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Government confirms second bailout for banking industry

February 3, 2009 by admin  
Filed under News, News-Banking

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In a week that saw Royal Bank of Scotland reveal losses of around £28 billion, and saw share prices in banks plunge amidst fears over instability, the Prime Minister has announced the second bailout of the banking industry in the space of just a few months, and once again this will come at the taxpayers’ expense.

The Prime Minister, Gordon Brown, and the Chancellor, Alistair Darling, indicated last week that if the latest bailout plan fails then the whole of the UK economy could collapse.

Taxpayers have already had to foot the £37 billion bill from the last banking bailout, and the new bailout will involve taxpayers’ money being used to underwrite billions of pounds worth of loans, which could mean potentially covering huge losses stemming from the banking industry. In order for the government to take on some of the risks with these loans through the use of taxpayers’ money the banks would have to pay a fee, although the amount has not yet been revealed.

After announcing details of the plan Gordon Brown stated: ‘These are comprehensive measures focused on one purpose – increasing the amount of lending that is available to families and to the businesses who are the backbone of our country and who want to invest and create jobs.’ Alistair Darling added: ‘If the banking system collapses, every single one of us would see the obvious problems. The economy would come down with it.’

Mr Brown went on to state: ‘This is not help for banks but help for businesses and families by providing the capital to ensure credit for businesses and families and to raise demand in the economy.’

Tags: government help, single one, week, plan, bank bailout, Minister, prime minister gordon brown, fears

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  1. Home loans are not going to become more readily available yet says:
    April 2, 2009 at 8:04 am

    [...] Officials have stated that it is very unlikely that home loans will become more readily available in the near future, despite various government initiatives aimed at helping people to get onto the property ladder and to get banks to start lending again. [...]



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