British control of Lloyds provides a roadmap for US

The British government now owns about 65% of Lloyds Banking Group. It has guaranteed almost $360 million in the firm's risky assets in exchange for its stake. According to the AP, "As a condition of the deal, the bank promised to increase lending by 28 billion pounds ($39 billion) over the next two years, the majority to businesses."

The move is remarkably clever and may provide the best example of what the US government should do with its largest troubled banks.

The Fed and Treasury have already provided backing for over $300 billion of Citigroup (C) assets. For that and other aid to Citi, taxpayers will end up owning as much as 36% of the firm. But the question of exactly how much of the government's money will make it into the credit system through lending is still fuzzy. In the case of Lloyds, the commitment is fixed. That means that a large part of the British investment will go directly to stimulate the economy.

The Lloyd's deal kills two birds with one stone. It save a large financial firm and it helps unlock credit that businesses needs to stay afloat and, in the best cases, expand.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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