Okay, so the government should cut domestic spending, reducing the amount of cash available to government agencies and their suppliers? Or did you mean it shou

Okay, so the government should cut domestic spending, reducing the amount of cash available to government agencies and their suppliers? Or did you mean it should raise taxes to collect more funds, essentially putting a drag on the economy and sending tax-sensitive organisations elsewhere? Possibly you meant it should print money, causing hyper-inflation and destroying the value of savings and the public's faith in them. All three options suck, and all three would lead to negative publicity. I think that the government should cut spending on stuff that I don't think is important. But you and I would probably disagree on what stuff that is. As for the banks model, bank A would probably launch an adversing campaign clearly describing that investing in banks B,C + D is a sure way to loose your money. This campaign (when successful) would make more funds available (term deposits, savings accounts) to A which it could then safely invest. Note of course that banks A..D are probably not competing on interest rates (they set them all the same) but instead on loan terms. Bank A decides that it is not in its best interest to grant loans to people without security/equity making money instead from 80% mortgages and the like. Bank A looses high-risk, heavy spending customers and attracts risk-adverse savers and spenders.