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Apr-21-2008

Bank of England's Swap Plan Aims to Jump-Start Lending

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CONTENTS:

Pressure has been growing on the British government and the Bank of England to do more to resolve a mortgage debt crisis threatening to slam the brakes on the British economy and which is contributing to a slump in support for Prime Minister Gordon Brown. (More...)
The Treasury said the ''50 billion figure is "speculation" but added that Chancellor Alistair Darling and the Bank's governor Mervyn King are working to help the market return to normality. (More...)
The current bailout is not without some concerns, however. (More...)
The hope is the package maintains the improvement in sentiment. (More...)
Mortgage rates range 8% (maximum rate on AMF standards) up to 18-20% in commercial banks. (More...)
Brown's focus is on channeling cash to building societies and specialist mortgage lenders whose credit dried up after the subprime collapse in the U.S. last year. (More...)
The Bank is expected to say that it expects around '50bn of these securities to be issued to banks in the first instance, but that it would be prepared to provide more help if required. (More...)
"We need urgent reassurances from the Government that the exchange is taking place on a discounted basis so that the banks and not taxpayers carry any losses." (More...)
Sounds like the old "Europe cut off because of fog in the channel". 0.87 is hardly a tumble, when viewed where the Euro came from, more like the pound tumbled and recovered ever so slightly. (More...)
BILLIONS of pounds will today be injected into the UK banking system in an effort to make mortgages easier to obtain for homebuyers. (More...)
"FT", "Financial Times", "Money Management", "Investment Adviser", "FTAdviser", "Mortgage Adviser" and "Financial Adviser" are trademarks of The Financial Times Limited and their associated companies. (More...)
We can't afford another Northern Rock, so we need to bail out the now reformed (we hope) banks. (More...)
Stressed parents = stressed children. (More...)

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Pressure has been growing on the British government and the Bank of England to do more to resolve a mortgage debt crisis threatening to slam the brakes on the British economy and which is contributing to a slump in support for Prime Minister Gordon Brown. Banks' fear that high-risk mortgage debt is lurking on balance sheets has driven the interest rates at which they lend to each other well above the BoE's 5 percent benchmark, in turn raising borrowing costs for households and companies. The new plan is expected to allow banks to temporarily swap mortgage-backed securities for government bonds to help free up their balance sheets and allow them to lend more to consumers. Banks have warned lending could halve this year and, with an election due by May 2010, Brown's Labour government wants to ensure borrowers are not priced out of the market. It is also desperate to stop another bank getting caught in the crunch after Northern Rock was nationalised this year. [1] Willem Buiter, a former Bank of England policy maker, told Bloomberg News that a significant amount of money would be needed to get the system working. "If they do 5 billion its not going to do much," he said. "If they do 55 billion it would help deal with the overhang of illiquid mortgage-backed securities that mortgage lenders have on their balance sheets that prevents them from engaging in any new lending." Despite three interest rate cuts that have taken the Bank of Englands benchmark rate to 5 percent, the three-month London interbank sterling rate, a reference rate for loans between banks, was at nearly 5.9 percent Friday, indicating that banks remain nervous about their peers. With Prime Minister Gordon Brown and his Labour Party facing difficult local elections in May, he and Darling are under pressure to help restore calm to financial markets.[2]

Figures last week from the British Retail Consortium showed like-for-like sales in British shops fell for the first time in two years and at the quickest rate in almost three years last month as consumers cut back on luxuries like electronics. The global credit crunch which followed a slump in the U.S. subprime mortgage market left UK banks wary of lending to each other or offering new home loans, and led to the forced nationalisation of mortgage lender Northern Rock (other-otc: NHRKF.PK - news - people ) this year. Royal Bank of Scotland (nyse: RBS - news - people ) is expected to announce a share issue this week in a move which analysts believe could raise over $20 billion. Darling said other UK banks were likely to follow suit with efforts to shore up their balance sheets. "We are doing our bit and I would like to see the banks pass on the benefits of the three interest rate cuts we've had over the last few months," he said in a BBC interview.[3]

