By Denis Campbell

Gordon Brown knows quid pro quo. 

He sat quietly in waiting for 12-years as his would-be mentor Tony Blair stayed vainly in power much too long and frittered away Labour’s public standing in a series of dramatic pratfalls, the biggest being a huge backlash for being a loyal Bush lapdog for years over Iraq. Once that came home to roost, conveniently, as he was leaving, there was no stopping the tide threatening to wash Mr. Brown to sea. 

PM Brown has had bad luck. His timing could not be worse as cynics compared him to John Major, the PM who unfortunately followed Baroness Thatcher and oversaw a massive Tory defeat to Tony Blair and “New Labour.”  Mr, Brown has had to deal with a huge crisis of party confidence, growing public Labour fatigue, a budding secessionist movements in Scotland (and Wales?), back-stabbing from within his own Cabinet, nasty backbiting comments from his safely ensconced in the Middle East and US University lecturing former boss and, oh yes, a cratering economy.

Yesterday though, the PM went back to his strengths as the stern and steady hand on the UK economic tiller. Just days after Time Magazine in its Europe edition released a scathing report of how the UK and London in particular, is drowning in the financial crisis, he and Chancellor Alistair Darling announced a sweeping bank rescue package with protections for the government as now key shareholder in each bailed out bank and strict rules on executive compensation and dividend payments, a key tenet mostly missing in the USA bailout version. It’s a banker’s worst nightmare come true, being completely transparent and fully open since they now have 60 million shareholders.

Embattled PM Gordon Brown watched his party’s support erode this summer as the resurgent Tories (Conservative Party) won huge local election gains, the mayoral seat in London and picked up three more seats in by-Elections showing a general downward Labour Party trend. There was a mini-party revolt in August when members of the Cabinet not-so-quietly suggested it was time for Mr. Brown to go. 

Then along came the full-bore financial crisis and the former Chancellor showed his true stripes coming up with the best solution and trumping Hank Paulson and the Yanks. The dour Scot proved that sometimes a winning personality can be trumped by solid and steady know-how. He and a calm Alistair Darling addressed the media and then bankers in a technical session to calm nerves. The end result was broad gains in the FTSE 100 and other indices.

Ever the shrewd market observer, Mr. Brown scratched his head at President Bush putting so much power in the hands of one person/agency. Letting Treasury Secretary and former Goldman Sachs Chair Hank Paulson (and his eventual successor) make markets with the US $700 billion dollar plan was akin to letting the investment banker fox own the hen house.

The Brown plan is much more prudent and more akin to the Swedish bank bailout plan of 1992. As Carter Dougherty wrote in the New York Time in late September:

“The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.”

So perhaps the US and other markets can learn a bit about financial self-responsibility. Mr. Brown did and we’ll all breathe a bit easier because of it.