Skip to comments.UK: Banks to Get More Cash if They Pass It On
Posted on 01/19/2009 8:14:15 AM PST by marshmallow
UK says it will only give more money to banks if they agree to pass it on to borrowers
LONDON (AP) -- Britain is bailing out its banks. Again.
Only three months after the government put 37 billion pounds into shoring up its shattered financial system, Britain is putting billions more into an insurance plan intended to get banks lending again.
At the root of the problem lies what treasury chief Alistair Darling said Sunday were "blockages in the system" that have prevented the money pumped into the financial sector from seeping into the wider economy. Interest rates on mortgages remain high and the number of loans remains low. With banks poised to return dismal earnings reports, Britain is again putting up taxpayer money to guarantee their wobbly balance sheets.
But this time, Darling says, that money will have to be passed on. The chancellor told Sky News television that banks would have to "enter into binding agreements to make sure that, if we put additional money into the system, it goes to the people and businesses it is designed to support."
Just how much money Darling is prepared to put on the table isn't clear.
A government official said the British treasury was preparing an insurance plan for some of the weakest items on the banks' balance sheets. In return for a fee, the government would agree to guarantee risky loans and bad debt with taxpayers' money, the official said. If the loans went sour, the banks would be reimbursed from the public purse.
Although some media reports have put the size of the expected liability at up to 200 billion pounds ($300 billion) the official said he could not give a figure, saying many aspects of the plan were still being negotiated.
(Excerpt) Read more at biz.yahoo.com ...
It's a done deal.
Destruction of the system.
Fat chance of passing it on to anyone but themselves.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.