If the US is setting up son of the Resolution Trust Corporation to lift the uncertainty hanging over the banking sector, should the UK create its own version – a cousin of RTC? Just as the UK has no need of a “Gordon Mac”, a British version of Fannie Mae, so it should resist the temptation to create a British bad bank for toxic assets. To the extent individual banks face capital shortfalls, UK regulators still have ample scope for ad hoc solutions.

The past week has given some signs that the UK authorities, by encouraging the rescue takeover of HBOS, have learnt lessons from the Northern Rock debacle. Their response is still characterised by improvisation and frequent U-turns. It is certainly a white-knuckle ride for investors, and occasionally for savers, but the piecemeal approach for now appears to be doing its job.