I rarely if ever do this, out of respect for my subscription to FT, however here is one of these occasions, and I hope they don’t mind.

I am just a blogger, but I have been blogging consistently since March 07 about how the sub prime crisis will change everything in banking, and in the economy. For the full list see here. Its scary how long this has been a topic on this blog!

That leads into …. I have never met Gordon Brown, but there are (at least) three thoughts that leap out at me from this FT piece, and he fails in #1.

1. did it really take a meeting with the heads of all Banks in April 2008 for the PM to understand we have an issue here?
2. the Banks are playing on 1. to get a bailout from their own shortcomings. [A few CEO firings would be a better approach] Did it really take till April 2008 for the heads of Banks to understand we have an issue here?
3. HSBC see the crisis differently than the rest. hmmmm

Enjoy ….

FT.com / In depth – Bankers see shift in PM’s grasp of crisis

Bankers see shift in PM’s grasp of crisis

By Peter Thal Larsen and Jim Pickard

Published: April 15 2008 22:57 | Last updated: April 15 2008 22:57

When leading bankers arrived in Downing Street for breakfast with Gordon Brown on Tuesday morning, expectations were low. The meeting, arranged about 10 days earlier, was billed as an opportunity to provide the prime minister with an update on the credit crisis before his departure for a visit to the US. However, many participants feared they were little more than extras in a  photo-opportunity designed to show voters that Mr Brown was personally getting to grips with the crisis in the mortgage market.

Ever since the wholesale markets froze last August, bankers have been pressing the government and the Bank of England to follow the lead of other countries by intervening in the  money markets. Despite a few efforts to restart wholesale lending, however, nothing much has been achieved.

By the time they walked out of Number 10 an hour and a half later, however, the mood had shifted. Several people who were present felt that, for the first time since the turmoil in the financial markets started, Mr Brown had fully grasped the severity of the crisis and its impact on the economy. Many now expect the government to act. “I think Gordon has crossed the Rubicon,” one senior banker said.

Gathered around the table in one of the grand state rooms at Downing Street were the chief executives of Britain’s six largest banks, as well as smaller lenders. Mr Brown had also invited a number of leading investment bankers and representatives from some of London’s largest hedge funds.

Flanked by junior ministers Shriti Vadera and Yvette Cooper, as well as Sir Gus O’Donnell, the cabinet secretary, Mr Brown asked chief executives of the UK’s largest banks to set out their views.

As participants tucked into breakfast, John Varley, chief executive of Barclays, and Sir Fred Goodwin of Royal Bank of Scotland outlined the difficulties they believed were facing the banks.

Michael Geoghegan, chief executive of HSBC, then raised eyebrows by declaring that the crisis was not as severe as some were making out. “He was the lone, dissenting voice,” one person who was present said.

But other bankers quickly spoke up for the smaller lenders which have been worst hit by the crisis. Antonio Horsa-Osorio, chief executive of Abbey, the lender owned by Santander of Spain, pointed out that the crisis threatened the survival of many small building societies which still account for a large chunk of Britain’s mortgage lending, leaving large banks to pick up all the  business.

Others echoed the point. “The big banks said: you’ve got to think about this,” one person who was present said. “We’re going to take 100 per cent of the market.”

One after the other, bankers urged action, pointing out that the US Federal Reserve had not hesitated to move when a run on Bear Stearns, the Wall Street investment bank, had threatened the stability of the markets.

Mr Brown dropped hints that he might be prepared to support a plan, designed by the BoE, to break the logjam in the money markets by swapping mortgage assets for government bonds.

Ministers also made it clear that they wanted the benefits to filter down to homeowners. “The government wanted promises that they will get a direct return on the money they put in.”

Many bankers remain sceptical that it is possible to agree such an explicit quid pro quo. Nevertheless, Mr Brown will have been left with considerable food for thought for his journey on Tuesday night.

Copyright The Financial Times Limited 2008