At the Treasury it has already been dubbed "the balti bailout". At 9.30pm on Tuesday, Alistair Darling and about 30 of his officials took a few precious minutes off from their marathon negotiations with bankers for a takeaway curry from Gandhi's Indian restaurant in Kennington, south London. The "customer feedback" section of its website includes commendations from Gordon Brown, Jack Straw, John Major, Paddy Ashdown, Richard and Judy and, appropriately enough, Mr Darling.
Sitting in his office on the second floor of the Treasury, the Chancellor tucked into his tandoori chicken. But government hospitality did not extend to the negotiators from eight banks and building societies sitting in a nearby room, who had to survive on Treasury tea and biscuits instead.
All night the lights burnt on several floors of the Treasury building, which runs from the corner of Parliament Square to St James's Park. Some officials had been there since 6am on Tuesday. Among those who worked right through Tuesday night were Paul Myners, the former Marks & Spencer chairman, having a baptism of fire after being appointed the Treasury minister responsible for the City in last weekend's reshuffle. He was joined in his all-night session by senior Treasury officials Nick Macpherson, John Kingman and Tom Scholar.
The bankers present included the so-called "Gang of Three" – the bank chief executives who had become impatient with the Chancellor at their previous meeting with him on Monday evening – Sir Fred Goodwin of the Royal Bank of Scotland, Eric Daniels of Lloyds TSB and John Varley of Barclays.
When they arrived at the Treasury at 10pm on Tuesday, the bankers had little idea how the Government's scheme to take a stake in ailing banks would work. There were also some differences among the banks themselves. The bosses of Standard Chartered, HSBC and Abbey did not share the Gang of Three's hunger to take up new capital but agreed to take part in the scheme if it would bring stability to the financial system.
Mr Darling, aware of the likely public reaction to a direct injection of £50bn of taxpayers' money into the banks, made clear early on that it would come with "strings attached" – including curbs on executive salaries and bonuses, and dividend payments.
The Chancellor was flanked by his officials and an array of outside advisers, including representatives from investment banks UBS and JP Morgan Cazenove, City lawyers Slaughter and May, and Michael Klein, a former Citibank investment banker. There were so many advisers present that the Government's side even included a brother and sister – Nilufer von Bismarck from Slaughter and May and Naguib Kheraj from JP Morgan.
The bankers had their legal advisers at close hand, too. "The legal teams from both sides were crawling all over the agreement," said one of those present.
Uncharacteristically, the workaholic Prime Minister had gone to his Downing Street flat at about 10pm. He was given updates on the Treasury talks by Baroness Shriti Vadera, one of his most trusted advisers, who is a minister in the Department for Business and the Cabinet Office.
The bankers did not leave until 2am, when the deal was finally done. Mr Darling went to bed at 1.45am, after a nightcap of a cup of tea at 11 Downing Street with his wife, Maggie. He was up at 4.45am yesterday, and by 5am was meeting Mr Brown and officials from No 10 and the Treasury to formally sign off the agreement with the eight financial institutions.
The scheme was announced on schedule at 7.30am, half an hour before the stock market opened. While Mr Brown headed to the second meeting of his economic "war cabinet" at 8am, Mr Darling toured the television and radio studios to begin the task of selling the deal to the wider world.
At 9.20am, the Prime Minister and Chancellor joined forces at a press conference in Downing Street. Mr Brown fielded most of the questions. Both men put on a cool exterior, but had to fend off tricky questions about the eventual cost of the deal and charges they had "dithered" before announcing it.
There was a telling pause when Mr Brown was asked "how far through" the crisis we now are. Eventually, he replied: "We know it is a long haul."
Mr Brown's next hurdle was his first session of Prime Minister's Questions since the Commons' 11-week summer break, which was bound to be dominated by the bailout. As he entered the Commons chamber from behind the Speaker's chair, Mr Brown had just had an ace placed up his sleeve. The Bank of England, which had not been due to make a decision on interest rates until today, had agreed a half-percentage point cut in a co-ordinated action with central banks in the United States, Canada and Europe. "It was the icing on the cake," one Labour MP said later. "It makes the bank deal much easier to sell, as it's part of a wider action."
Downing Street denied that Mr Brown or Mr Darling had put pressure on Mervyn King, the Bank's governor, to grasp the nettle on interest rates. In fact, the Chancellor had already done so in media interviews in recent days. Yesterday morning, he repeated that the Bank's remit was "to support the Government's wider objectives of economic stability" as well as to hit its 2 per cent inflation target. It seems that Mr King, who has frustrated Mr Brown and Mr Darling over his stance on rates, had got the message.
