Yesterday saw the ante being well and truly upped on this issue, with the Bank of England Governor weighing in and the Chancellor speaking forth too, issuing veiled threats aplenty.  This smacks at a spot of scapegoating that does nothing much to help the real issues.

For starters, why would it be a good idea to expand mortgage lending still further, when the UK is already so overindebted on a personal level?  I saw predictions yesterday that suggested mortgage lending growth will be negative next year.  In a time of a) overindebtedness and b) falling asset prices, shouldn't a net repayment be a good thing?  Nobody seems to be saying how much additional mortgage borrowing the country could take - what is the maximum level if we aren't already beyond it?

Second, if HMG doesn't think the banks are doing enough to lend, it has two of its own vehicles already - Northern Rock and B&B - through which it could choose to take up the slack.  Hang on - they're busy winding those down and NR for example has already 'repaid billions' to the Government, which presumably represents a reduction in its mortgage book.  This reduction in those books is presumably adding to the problem, when they could be reducing it.  Talk about kettle calling pot black...

Third, we also saw that there will be a panel established that will monitor lending decisions.  I'm dying to see the terms of reference for this august body, as it will compose reps from banks, trade bodies, consumers and the Government.  It will be really great to see what a mess those will make of individual lending decisions, versus a trained lending banker.

Fourth, the banks are strapped for money.  We already know that much lending is securitised (i.e. not backed by deposits).  Given that banks are struggling to convince investors to renew the underlying funding they provide, this lack of funding will continue for some time to come.  The banks have been unable to raise even a few billion from investors in capital.  Why would investors choose to provide much larger sums of money to those same banks, as term lending?  It's no wonder that banks are reducing their asset bases - they won't be able to continue to fund them, never mind lend more...

I still believe that the biggest problem we face is overindebtedness.  Until we get the levels of debt down, and restore confidence in the banking system that the money we put with them won't be lost through bad lending, we won't see this crisis end.  That should be trusted to bankers to achieve, not a group of conflicting interests who have no training in the discipline.