Pause for breath and consider the events of the last few days.

A Labour Government will have a powerful influence over how Britain's banks are run.

It will have a say on the bonuses paid to management and it will have a great opportunity to force through measures that will make bosses adopt a long term view.

If you're an idealist, you might believe that this marks the start of a golden age, when the voice of the taxpayer – and therefore the voice of the home owner and small business – is finally heard at the top table of Britain's banks.

The humiliation of the banking bosses has happened so quickly that the full ramifications will take months, if not years, to sink in. But the fact that the Government will have the last word on so many aspects of our financial lives means we are moving into uncharted territory.

Nobody in their right mind wants this sort of cataclysmic event to occur again.

Every element of the pay and bonus package paid to the chief executives of Britain's banks will be subjected to detailed scrutiny.

If they fail to deliver, they are more likely to be ousted, and denied a pay off.

The banks' own greed and incompetence, rather than a revolutionary coup hatched by a left wing Government, has brought us to this unlikely state.

It's too early to say whether yesterday's announcements mark the end of the beginning of this crisis, but the FTSE 100 soared in the hours after the Government revealed it was pumping billions of pounds of taxpayers' money into Royal Bank of Scotland, Lloyds TSB and Halifax Bank of Scotland.

Suddenly, bankers are public enemy number one.

Last night, Liberal Democrat spokesman Vince Cable noted how bankers hadn't proved very good at managing banks. "I wonder now that because Stalin in Number 10 has rediscovered his confidence it might be the time for a Beria in Number 11 to launch a purge of irresponsible bankers."

He suggested that executives from the mutual building societies who had not been "seduced by the bright lights and profits of the City" could be brought in to run ailing institutions.

We really are all in this for
the long term. Conservative Michael Fallon, a member of the Treasury Select Committee, has pointed out that Swedish taxpayers still owned part of a bank 17 years after it was nationalised.

The Government will be hoping that the current banking crisis can be resolved a little more quickly.

The strongest sign that these are abnormal times came
when the Bank of England's Monetary Policy Committee cut interest rates by half a percentage point last Wednesday, in a move co-ordinated with five other central banks, who also announced they were cutting interest rates.

The decision was welcomed as brave and timely by business organisations.

But it's worth remembering that the interest rate decision had not been scheduled until the following day, and, just a month earlier, the MPC had voted by a resounding 8-1 margin to hold UK rates at 5 per cent.

So opinions must have changed in a brief space of time. As the Bank acknowledged, inflation is likely to rise above 5 per cent in the next month or two, which is more than double the 2 per cent target.

Under normal circumstances, an interest rate rise would have been on the cards.

But, according to the Bank, the problems caused by the banking crisis could pull inflation "materially" below its target.

In the same statement, the Bank acknowledged that there was also risk that inflation could stay above target for a "sustained period".

The only certainty is that the Government will be under enormous political pressure to show that it can use its new found power over the banks to improve their performance, stamp out instances of "fat-cat" pay and make them more responsive to customers.

In principle this is all commendable. But, in the aftermath of the banking crisis, there are dangers that we could stifle growth through over-regulation.

As former Shadow Chancellor Michael Portillo told me earlier this year the Northern Rock crisis – which now seems like a distant memory – was caused by a lack of observation rather than a lack of regulation.

Regulation is no substitute for having somebody who can read the graphs and spot weaknesses on the balance sheet.

There's a real danger of wobbling between extremes. The hand of the "nanny state" might control the financial levers, which would make us too risk averse.

There's no guarantee that politicians, or political appointees, will prove more adept at handling our finances than the bank bosses who have been shown the door.