Around ''50 billion is expected to be made available in an effort to "unbung" the crisis caused by banks' fear of lending money to each other following the U.S. credit squeeze. This has seen mortgages for first-time buyers restricted to those with large deposits. Some borrowers have also seen their monthly repayments increase despite three recent interest rate cuts by the Bank of England. Alistair Darling, the Chancellor, will set out details to parliament this afternoon. It will involve swapping government bonds for mortgages held by the banks ''' but the loans will have to be repaid. Mr Darling told the BBC yesterday: "It will effectively lend banks money to unfreeze the situation.[4] Alistair Darling is today expected to announce an unprecedented 50bn bail-out of Britain's banks to kickstart the mortgage market and prevent its collapse. The Chancellor will tell MPs this afternoon that the Bank of England is to allow lenders to swap their assets - ie mortgage debt - for secured government bonds to stave off the housing market from plunging into a full-blown crisis. Tomorrow, Mr Darling is due to meet representatives from the High Street banks to urge them to honour their side of the deal - to pass on interest rate cuts so that more money is placed in homeowners' pockets. A senior Treasury source told The Herald: "He is not putting a pistol to their heads. It's a difficult situation. We will continue to help, and what we are saying to the banks is that we would like them to do what they can to help the punters."[5]

Mr Darling said that the latest move was intended to "ease" the market. "We believe that this will be an essential step in trying to get the financial market stabilised. That in turn will help the mortgage market too," the Chancellor said. He gave warning that in return he expected that the banks would "begin now to disclose the extent of their losses and explain how they are going to rebuild their capital". Under the terms of today's announcement, banks will be allowed to swap hard-to-trade mortgage-backed securities linked to their previous lending for specially issued Treasury bills. Mr Darling is expected to press for mortgage lenders to ease lending conditions, especially for first-time buyers, when he meets them tomorrow. "He's not holding a pistol to their heads, but he wants to do everything he can to help people get on the property ladder," a Treasury source said. Vince Cable, the Liberal Democrats' Treasury spokesman, said: "We cannot have a situation where the banks are able to privatise their profits and nationalise their losses. Since the mortgages from the banks are of inferior quality and higher risk than the government bonds which they are replacing, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right." A spokeswoman from the British Bankers' Association said: "In principle, if this is an injection of liquidity, we are all in favour.[6]

As secured loans grew by ''7.4 billion and consumer credit lending also rose by ''2.4 billion, according to figures released by Action Credit in February, Banks will now apply toughermeans to tighten lending. A report by Equifax said banks can not stop lending because they depend on it for profit and survival. They will be more cautious of those they lend to. Equifax'''s external affairs director, Neil Munroe argued they are unlikely to stop lending. They will, however, tighten the criteria for giving loans to people. '''They will continue to lend money, but will just be a little more investigative when an application is being made,''' he explained, adding that this is to make sure that it is the right person who is going to repay them. This move could lead to a lower level of borrowing, as prospective borrowers could be forced to take on the responsibility themselves, warned Mr Munroe. He said that it all depended on the individual and the circumstances, as some may be compelled to accept more expensive loans in the absence of an alternative. He further warned that people rejected by main banks would resort to taking out loans from the next tier of lenders. The Bank of England is considering a plan to ease the credit crisis by allowing banks to swap their mortgage based assets for government bonds. This will allow the banks to offer new mortgage loans to borrowers. Although the central bank would not comment on this issue, it has been widely reported in the media that government sources said a deal to help liquidity is nearly sealed.[7] Prime Minister Gordon Brown's government is looking for ways to promote lending after an increase in borrowing costs caused banks from HBOS Plc to Lloyds TSB Group Plc to curb credit. That raised the cost of mortgage loans, even after central bank policy makers cut the benchmark lending rate three times since December to help avert a U.K. recession. By offering commercial lenders government bonds, the central bank will add to their inventory of liquid assets and make it easier for them to both raise cash and lend, especially to consumers seeking mortgages.[8] The U.K. central bank is working with the Treasury and Prime Minister Gordon Brown's office on a plan to inject liquidity into markets after a worldwide surge in borrowing costs. Lloyds TSB Group Plc, Nationwide Building Society and HBOS Plc have raised the cost of mortgage loans even as the central bank has cut its benchmark lending rate, threatening to curb U.K. economic growth.[9]

