Would Margaret Thatcher have rescued the banks?

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No, she was supposed to understand that she was creating a regulatory environment in which widespread fraud and malfeasance could be undertaken with no effective scrutiny.

Some basic questions, "Could this be abused?" "How could this be abused?" "Are there protections to prevent that abuse?" should have been asked and honestly answered.

There was no real intelligence in what Thatcher did with the banking system. She simply took away the reins and allowed the bankers to do as they wished.

Anything can be abused, in any number of ways. It's a matter of what protections you're willing, as a society, to take. Do we stop abuse of drinking laws by banning liqour sales? Do we stop the use of motor vehicles by criminals by banning car sales?

Banking was and is a highly regulated industry in both the UK and the US*, it's not someone out of office 16 year's fault that her successors and the regulators did'nt perform tasks to a retroactively imposed standard.

* Before I'm called out of that by posters, I'd like to ask how much direct and/or personal knowledge they have of the regulatory process and enviroment.

I am against speculating what past leaders would have done in modern situations. The UK economy in 2008 was way different than the UK economy in 1986. So were the internal politics of the UK. Granted, Thatcher singlehandedly had a big stake in the political and economic conditions leading up to 2008, but many changes were outsider her control. For instance, the global economy was far more interconnected in 2008 than in 1986, and the change touched every nation. It would happen with or without Thatcher.

What I think Thatcher would have done is chose pragmatism over idealism. For the most part, she only picked fights she could win. She battled the coal miners union only when her government had a stockpile of coal. She never fought directly with the teachers union, which was a fight she would surely lose. She only picked fights at all because she had a strong power base with the South of England. The decision to bail out banks probably would have hinged on how it would shore up her own position. Given this, it may be tempting to conclude she would bail them out, but in my mind the jury is out.

Of course abuse is always possible, and of course government is about making policy choices. And while the extremes that you suggest are, indeed, impractical policy responses to perceived mischief, regulation is not a binary state--it's not a question of regulating or not regulating. Rather, it's a question of how much regulation is required to protect the system from foreseeable mischief without creating a burden that makes participation in the marketplace impractical.

I have over 20 years of direct experience of the regulatory process--but not of the regulation of banking. My knowledge of the financial sector is limited to research of my own, primarily into the causes and consequences of the 2007-2008 Financial Crisis.

Based on the number, scope and compexity of regulations, I won't disagree that banking is highly regulated in the US and UK. But the question is not whether or not there are enough regulations, the question is whether there are:

1) regulations to prohibit the potential abuses that are foreseeable at the time that regulations are made
2) the administrative tools to detect these abuses
3) the remedial tools to mitigate the losses that might be caused by these abuses, and
3) the enforcement tools to punish them

This is where Thatcher failed. It was not that she repealed the Banking Act (she didn't), it was that when she reduced the regulatory constraints on the banking sector she did so without taking care to determine the potential consequences.

And let me be clear, I don't restrict my blame to Thatcher--I believe that Major and Blair were equally culpable. They had become so dependent on the wheelbarrows of cash that the City was pouring into the Treasury, that they wilfully blinded themselves to the moral hazard that was created when banks became "too big to fail."

But the rot would not have set in if Thatcher had not sown the seeds.

I think if she was to worry only about how it would make her look then she would have had a nightmare of a decision to make in 2008. Because either decision would have weakened her position.

Bail them out - This would have gone against her overriding principle that the state should not intervene with private business. She allowed the banks to operate freely and so should have let them deal with the consequence of their own freely made choices. This would have weakened her position because it would have been one major U-turn.

Let them fail - This would have given her personal integrity, in that she was standing by her ideals of free market capitalism. But she would have then had to deal with the consequences of two major UK banks going under, which would have devastated the economy.

I am keen to think she would have let them fail. Because even though it would have been devastating she would have been standing by her principles and it would have also made the other banks more careful in future.

Pinochet bailed out the banks in the early 1980s... nationalising them at first, in fact... there's nothing shameful to that mob about public subsidy for private profit. In fact, as far as they're concerned, it's a matter of rewarding the deserving.

Have you seen No? You'd enjoy that.

It's available online, if you're too much of a pikey to go to the cinema and watch it like a normal pleb.

But I think with the way the Tory party glorify her, and say she stood by her convictions, that this question should be debated. Because this question would really test her convictions. I think it should be on Question Time.

Ummmm.....are they conducting this question by senance? She's....ummm......not with us anymore.

Thatcher's convictions would not stop her from bailing out the banks.

It is a question for all of us. If we think we know what this woman was about and we apparently either love her or loathe her, then everyone must have an opinion.

I think it's a very apt question given our current situation.

The press and the Tories, and a few Labour MP's, have just spent the last week and a half spouting about how brilliant a PM she was, and that she changed the country for the better etc etc etc So I think those people should be made to address this question.

If she was so great and changed the country for the better, then where have we gone wrong with Thatcherism. Seeing as two major banks are now owned by the state, then Thatcherism has gone wrong. Is that because Thatcherism was wrong, or because we have not applied it properly.

Then the lady was for turning. She would have gone against everything she said she stood for.

I actually think she would have let them fail.

She never took a position against bailing out banks. It was established as part of the neoliberal playbook. Pinochet did it.

So now you're advocating asking sitting ministers of their hypothetical undersanding of a dead person's views on something. I'd be happy if we had "Question Time" over here, but even I think questions should be limited to areas actually under a minster's jurisdiction.

Edit to add: Now, if you asked (minister with oversight of banks) what his/her views are on bank oversight, I'd have no disagreement with that.

Its not just a question for ministers. If we are to understand Thatcherism then this is a very good question to ask.