THERE is a whiff of something unpleasant in the air. Some might call it a climb-down, others will say it is a sell-out. Either way, it seems likely the Government is laying the groundwork to surrender to the big banks and abandon all further attempts to dismantle their interest rate cartel. Financial Secretary Sir Hamish Macleod's efforts at damage limitation yesterday were distinctly unconvincing. By stressing that 'all options are open' he only reinforced the impression that the Government is no longer wedded to the policy of deregulation it had previously pledged to pursue. Secretary for Financial Services Michael Cartland's earlier remarks that, since the position of local banks has recently deteriorated, the Government 'does not want to add to their problems' gives a clear indication of the direction in which official minds are moving. When Mr Cartland talked about local banks, perhaps he was referring to Hongkong Bank and Hang Seng Bank, which had appealed for a moratorium on deregulation earlier this week. Barring an unexpected recovery of nerve, any chance of deregulating 24-hour deposits now seems dead and buried. Ironically, by the time this has to be announced, Sir Hamish and Mr Cartland will be gone. Both have only a few months left before they retire, leaving it to their local successors to complete the dirty work of caving in to the big banks. But the departing expatriate duo should leave with their heads hung low in shame - for it now appears their last act in office will be to put the interests of a few major banks ahead of the Hong Kong consumer and other banks.