According to Alex Brummer in his excellent book, The Crunch, Lloyds TSB was interested in buying Northern Rock in early September last year, but wanted a back-up loan facility at commercial rates from the Bank of England. The Bank refused to provide such a facility. Both its Governor, Mervyn King, and the Chancellor, Alistair Darling, worried about a possible breach of European competition law.

But in the past few weeks, the government has been actively promoting Lloyds TSB's takeover of HBOS, even though the result will be to create a dominant supplier of important financial services - including mortgage-lending - in the UK. In some areas of retail banking, the Lloyds TSB-HBOS combine will have a market share of 30 per cent, with a high risk of semi-monopolistic, anti-competitive outcomes. Mr Brown has intervened personally in the matter, letting it be known that the takeover has official blessing.

Second, on 29 September 2008, the government used the Banking (Special Provisions) Act, which had been passed earlier in the year in order to take Northern Rock into public ownership, to nationalise Bradford & Bingley without its shareholders' consent. When this was done, 97 per cent of Bradford & Bingley's loan book was current (ie, not in arrears) and profitable, while its balance sheet had just benefited from £400m of rights-issue proceeds and its book capital amounted to about £1,500m. On all standard accounting criteria Bradford & Bingley was solvent and profitable, even if it faced difficulties funding its assets.

Nevertheless, immediately after the nationalisation, the government sold Bradford & Bingley's branch network to a Spanish bank, Santander, for just over £600m, and shunted its loan portfolio and deposit liabilities into a separate vehicle which may (or may not) have positive value after some years of winding-down. To whom will the £600m and the value in the wind-down vehicle belong? In terms of natural justice, surely the answer is that they belong to the shareholders. But, under the terms of the 2008 Banking (Special Provisions) Act, shareholders could be compensated under a formula which leaves them with next to nothing.