Since the credit crisis hit the UK, along with the U.S. has been cutting interest rates. This has not trickled down to the retail market, where mortgages remain as expensive as ever with many financial institutions now charging more than they did before the rate cuts. The Bank of England's idea is that by issuing this longer-term debt in exchange for mortgage-backed securities the banks may feel more comfortable about lending to each other and homeowners again. There are lingering fears both in the UK and the U.S. that the worse may not be over and indeed that the subprime fiasco could be followed by failures in the credit card business and in car loans. None of which is really Gordon's fault, but he will still get the blame for it. His speech about a new dawn in European-US relations rather fell on deaf ears back home.[10] "We can re-open the financial markets, because that is an essential pre-condition for the provision of mortgages.'' The U.S. Federal Reserve last month made up to $200 billion available to banks in return for debt including mortgage-backed securities and in December created a lending vehicle to make credit available to banks as an alternative to borrowing at its discount rate, which may carry a stigma. To date, the Bank of England widened its collateral requirements just for three-month lending. It only accepts top- rated government securities at its weekly auctions. It has already cut interest rates three times since credit markets seized up in August as it tries to shore up growth.[8] The plan's success "all depends on the scale", Professor Buiter said. "If they do 5 billion it's not going to do much. If they do 55 billion it would help deal with the overhang of illiquid mortgage-backed securities that mortgage lenders have on their balance sheet and prevent them from engaging in any new lending." The U.S. Federal Reserve made up to $US200 billion ($214 billion) available to banks last month in return for debt including mortgage-backed securities, and in December created a lending vehicle to make credit available to banks as an alternative to borrowing at its discount rate. To date, the Bank of England widened its collateral requirements just for three-month lending. It only accepts top-rated government securities at its weekly auctions.[11]

"We need urgent reassurances from the Government that the exchange is taking place on a discounted basis so that the banks and not taxpayers carry any losses." Banks are increasingly unwilling to lend to one another because of uncertainty over the exposure which they have to the U.S. sub-prime mortgage market. The banks have been asking for longer term finance from the Bank of England to fill their funding gap following the collapse of the market for mortgage-backed securities last August. The disappearance of this market deprived banks of tens of billions of pounds of finance for mortgage lending and is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate. Mr Darling said it was important that the banks began to reveal the extent of their losses as a result of exposure to the sub-prime market - as well as how they were going to rebuild capital. Britain's second largest bank, Royal Bank of Scotland, is to ask shareholders for about '10bn of extra cash to improve its financial position. Other institutions were likely to follow suit, the chancellor said.[12] Even as late as the first half of 2007, British banks raised '60 billion from the sale of mortgage-backed securities but next to nothing since then. The disappearance of this market deprived banks of tens of billions of pounds of finance for mortgage lending and is one of the main reasons why the cost of mortgages for many home owners has been rising, although the central benchmark rate is quite low at present. Even as the central bank keeps the benchmark rate low at five per cent, the prevailing sentiment that high-risk mortgage debt is lurking on banks' balance sheets has driven the interest rates at which they lend to each other to well above that figure, in turn raising borrowing costs for households and companies. This in turn has led to a general slowdown in the nation's economy, with some analysts fearing the onset of a recession.[13] The Bank of England hopes the scheme will encourage banks to lend to each other again and also to homeowners. The banks have been asking for longer term finance from the Bank of England to fill their funding gap following the collapse of the market for mortgage-backed securities last August. The disappearance of this market deprived banks of tens of billions of pounds of finance for mortgage lending and is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate.[14]

British banks have become increasingly unwilling to lend to one another as a result of the credit crisis, which was sparked by massive losses for banks who lent in the U.S. sub-prime sector. Many investors, concerned about what happened to sub-prime mortgages in the U.S., no longer want UK mortgage-based assets and the disappearance of this market has deprived banks of tens of billions of pounds of finance for mortgage lending. It is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate.[15]

