Lloyds bank and Royal Bank of Scotland criticised by MPs committee

Lloyds Bank and Royal Bank of Scotland have today been criticised by a committee of MPs for failing to live up to promises made just after the taxpayer led bailout of the two companies. In total the two operations had promised to lend upwards of £39 billion to homeowners and businesses in the UK by the end of February 2010. Royal Bank of Scotland had pledged £25 billion in additional loan liquidity and Lloyds bank a further £14 billion.

However, despite being bailed out by the taxpayer and also signing a legally binding commitment to increase liquidity in the loan market the two companies will fall well short of the target. Despite the fact that the lending record of the two companies has been disappointing to say the least there is very little that the Treasury can do to force the companies to act. Any fines dished out to Lloyds Bank and Royal Bank of Scotland would be counter-productive as they would take away vital liquidity from the companies and the marketplace.

More and more we are seeing that the authorities are toothless when it comes to acting against the banking industry which despite being on the verge of collapse, prior to the taxpayer led bailout, still appears to be calling the shots.