The bank rescue has been a success. The global bailout remains a work in progress, but with the aid of government equity injections, special liquidity programmes, debt guarantees and asset protection schemes, most systemically important banks have remained open for business and the banking system has survived.

Moreover, the financial crisis has not cost as much as many thought it would. From the astronomical amounts cited at the height of the crisis, the expected final cost to taxpayers has been drastically reduced and governments are seeing money coming back to their treasuries in the form of fees and dividends.

If some governments - such as Ireland - are still firmly in crisis mode, France has already declared a profit from its intervention.

But if banks paying hefty fees makes for crowd-pleasing headlines, some commentators suggest that the emergence of a political consensus that the bailout needs to make a profit is more about punishing banks for their bad behaviour than about good public policy. Moreover, these critics argue that a focus on profit and the politicians' need to prove they have been tough on banks have led to the rejection of more efficient solutions that would still have been costless to the taxpayer.

Charles Calomiris, Henry Kaufman professor of financial institutions at the Columbia University Graduate School of Business, argues, for example, that zero-coupon preference shares would have been a more effective recapitalisation solution than the capital purchase programme ultimately chosen. The latter, he maintains, has reduced the ability of banks to raise common stock and has therefore prolonged the recapitalisation process.

Similarly, Mr Calomiris says an alternative solution for dealing with troubled asset portfolios floated by US treasury secretary Tim Geithner (based government providing a put option on entire mortgage portfolios) was rejected - despite being more efficient and virtually risk-free for the taxpayer - because it was seen as a sell-out to banks.

There was plenty of foolish, greedy and reckless behaviour in the run-up to the financial crisis that cannot be condoned and, as an industry, banking has not exactly covered itself in glory with its response; but the hostility evident in the relationship between policy-makers, regulators and bankers is not a healthy foundation for sensible policy.

Just because something is tough on bankers does not necessarily mean that it is good for the taxpayer.


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