In a move reminiscent of the U.S. Federal Reserve's injection of $200 billion into the financial system in early March, unconfirmed reports say that the Bank of England is also planning to provide around '50 billion or $100 billion of support to British banks and lending institutions. This assistance would be in the form of government bonds to swap the banks' mortgages. These bonds would have a maturity of up to a year, but would be rolled over for up to three years, and are expected meet banks' demands for longer term loans, without being accounted for in the national debt.[13] LONDON, April 18 (Reuters) - The Bank of England will next week announce plans to swap 50 billion pounds ($99.8 billion) of government bonds for UK bank mortgages in an effort to break a lending squeeze gripping the home loan market, the BBC said on Friday. The broadcaster said in a report on its Web site the bonds would have a maturity of one year but would be rolled over for up to three years, meeting banks' demands for longer term debt but ensuring the loans are not accounted for in the national debt. It did not give a source.[1]

Britain's smaller building societies and banks are suffering worst from the general shortage of liquid funds. Some have been forced to massively cut back on their provision of new mortgages, which is exacerbating a downturn in the housing market. These smaller banks will be unable, under Bank of England rules, to directly benefit from the new financing plan. They are prohibited from participating in repos. The Bank of England hopes the bigger banks will swap their illiquid assets for the new government bonds and this will reduce the inter-bank lending rate or the market price of loans. The Bank of England and the Financial Services Authority are also expected to put pressure on the bigger banks to lend at these keener rates to the smaller banks and building societies, thus turning on the funding tap.[14] LONDON, April 20 (Reuters) - The Bank of England will unveil a plan on Monday to swap government bonds for commercial banks' mortgage debt, injecting cash into the financial system to boost lending and ease the effects of a credit crunch on consumers.[3] Since the mortgages from the banks are of inferior quality and higher risk than the government bonds, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right." The Conservatives support the proposal in principle but George Osborne, the shadow chancellor, said: "Unblocking the financial system and getting the Bank of England to do this swap, where it is basically taking on some mortgages in return for the equivalent of cash from the bonds, is a good idea but we have got to make sure the taxpayer is protected." Under the plans, to be unveiled this morning, the Bank of England will swap Treasury bills for mortgage debts and other collateral from the banks.[16] The disclosure that unsecured credit card debt may also be involved has led to calls for Alistair Darling, the Chancellor, to make an emergency statement to Parliament on the proposal. Vincent Cable, the Liberal Democrats' shadow chancellor, said last night: "At least with bricks and mortar there is something behind the loans. "This seems very dodgy and goes way beyond what the Bank has hitherto indicated it would do." George Osborne, the shadow chancellor said: "Unblocking the financial system and getting the Bank of England to do this swap, where it is basically taking on some mortgages in return for the equivalent of cash from the bonds, is a good idea but we have got to make sure the taxpayer is protected, the one thing we don't want is the taxpayer holding the baby." The Daily Telegraph disclosed that the Royal Bank of Scotland (RBS), Britain's second biggest bank, is seeking to raise between £5 billion and £12 billion from shareholders to help shore up its finances.[17]

The Bank of England is expected to provide billions of pounds in Government loans to high street banks and building societies in exchange for credit card debts or mortgages, under controversial proposals that are being considered. It is hoped that the money will help the mortgage market to return to normal and that lenders will be able to offer more competitive deals to consumers. It was previously thought that the taxpayer-backed loans - which could total more than £50 billion - would only be offered in exchange for high-quality mortgages.[17] Since the global credit crisis began last summer, banks have become wary about lending to one another and have called on the Bank of England to provide large amounts of extra money in the form of Government loans. Previously, the Bank has agreed to lend money only in return for high-quality assets such as Government gilts. It has extended the collateral it will accept for the scheme to mortgages and even credit card debts. Mr Darling will make a statement to Parliament this afternoon and will meet the country's main mortgage lenders tomorrow, when he is expected to urge them to build on the Government's intervention. He will discuss the possibility of people at risk of defaulting being offered "mortgage holidays" or flexible mortgages allowing them to underpay for a few months before compensating with higher payments when conditions improve.[16] Over the past six weeks, Mervyn King, the governor of the Bank of England, has been in detailed discussions about loaning more money to British banks and building societies. It is understood that as part of the deal, banks are also under pressure to come clean about the size of their bad debts and to raise money from shareholders. As a result of the global credit crisis, which has been brought on by the high number of defaults on loans in the U.S. sub-prime market, lenders have struggled to borrow money on the international financial markets and have responded by rationing mortgages and raising their rates.[17] Considering the extent to which British banks and consumers rely on borrowing, £50 billion is a small sum. Total household mortgage debt in Britain at the end of 2007 stood at about £1.19 trillion -- or about 84% of the country's gross domestic product, compared with 75% of GDP in the U.S. British banks got a big chunk of the money they needed to make those mortgage loans from financial markets, rather than customer deposits: As of mid-2007, they counted on markets for nearly half their funding. The British mortgage market is even more vulnerable to market whims than its U.S. counterpart. Britain lacks its own versions of government-chartered Fannie Mae and Freddie Mac and the Federal Home Loan Banks, which buy mortgages and mortgage-backed securities in the U.S. Yet markets in which British banks package and sell their loans as securities to investors have all but disappeared.[18]

