It is much better to be a banker in the US than in the UK, says the FT in a Wednesday editorial comment. The US bank rescue plan announced Tuesday is significantly more generous than the UK equivalent. But it is moot whether US public opinion will be as generous towards the scheme’s architect, Treasury secretary Hank Paulson. His scheme has clear echoes of the plan announced in London last week. But there are crucial differences. The US Treasury is being more generous to banks and shareholders than its UK counterpart. The preference shares being bought in the US pay a 5% dividend, rising to 9% after five years. In the UK, these shares will pay at 12%. And unlike in the UK, participating US banks will be able to pay dividends, albeit subject to Treasury approval. The US authorities are, perhaps, being kinder to bankers than is politically prudent. The world economy is still caught in a nasty slowdown, but this plan significantly improves the chance that it will not be too prolonged. Soon however, Paulson must say what he intends to do with the rest of his $700bn kitty – and whether he thinks it’s enough.
