The Government has failed to punish RBS and Lloyds for not hitting business lending targets
The Treasury decided it would be counterproductive to impose sanctions on the taxpayer-supported banks, according to a report by the Public Accounts Committee (PAC), which acts a watchdog for public spending. Margaret Hodge, who chairs the PAC, said: "The Treasury appears to lack strong determination to use its influence to increase lending to small businesses. "We expect it to find effective mechanisms to ensure the banks meet their lending commitments." The Treasury looked at various sanctions but decided each had a downside which outweighed the benefits, the report said. The PAC said this was "not satisfactory". MPs had been examining the Treasury's Asset Protection Scheme, which was designed in January 2009 to support ailing banks by insuring them against further losses on bad loans. It originally exposed the taxpayer to a liability of £1trn, but that figure has since fallen to £512bn. RBS had a target of £16bn of business lending between March 1, 2009,...