After a decade embracing private enterprise and free markets, New Labour has once again become the party of nationalisation. The Chancellor’s decision to offer a national guarantee to the customers of Northern Rock means that, if a private buyer does not step forward, the bank will fall into public ownership.

Alistair Darling has not, of course, reverted to socialist doctrine. There was nothing principled or premeditated about yesterday’s intervention. Instead, it was the ultimate act of pragmatism, a desperate piece of policy-making on the hoof designed to stop the panic and save a financial institution that has fallen prey to negligent executives and bungling regulators. To be fair, Mr Darling has shown some of the qualities required of a Chancellor in a crisis - logic and leadership.

The Treasury stepped in because it judged, rightly, that depositors at Northern Rock would keep on queueing to withdraw their savings until they had no doubt that their money was safe. A private sector bail-out, even if agreed within days, could take months to complete and would not provide the public with adequate peace of mind. The Bank of England’s promise of support did not inspire confidence. Quite the reverse. Finally, an explicit, unequivocal commitment from the Government that it will honour every deposit provides Northern Rock customers with, quite literally, a gilt-edged guarantee.

Until yesterday, it seemed that no-one was in charge. Matt Ridley, the chairman of Northern Rock, has seemed missing in action. Mervyn King, the Governor of the Bank of England, has appeared to take a vow of silence. It has fallen to the unlikely combination of Sir Bobby Robson and Angela Knight, a former Newcastle United manager and a former Conservative MP, to shore up confidence in the British financial system. (Sir Bobby gamely announced his plan to open a £10,000 deposit account; Ms Knight, now the mouthpiece of the British Bankers’ Association, assured people that the bank was solid.) Mr Darling yesterday took personal responsibility for the crisis, not only saying that his job as Chancellor was on the line but making the coffers of the Treasury available.

But the creeping nationalisation of Northern Rock is, a humiliation for the British banking system and the Labour government. It is not a statement of strength from the Treasury, it is a salvage operation.

The ultimate blame lies with the managers of Northern Rock. They aggressively built an increasingly profitable business on a piece of wishful thinking. This was that they could borrow primarily from the wholesale markets to lend to individual mortgage customers. This worked spectacularly well until those wholesale markets seized up. The Rock’s board failed a simple test of risk management: they put all their eggs in one basket.

But the rescue, too, has been a botched job. It has seemed that Mr King’s concerns with moral hazard have obscured his understanding of the fragility of customer faith. Last week, he issued a public statement that seemed to pick an argument with the European Central Bank about the dangers of encouraging bad behaviour in banking by providing emergency liquidity in the three month market. Given the problems at Northern Rock, this was not the time to throw stones.

The Bank’s refusal to allow Lloyds TSB to structure a deal with Northern Rock is, with hindsight, more perplexing still. Mr King apparently argued that the central bank could not provide blank cheques to healthy banks, just because they were buying tottering instutions. But his refusal to fashion a deal that worked both for Lloyds and Northern Rock meant that the Bank was forced to act as lender of last resort. The crossed lines of communication between the Bank, the Treasury and the Financial Services Authority have prompted questions about the wisdom of the tripartite system of financial regulation introduced in 1997 by the former Chancellor, Gorodon Brown. And the way that the Bank’s emergency action was announced - a late night leak to the media on Thursday - added unnecessarily to the sense that events were spiralling out of control.

As much as Mr Darling will hope that his action draws a line under the uncertainty, it will not.

Alliance & Leicester’s shares fell by a third yesterday, as anxiety spread from one former building society to another. A&L’s business model is similar to Northern Rock’s, but not the same. It needs less than half the money that Northern Rock does to refinance bonds and securitisations in the coming year. And it has nearly double the money to pay. But this is no longer about financial statistics. It is about public confidence. The question raised by Mr Darling’s intervention yesterday is this: if the government insists that it will not allow Northern Rock to fail, will that hold true, in the unlikely event that it comes to it, for A&L and Bradford and Bingley too?

Gordon Brown has long stood in awe of Franklin D. Roosevelt, the President who told Americans “the only thing we have to fear is fear itself” and then assured them that the Government would honour their deposits. But, for all his admiration of FDR, Mr Brown, surely, does not want to emulate him in office?

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