Mortgage-backed securities are basically bonds secured by loans made against a property. They comprise a collection of mortgages that lenders sell to the issuer of the securities who then uses the sums received from the borrowers in repaying their loans to fund dividends to investors. Why do it? Investors enjoy securities that are relatively stable ''' everyone should pay there mortgage as much as David Bowie will continue to sell CD'''s long after he is dead. Those income streams offer a good return on investment and are often guaranteed by a third party. It also allows investment banks to obtain extra cash. The biggest benefits are that it allows the original owner of the assets, or mortgages, in the case of Northern Rock - or EMI in the case of David Bowie - are access low cost capital without bank loans, inexpensively and quickly And it also allows them to diversify ''' finding new sources of both funding as well as investment, lowering the overall cost of capital. Basically, they don'''t have to rely upon savers deposits to lend money. It carries little risk ''' as the majority of the risk is transferred to a third-party.[19]

With general elections by May 2010, Gordon Brown's new Labour government is anxious for things to improve and consumption to increase, for which it wants to ensure that borrowers are not priced out of the market. This is especially relevant at a time when banks have announced intentions to halve lending this year. The new plan is expected to allow banks to temporarily swap mortgage-backed securities for government bonds to help free up their balance sheets and allow them to lend more to consumers, as well as to each other. The Royal Bank of Scotland, the UK's second-largest bank after HSBC, is expected to announce a rights issue next week to shore up its battered balance sheet.[13] The central bank, the Treasury and Prime Minister Gordon Brown's office may unveil a plan to swap mortgage-backed securities for government bonds as soon as next week, which the British Broadcasting Corp. reported yesterday will total 50 billion pounds.[20] The Treasury and Bank of England have declined to comment on details of the plan but local media suggested the package involved swapping 50 billion pounds ($99.80 billion) of gilt-edged government bonds for mortgage-backed securities. The Sunday Times said the arrangement was intended to run for just over a year and would involve valuing the less liquid securities the BoE takes on to its books at a discount. The move would free up bank balance sheets so they can lend more to consumers suffering the effects of an economic downturn, with falling house prices and soaring oil and food prices.[3]

The Government looks likely to issue tens of billions of pounds worth of bonds to finance the Bank of England's plan to ease funding strains on bank, according to press reports. It is believed the Bank is looking to inject liquidity into the banking system by offering to swap securities backed by mortgages for Government bonds for a period of one to three years. The Bank will need the Government to issue new bonds to boost its balance sheet, which currently shows gilts and other bonds to be worth just '3bn.[21]

Under the controversial plan, billions of pounds of taxpayers' money will be pumped into banks which have been devastated by the credit crisis. Liberal Democrat Treasury potential house buyers could be refused a mortgage this year spokesman Vince Cable warned that the move could be a bad deal for taxpayers, leading to "a situation where the banks are able to privatise their profits and nationalise their losses". It is likely that the banks' mortgages will be swapped for Government bonds, known as gilts. It will be an unprecedented intervention by the Bank of England.[22] LONDON (AFP) — The Bank of England will unveil on Monday a plan to take over high street banks' mortgage commitments in return for government bonds, Britain's finance minister Alistair Darling said. He said the scheme would help unblock the financial system in Britain which has been hit by the knock-on effects of the U.S. sub-prime mortgage crisis. He insisted that the banks would have to repay the money to the Bank of England and described the current economic situation as an "unprecedented shock to the system," the like of which had not been seen "in generations."[23] April 20 (Bloomberg) -- The Bank of England tomorrow will release its plan to swap government bonds for mortgage-backed securities in an effort to ease credit costs and help British homeowners, Chancellor of the Exchequer Alistair Darling said. This will "unfreeze the situation we've got at the moment,'' Darling said today in a BBC television interview.[8] UK Chancellor Alistair Darling will today announce plans to MPs''for the Bank of England to swap mortgage-backed securities held on banks' balance sheets for government bonds.[24]

