using the proceeds to lend to people who want to buy homes without any of the greed of the high street banks.
Perhaps we could call them building societies?
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