Government digs into the banks' stinking pile

Another bank bail-out? So what happened to the billions us taxpayers poured down the throats of those naughty bankers back in the autumn?
Well, they stopped the banks falling over. But they didn't make the stinking great pile of property-related bad debts they've all got go away.
We're only a few weeks away from the banks revealing their financial results for last year. In some cases (not all) they will amount to some of the worst ever losses in British corporate history.
The fact that those losses continue to tick away like an unexploded bomb is why Stock Markets started to get nervous again.
It's also the reason why the Government, the Bank of England, the Financial Services Authority and the banks have been spending the last few weeks trying to put together a series of measures that will stop the banks suffering another cardiac arrest and get lending going again.
For the moment, the Government has stopped short of grabbing hold of the stinking pile and putting in a so-called toxic bank (though this still remains an option).
So what are our taxpayer billions being lavished on this time?
What today's announcement boils down to is allowing banks to raise money by selling 'high quality' assets (a relative term, these days) to the Bank of England, and a 'back stop' insurance scheme under which the Government will cough up if the banks lose a packet on some of their rotten loans.
Underneath the coded language of the Treasury, the scheme is intended to do three things: stop the financial system wobbling like it did in the autumn, get banks confident enough to lend more, and stop the UK recession turning into a real train wreck.
Will it achieve those goals? I could say ask a football pundit, since Forest's performance appears more predictable than that of the economy.
But if you look carefully at the small print of today's announcement, you can see the Treasury begin to apply the thumbscrews to the banks in a way it hasn't before: it wants the banks to sign up to 'lending responsibility agreements' that will be audited.
Which could be paraphrased as: "We're telling you to hand over the bloody money, so bloody well hand it over!"
This means that at some stage the Government will be able to produce some statistics that show an increase in lending.
That can only be a good thing. But so much money has drained out of the economy that I can't see this being the last step on a long road to recovery.
PS – you'll hear an announcement by Northern Rock today about its lending policy. It will amount to an admission that the way the Rock has tried to rundown its lending book has backfired in a way that has made things worse, not better. Its decision to reduce the number of mortgage products it offers and make them more expensive has forced large numbers of people to chase after the dwindling number of products offered by other lenders. That has put even more pressure on credit markets.