The programme would see the Bank of England exchange Government bonds for banks' mortgage-backed securities in a bid to free up liquidity in the markets. It is believed Alistair Darling will introduce the plan imminently. In a letter to Osborne, Cable calls on him to clarify his proposal and accuses him of leaving taxpayers to shoulder bank's losses. He says: "Since the mortgages are of variable quality and at risk in a falling housing market and the Government bonds are of the highest quality and risk free you seem to be saying that the taxpayer should shoulder the banks' risks and potential losses. "Those could be reduced if the mortgages are transferred at a discount - a 'hair cut' - but you do not say that, nor do you suggest what any discount should be.[25] Under the plan, scheduled to be announced Monday, the Bank of England will exchange government bonds for mortgage-backed securities, Alistair Darling, the chancellor of the Exchequer, said Sunday on BBC television. "We recognize that this is an unprecedented shock to the system," Darling said of the problems affecting the credit markets. "We havent seen this in generations. Its happening in America, Europe, the Far East. It is affecting countries all over the world.[2]

Britain to unveil plan for lending Boston Globe LONDON - The Bank of England will today unveil a plan to swap about $100 billion worth of government bonds for mortgage-backed securities to lower credit costs, people familiar with the matter said.[26] Economist Simon Ward at New Star Asset Management says the central bank must be prepared to swap up to 40 billion pounds ($80 billion) in mortgage-backed securities for government bonds to revive lending in the U.K.[27] Buiter's estimate of the size of aid contrasts with that of Simon Ward, an economist at New Star Asset Management Group Ltd., who says the central bank needs to swap up to 40 billion pounds in mortgage-backed securities for government bonds.[20]

The treasury and the central bank had declined to comment on details of the plan, but media reports suggested that the package involved swapping 50 billion (R768 billion) of government bonds for mortgage-backed securities.[28]

Having been far more conservative than the Federal Reserve and the European Central Bank in the way that it provides financial support to banks, it will announce what may be the world's most ambitious and generous plan to pump money into the banking system. The Bank of England will offer banks the opportunity to swap their mortgages for rock-solid Government securities or, more specifically, nine-month Treasury bills. It will offer to do so in the form of a standing facility that will remain in place for up to three years.[29] BBC business editor Robert Peston said it could be the world's most generous plan to help the banking system. The move could also be seen as a major U-turn by the Bank as it is regarded as more conservative in its financial support for banks than the Federal Reserve in the U.S. and the European Central Bank, he said. Under the scheme, banks will be allowed to swap their mortgage debts for government securities.[15]

The Bank of England is to announce details later of a plan to help prevent the credit crisis causing more damage to the UK banking system and economy. Banks will be able to swap potentially risky mortgage debts for '50bn worth of secure government bonds to enable them to operate during the credit squeeze.[15] The Bank of England is expected to unveil today a plan to swap government bonds for commercial banks' mortgage debt, in an effort to unblock the home loan market and ease the effects of the credit crunch on British consumers.[28] LONDON (Reuters) - The government will try to ease the effects of a credit crunch on borrowers by unveiling plans on Monday to swap government bonds worth 50 billion pounds for banks' riskier mortgage debt.[30]

April 19 (Bloomberg) -- The Bank of England is preparing to announce a plan to swap 50 billion pounds ($100 billion) of government bonds for British banks' mortgages, the British Broadcasting Corp. reported.[9] The Bank of England will next week unveil a plan to swap '50bn of government bonds for British banks' mortgages, the BBC has learned.[14] The Bank of England plans to fill the breach, and next week it will announce a proposal to pump new money into the banking system for up to three years. It will offer to swap government bonds with a maturity of up to a year for the bank's unsellable mortgage assets.[31] "At a time where the private sector is not prepared to put any liquidity into the market, the government has stepped up to try and ease the crisis. This sort of model has been successful in other countries, like the U.S. and Sweden, and it could be just what the UK economy needs," said James Caldwell, director of FIC. "However, although action is needed, we cannot be in a situation where banks are having their cake and eating it too. "By exchanging their high risk mortgage-based assets for lower risk government bonds the banks are being allowed to enjoy their profits while pushing all the risk onto the tax payer," he added. The Bank's plan centres on allowing UK banks to swap their mortgage assets for bonds which are more secure and should encourage the banks to begin lending to each other again. If you have any questions or suggestions about this article or our news section, please don't hesitate to contact us.[32]

