For those of us without a PhD in finance, the £200bn “special liquidity scheme” is difficult to comprehend. But taxpayers should pay attention.

The Bank of England is allowing hard-pressed banks to take the assets they are unable to sell in the market and swap them for crisp, clean Treasury bills.

The big question is: how is the Bank valuing the collateral if no one in the market is willing to put a price on it?

The Bank argues the exposure to the taxpayer is limited. First, they only accept AAA rated securities. Second, unlike the US plan to buy up bad assets, the Bank scheme leaves the private banks responsible for losses.

But these points are worryingly similar to the arguments private banks were using ahead of the crash. After everything we have discovered about rating agencies, why is the Bank ready to accept a security simply because it is marked AAA? Have they been listening to Gordon Brown’s criticisms of how the ratings agencies operated?

And if there are any losses, how will this be recouped from the private banks? Under the scheme the Bank can swap assets out of the programme when they deteriorate. But how will the Bank officials judge when they have deteriorated? And how will they price an asset that no one is willing to buy?

This valuation is critical because under the scheme’s repurchase agreement, if an asset falls in value the Bank either has to ask the private bank for more money or more collateral. Again, who will determine how much? And will the bank be in a position to pay?

These are big decisions. The Bank officials are judging structured finance products that fooled specialists, analysts, investors and some of the most highly paid bankers in the world.

Up to now, the Bank collateral managers have mainly dealt with simple government bonds. According to Paul J Davies’ excellent piece on this subject, they have added “a couple of extra staff” to the team running the £200bn scheme. Let’s hope they are good.

All the evidence suggests that allowing corporate donors does nothing for transparency or the simplicity of the political finance system.

Peter Riddell’s piece neatly exposes the logical contortions in electoral law. Why should a foreigner banned from donating be permitted to give as much as they like via their wholly-owned EU based company, as long as it does business in the UK?

But one point he doesn’t raise is why companies are permitted to donate at all.

The US realised this was a bad idea a long time ago and banned direct corporate donations. The 1907 Tillman Act — named after “Pitchfork Ben” Tillman, a vile racist Senator who made his name rampaging through the South attacking blacks and Republicans with his “Red Shirt” band of paramilitary terrorists — was the first attempt by Congress to clean up politics.

Tillman’s motive — stopping funding to civil rights politicians — was pretty disgraceful. But the means he sought was supported by the likes of Theodore Roosevelt, who were more interested in tackling dirty politics.

The big question is what the purpose is in giving as a company? Strictly the decision should be passed through the board. But how many companies shareholders are united in their view of politics, let alone corporate boards? A politically united company is more than likely to be owned by one person. If the decision is down to an individual, what is the point of giving through a company?

Ideally the system would allow for public spirited companies to give to all three parties and show their support for the system. But are there any examples of that? A much more prevalent practice has been individuals sanctioning their companies to donate rather than use their own name. You have to wonder why.

Banning corporate donations would clear up a lot of the controversy about foreign-donors, tax-status and disguised donations.  Why isn’t it being done? Well, the Tillman Act banned companies and unions from giving. Now that would be controversial.