Ian Bell on bricks and mortar

Well, that's the bankers told. Again. Hauled into the Treasury last week for a rollicking from Alistair Darling and Peter Mandelson, the financial wizards did not quite reply "You and whose army?" After all, the government's commitment to essential Keynesian reflation still involves Trident and two gigantic aircraft carriers. Nevertheless, challenged to restore lending to 2007 levels, the banking geniuses were neither chastened nor cowed.

After all, they had already heard Gordon Brown "demand" that they ease up on repossessions, a misery whose tally is heading towards 48,000 and beyond. In point of dull fact, the prime minister had merely issued some fierce-sounding "guidelines". We all know the effect those have on an industry that has him, us and half the planet over a barrel.

True, the banks are prepared to avail themselves of £37 billion of our money. They appear to believe that this is the least we can do. Ever since they heard that none among them will be allowed to go bust, they have drawn the conclusion: Messrs Brown, Darling and Mandelson can only bluff or beg. Or get stuffed.

Northern Rock is a case in point. As it toils to buy its way back from nationalisation, it stands accused (though the charge is denied) of pursuing repossessions with more brutal zeal than any of its competitors. Equally, it proposes bonuses all round for those doing this dirty - but rewarding - work. Public opinion has no bearing on the matter and nor, apparently, does the glaring fact that a government issuing "guidelines" owns this bank outright. We employ every last individual busy kicking our fellow citizens from their homes.

Such is the nature of the beast. Lloyds TSB - hands outstretched for £5.5bn - boasts that this year's bonuses are secure. Potential investors in RBS and HBOS demand that their dividends be restored. The pin-stripes meanwhile bemoan "political interference". And no politician disturbs this sublime arrogance by mentioning the possibility of a proper inquiry into zany banking practices, far less charges. Only naïve small business people remember that it is, in fact, illegal to continue to trade while insolvent.

The government would like the banks to understand, nevertheless, that repossession must only ever be a last resort. Isn't this the first thing they teach at Mammon College? Apparently not. Apparently it is sound business practice to wait until a housing market has collapsed before flooding said market with thousands of repossessed properties. Ideally, if that's the word, you embark on the process amid the destruction of the buy-to-let fantasy that someone - the banks, you say? - encouraged. Economics: only geniuses need apply.

The government's best shot - Scots law will doubtless adapt to English practice - is to cajole judges in repossession cases into ensuring that the banks tried really hard to avoid kicking families into the street. Beyond that, Brown, Darling and (for small business folk) Mandelson have nothing. They will not legislate. They will not accept the powers that should accompany even part-nationalisation. Instead, they appeal to the better natures of bankers. Savour the concept.

The reality is that the banks are "repairing their balance sheets" by the traditional method: at our expense. They will not be distracted from the task unless they are forced into civilised behaviour. Their mantra of "confidence" is a sham: their lending activities are guaranteed by HMG. But the more the banks are given, the more they demand. So families are destroyed just to prettify the accounts.

Why does repossession terrify? Why does it possess such a deep psychological significance? These sound like stupid questions, but they are worth pursuing. Some of the reasons are practical, some what might be termed social. All reach to the heart of Britain's peculiar relationship with bricks and mortar.

Thatcher's destruction of council housing mean the near-eradication of alternatives to home ownership. The private sector did not pick up the slack, and the buy-to-let mania, has failed to provide answers. There was a housing crisis in Britain long before the scale of banking's lunacy became plain.

The Thatcherite mirage known as a "property-owning democracy" may have failed but it transformed attitudes. First, it caused people to believe that ownership was essential to self-respect. Then it convinced millions that they would acquire wealth in perpetuity in the process. Supposedly no-one could lose. It was sensible and respectable to buy.

It was common sense and socially necessary, in fact, even if the ritual involved a 125% mortgage from the likes of Northern Rock, based on income multiples that, long before the recession arrived, defied belief. The topic was commonplace years before the combined effects of debt and bankers' fictions became a global pandemic. Who were the people taking loans at six and seven times their salaries? And who was lending, lending with honest intent and a clear conscience, on that basis?

As it transpired, the people doing the lending were also borrowing hand over fist. In America - 750,000 foreclosures and counting - as here, everything depended on the walls, roofs and floors where families made their homes. And it was all but compulsory to enter into the contract. The housing market, and therefore general prosperity, depended on it.

All of this was "sustainable". High employment and low-interest rates guaranteed the housing market. As long as those were maintained the bubble could never pop, they said. The wise ones forgot to mention that each card in the rickety tower depended on every other card, and that interdependence was global. So the scams of banks and US realtors created their butterfly effect in the British jobs market. The last prop has crumbled beneath the debt mountain. People are losing the homes they mistook for assets.

People will be helped, or so it promised. Does that mean an end to repossessions? Of course not. Even when it makes no sense for a bank to seize a house, neither the bankers nor the politicians will ever go that far. Who would bother to keep up the payments if eviction was forbidden? Who would bother to invest in banks? Instead, the grand plan is merely to ameliorate the situation, if possible, and if the banks can be persuaded to wait for their money, and if someone can force the idea of the greater good into bankers' skulls.

Don't hold your breath. Having the full protection of the state and making money are not, for the industry, one and the same thing. Further wrecking a housing market on which they have come to depend is not, for the short-term thinkers with bonuses in view, illogical. The destruction of hopes, dreams, health and families is not their problem.

Repossessions convey messages. Victims learn that they have become worthless, almost overnight, as people. They are parents who have failed to provide, losers in the rat race and individuals who should never have been granted the privilege of ownership to begin with. Repossessions crush the life from the luckless. They remind the rest of us that we have been conscripted. The act of making a home has dragged all of us to the heart of international capitalism.

Such was Thatcher's scheme. Once stakes in housing and privatised shares were forced upon us, dissent from the excesses of the market ceased to be possible. People believed they had no choice but to join the game, to gamble with home and family. The bankers, it turned out, were gambling with those same fundamental things. The difference being that if we lose, they still win. Is it not essential that they cannot go bust?

Your home may be at risk, said the small print, if you fail to keep up payments. More than your home: merely everything a home can ever mean.