They’ve summoned the big names in the industry to 11 Downing Street for an earful about not following the base rate all the way down.
There’s a curious ambiguity in this, as Brown & Co know perfectly well that the position of mortgage lenders is more complicated than they maintain.
The base rate may be at its lowest point since the 1950s but LIBOR has only fallen by around a third of 1% since the Monetary Policy Committee announced the recent 1% cut.
And the banks being recapitalised by the state are paying 12% for the privilege.
Amazingly, the Financial Services Authority is planning to make it even more difficult for lenders to lend, with proposals to toughen up its already excessive liquidity regime.
It wants lenders to hold between 6% and 10% of their liabilities in government gilts. This is a huge change from the average of 4.6% currently held and will amount to billions of pounds.
Such a move will help the massive public sector borrowing requirement but will do little for the financial services industry. It won’t help aspiring home owners either and will do nothing to resolve the credit crisis.
Going all the way with Brown may not be the right option, especially if he’s heading in the wrong direction.