September 18, 2007 (LPAC)--British Prime Minister Gordon Brown better not imitate Franklin Roosevelt and have the British Treasury guarantee the British population's bank deposits, threatened the London Times Business Editor James Harding in a commentary today. Harding claimed that British Chancellor of the Exchequer Alistair Darling, by giving Northern Rock customers a "gilt-edged guarantee" for their deposits, had set off the "creeping nationalization" of Northern Rock, a "humiliation for the British banking system and the Labour government." Harding concluded: "Gordon Brown has long stood in awe of Franklin D. Roosevelt, the President who told Americans 'the only thing we have to fear is fear itself,' and then assured them that the Government would honor their deposits. But, for all his admiration of FDR, Mr. Brown, surely, does not want to emulate him in office?"[silly british voice emphasis -ed]

The big issue is that Darling's move means that the government—not the Bank of England—had to give "an explicit, unequivocal commitment" to the Northern Rock depositors, after the BoE's proposed bail-out only worsened the run on the bank. Harding complained that "After a decade embracing private enterprise and free markets, New Labour has once again become the party of nationalization." Three more big lenders in Britain could go the way of Northern Rock soon:

Alliance and Leicester, Bradford & Bingley, whose shares fell 15% yesterday, and Paragon, whose share price has fallen 60% since March.

Already, there is more and more agitation in Britain that the government should do something about safeguarding citizens' deposits. Today, Britain's Financial Services Authority head Hector Sants told the BBC that the current totally inadequate bank deposit guarantees would have to be reviewed. Sants said that it is clear that the existing bank-backed "Financial Services Compensation Scheme" has "limitations," and this has contributed to the bank run on Northern Rock. Also today, campaigners for employees who lost their pensions when their companies went bankrupt, called for government compensation, the Guardian reported. The government had assured employees that their pensions were protected by law, but millions of pounds of pension funds evaporated in the past decade. A Pension Protection Fund was finally established in April 2005.

Meanwhile, Britain's huge real estate bubble is trembling on the brink. Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn today said there is a 10% chance of a 1990s style house price crash this year. House prices crashed by at least 35% in the early 1990s, and almost 150,000 houses were repossessed by the banks in 1991 and 1992.