This financial crisis is a challenge for our political system. Political parties and the independent financial authorities must show the character and judgment necessary to make the right decisions under pressure. Our response will have profound implications for the future prosperity of the country. It was not the stock market crash of 1929 that caused the great depression of the 1930s, but the banking crisis and the failure of the policy response that followed it. Last week’s US congressional wrangling and evidence that bank lending in the UK has all but ground to a halt means that a concerted policy response is vital to avoid serious economic consequences.

That is why I said last week that we are ready to put aside party differences to help bring stability and reassurance. There may need to be a marshalling of public support behind some big decisions and we cannot allow the bitter partisanship that we saw in America to happen here. This does not mean signing a blank cheque and we will not suspend our critical faculties. But the shadow chancellor George Osborne and his team have already met the chancellor and senior Treasury officials to discuss how we can smooth the passage of the banking bill to be introduced this week. This will include the Bank of England-led special resolution regime for dealing with failing banks that we have been calling for since last year. I am glad to see that our advice on deposit protection has been followed with the announcement that the guarantee limit will be raised to £50,000. That needs to be kept under review as it may need to rise further.