The surprise early cut in rates lifted some of the pressure on Mr Brown in the Commons. He was able to tell MPs about it in his opening remarks, to jubilation on the Labour benches. That set the tone for what was an uncomfortable 30-minute session for David Cameron, and Mr Brown's best for a long time.
The Tory leader demanded an assurance that taxpayers should not fund any "rewards for failure" – bonus payments for executives of ailing banks. But he faced a delicate – perhaps impossible – balancing act.
He could not be too critical because the Tories had given their broad support for the bank rescue, in line with the bipartisan approach to the crisis they adopted at their annual conference last week. This has limited their room for manoeuvre; when Mr Brown faced a tricky question from Tory backbenchers, he quipped that the all-party consensus had not lasted very long.
A confident Mr Brown swatted Mr Cameron aside and Labour backbenchers waved their order papers in approval as the session ended. One Labour MP later described it as "Gordon's Lazarus moment".
It is far too soon to judge whether that is true, or whether the monumental gamble taken yesterday will pay off. The FTSE 100 index is now lower than it was when Labour came to power in 1997. Ministers are holding their breath, admitting privately they do not know what will happen next.
Some concede that the bank rescue could have been better handled. Mr Brown, keen to build on his recent recovery, was keen to be seen in charge of events rather than reacting to them. But it didn't look like that.
The Treasury has been working in great secrecy on a recapitalisation scheme for the banks for several weeks. "Don't talk about it, even if you're asked," Mr Darling repeatedly told his aides. "The markets will go down."
His remarks were prophetic. That happened with a vengeance after Monday night's supposedly secret meeting between the Treasury and the banks was disclosed by the BBC on Tuesday morning, fuelling speculation about a rescue deal. That sent bank shares plummeting.
The Treasury is convinced that bankers briefed the BBC because they were becoming frustrated that it was taking so long to finalise the scheme. "They played the 'dithering' card," claimed one source. "It was amazing, a massive own goal, because all it did was to hurt their own shareholders."
A Treasury official said: "We are completely mystified. The banks knew the score; they knew we were going to do it." One theory in government circles is that the divisions amongst the banks were holding up an agreement, and so those who were desperate to secure extra capital leaked the plan in an attempt to break the logjam.
According to his aides, Mr Darling always intended to announce the rescue plan yesterday – not least because he leaves this morning for a crucial meeting of G7 finance ministers and central bank governors in Washington. So, despite the appearance that a dithering Chancellor was bounced into action, there was no need for the banks to pile on the pressure after all – the final irony of a momentous day.
Gandhi's: MPs' views
"Excellent hospitality, food and company" – John Reid
"A consistently high standard of cooking and service" – Jack Straw
"Excellent service and hospitality" – Gordon Brown
"An excellent meal" – Alistair Darling
"Wonderful as always" – Paddy Ashdown
"Gandhi's restaurant in Kennington Road – my favourite Indian restaurant. Excellent food and service" – John Major
The teams: Who's who
Paul Myners: The former Marks & Spencer chairman and ex-director of GLG, one of the world's biggest hedge funds, was a surprise appointment as the Treasury minister responsible for the City. Mr Myners, 60, was appointed to his new job on Friday.
Nick Macpherson: The permanent secretary to the Treasury, aged 49, was appointed in 2005 and is rated very highly by Gordon Brown. He gave £12,700 to Mr Brown's Labour leadership campaign when Mr Brown was Chancellor.
Baroness Shriti Vadera: The 45-year-old junior Business minister is another Brown ally. She was given a Cabinet Office role in last week's reshuffle to bring her closer to Downing Street.
Sir Fred Goodwin: The Royal Bank of Scotland chief executive, 49, is known as "Fred the Shred" for his cost-cutting drives but has expanded the bank. He is chairman of The Prince's Trust.
John Varley: Was appointed chief executive of Barclays in 2004. In his spare time, the 52-year-old is involved in a drugs think-tank and an organisation for the homeless.
Eric Daniels: The chief executive of Lloyds TSB is known in banking circles as "the quiet American". Aged 57 and from Montana, he is the son of a German professor and a Chinese mother. He is a fan of crime fiction and fly-fishing.Reuse content