Elementary, but please explain...

Why, when a Bank will hound a defaulting mortgagee for 50 years for repayment, adding new charge after new charge and top rate interest on top, can a Bank get away with the idea that its debts will be wiped off the slate and forgotten?

When public money was funneled into the Banks, I for one thought it was the right thing to do because I believed most banks are in a 'they win, we lose' industry and therefore, when things pick up and the large margins return, so will the 'loan' repayment.  With interest.  So why is there talk about writing that off completely, or not applying interest.  The Banks are not even going Bank-rupt to avoid it (and in so doing barring those responsble in management to not working in such roles again for a while).

Second.  Why are no regulators pressuring the banks to offer more acceptable loan rates?  When interest rates are 0.5% but 'Bank Interest' rates are 4+%, is this a gravy train again?  Most of the loans are still current and now they attract 2-3% margin instead of 0.5%.  Sounds like many Christmasses all coming at once?   Now I recall this was explained as a result of the Inter-Bank lending rate being different to the BoE rate, which I accept - but surely this should be decreasing by now.  Hmmm - I wonder why not.

Third. Watch for the day that interest rates start rising.  This will precipitate another depression as all those inflated Bank base rate linked loans start to hurt and people realise how much the redemption terms have changed and will cost them.  Its simply not easy to jump ship and shop around.