Politicians wouldn�t be politicians if they didn�t try to squeeze maximum party advantage from times of crisis.

Politicians wouldn't be politicians if they didn't try to squeeze maximum party advantage from times of crisis. And crises don't come much bigger than the firestorm rampaging through the banking sector, here and in the United States, in recent days. With the group that includes Scotland's oldest bank felled in a matter of days, some of our leading politicians have gone into hyperbolic overdrive.

Gordon Brown and Alistair Darling want us to know they moved heaven and earth to prevent another big UK bank going the way of Northern Rock. Alex Salmond, having blamed "spivs and speculators" for driving HBOS into the arms of Lloyds TSB, accuses the Prime Minister and the Chancellor of standing "idly by". An independent Scotland, with its own central bank, would, we are told, have instantly committed up to £100bn to keeping HBOS free and afloat.

That's a vast amount of money. More than three times the Salmond administration's entire annual budget at Holyrood. Or twice Scotland's total annual revenues under the GERS analysis. But it would have been poured into the Mound's coffers, it seems, to teach the speculators the only kind of lesson they understand. And, just for good measure, an SNP government of an independent Scotland would slash corporate taxes to make sure HBOS stayed here.

Last time I checked, the SNP had decreed an independent Scotland wouldn't have its own central bank. The plan, unless it's been quietly dropped since, was for Scotland to remain in monetary union with what was left of the UK. Until the Scottish people voted to join the eurozone, our central bank would be the Bank of England, as now.

And even if Scotland did join the eurozone our central bank would then be the European Central Bank. I doubt Jean-Claude Trichet would be willing to see Alex Salmond splash such a money mountain on HBOS, without their say-so. Of course policy is there to be torn up, in extremis.

After all Brown and Darling tore up competition policy to allow Lloyds TSB to clinch its takeover of HBOS. Sir Victor Blank and Eric Daniels must still be pinching themselves they got away with it, buying a bigger, more profitable bank at such a bargain-basement price. The Prime Minister and the Chancellor, or their successors, may one day rue unleashing such a behemoth, intent on growing its already massive retail banking share, longer term .

In fact this takeover looks such a steal others may be tempted to spoil the party. I don't mean a bunch of Scottish grandees, galloping to SNP MSP Alex Neil's call to pool their bawbees to buy out the Bank of Scotland bits of HBOS. On the retail side unscrambling is well nigh impossible. In the much more stringent times facing all lenders for years to come, a stand-alone corporate bank would look hopelessly unbalanced.

But there may be other institutional buyers, rival banks among them, casting an interventionist eye over Lloyds TSB's less-than-generous terms. One obstacle is Lloyds' all-paper terms. The more banking stocks in general recover, the more HBOS shareholders stand to recoup of their battered investment were they to accept this deal. For the UK government and its regulators, the challenges are still multiplying.

They have to decide whether they will follow the US Treasury's lead and quarantine all the toxic paper out there that is clogging up the wholesale money markets and crippling liquidity. They have to re-examine an institutional architecture for banking regulation that has proved too slow in responding to this unfolding crisis. And they have to address the anti-competitive consequences of letting Lloyds TSB grab a prize it has long dreamed of landing.

Alex Salmond faces challenges too. He has portrayed HBOS as an exemplary bank, dragged down by avaracious villains. But no short-selling assault can bring down a major bank that hasn't already sown the seeds of its own weakness. Bank of Scotland rushed into its 2001 merger with Halifax on the rebound from having NatWest snatched from its grasp by Scottish rival, RBS.

Apart from the corporate side, Halifax executives ran the show. At group level, the merged bank has been run from London ever since. The Mound has long since become what Eric Daniels of Lloyds tellingly called "a residence" last week. It hasn't been a headquarters, in any meaningful sense of that word, for the past seven years. On both the retail and corporate sides, HBOS took large positions on homes and other property interests. It also exposed itself more than many of its peers to short-term funding from the wholesale money markets.

When even the chairman of his own Council of Economic Advisers, himself chairman of a hedge fund that uses short selling, defends the practice as "perfectly valid", isn't it time our First Minister stopped playing to the gallery and start addressing the very real crisis that banks, largely through their own excesses, have brought upon themselves?