Who knew they still had it in them? Forty-three years after Winston Churchill passed from the scene and at least 15 years since the Rolling Stones put out a respectable single, the Brits are back at the helm of world leadership!

First, Prime Minister Gordon Brown proposes to combat the credit crisis by direct government purchase of stock in distressed British banks—socialism that would make Margaret Thatcher defect to Argentina, yes, but still the most intelligent idea out there. Within days, voices across Europe and the United States start to say publicly what everyone already knew: that U.S. Treasury Secretary Hank Paulson’s bailout plan bordered on daffy, and direct injections of capital in the banking system would jumpstart the credit markets much more efficiently. Next thing you know, the Treasury Department pulls another weekend shift to draw up a U.S. version of the Brown Plan, and Wall Street opens 450 points higher on Monday morning. Boring men everywhere rejoice that one of their own has finally succeeded at something.

But the British may not be done yet. The U.K. Financial Services Authority published a “Dear CEO” letter on Monday that squarely warns financial firms to re-examine their executive pay policies. The three-page missive explains to boards and CEOs that while the agency ostensibly “has no wish” to wade into the minefield of setting CEO pay, it does want to ensure that pay policies are aligned with sound risk-management principles and with risk tolerances spelled out by each company’s board. My favorite gem from the letter:

We believe that given the events of the past year firms recognize the need to review their remuneration policies and to take steps to change them if necessary. We believe that in working with the industry we can assist and encourage this process.

Translation from the Queen’s English into American vernacular: “Everyone knows you screwed up, and you have even less political capital than you do financial capital. Fix this or we’ll fix it for you.”

The FSA letter should surprise nobody on either side of the pond. The British government has become a shareholder in its banking industry, and like any other shareholder, it now wants to exert influence. A polite “Dear CEO” letter is a quintessentially British way of going about the task, but make no mistake about why the FSA is sending out such a warning: because it has the newfound political muscle to do so.

We can already see the parallels forming here in the United States. The bailout legislation passed two weeks ago allows for the Treasury Department to buy stock in U.S. banks directly (who slipped that into the bill, anyway?) and contains a few mild admonishments for greater scrutiny of CEO pay. Shareholder activists want stronger curbs against pay abuses, and Democrats in Washington seem to be in full agreement. The only major difference between Britain and the United States is the greater political context: They have Gordon Brown running the government, and we have George W. Bush.

But we won’t have the Bush Administration for long. You might want to start watching the BBC for ideas about what could come next.

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