Most agree the market hasn'''t bottomed out yet. It is still difficult to determine whether the Bank of England's decision to allow mortgage lenders to swap their residential backed securities for government bonds will help stimulate the market because the size and scale of the crisis is still difficult to determine. It is clear that statements made by the mortgage market that things would begin to return to normal by the middle of this year are looking less and less likely.[19] Last week's plans for the Bank of England to swap securities backed by mortgages for government bonds are part of a larger government strategy aimed at reassuring increasingly nervous consumers, economists have claimed.[33]

The deal hammered out would entail the Bank of England swapping securities backed by UK mortgages for ''50bn of Government bonds, thereby providing much-needed liquidity to the banking system.[34]

The British banks should be extending mortgage terms to up to 40 years if required so that monthly payments can be reduced. House prices will still come down, but at a slower rate, and although thousands of mortgagees will still find themselves in negative equity, they will be at a significantly reduced risk of repossession. The banks will not 'need' to beg for help from the BoE because the asset they have loaned on will have recovered in value by the time the mortgage they have loaned on it is paid off. Another scam from nu-labour to save a sinking ship,what they are doing is "moving the deck chairs on the Titanic". The mortgage backed securities that the Bank will exchange for bonds are "RUBBISH" thats why the banks can't trade with them. If Brown and his monkey lose all this money by effectively underwriting UK property market the Taxpayer should go looking for them personally. They know they have lost there jobs in any future election but they should not get away with this reckless interference in banking finance.[35] The arrangement is intended to run for just in excess of a year and will involve valuing at a discount the less-liquid securities the Bank takes on. This will free up bank balance sheets so that more money can be lent to consumers suffering the effects of the economic downturn, characterised by falling house prices and soaring oil and food prices. Last week, retail figures showed like-for-like sales in British shops fell for the first time in two years and during last month at the quickest rate in almost three years as consumers cut back on luxury goods such as electronics. Last night, Vince Cable for the Liberal Democrats said: "It is obviously necessary for urgent action to be taken to unblock the mortgage market and to break the crippling effects of the credit crunch. "However, we cannot have a situation where the banks are able to privatise their profits and nationalise their losses."[5]

Rumours about the Bank's long-awaited rescue plan have already prompted criticism that the banks should not be bailed out with taxpayers' money. Mr Cable said: "It is obviously necessary for urgent action to be taken to unblock the mortgage market and to break the crippling effects of the credit crunch. "However, we cannot have a situation where the banks are able to privatise their profits and nationalise their losses. "Since the mortgages from the banks are of inferior quality and higher risk than the Government bonds which they are replacing, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right.[22] Liberal Democrat Treasury spokesman Vince Cable expressed concern that the government was offering the banks too good a deal. "We cannot have a situation where the banks are able to privatise their profits and nationalise their losses," he said. "Since the mortgages from the banks are of inferior quality and higher risk than the government bonds which they are replacing, the implication must be that taxpayers are shouldering the risks and losses of the banks.[12]

The Bank of England is to swap ''50 billion of government bonds for high street lenders' mortgages in a bid to ease the credit crunch, it has been reported.[36] Former Bank of England policy maker Willem Buiter said yesterday the central bank will need to offer loan swaps to financial institutions of at least 100 billion pounds to succeed in kick-starting the U.K. mortgage market. "In total, they would have to do -- not in one big go -- at least 100 billion for it to really actually make a difference to the liquidity position of banks, but also act as the catalyst for getting that market going again,'' Buiter said in an interview. He served on the bank's rate-setting panel from 1997 until 2000. Another former policy maker, Richard Lambert, said yesterday the Bank of England should be ready to act to ease financial-system strains both within the U.K. mortgage market and in a global move with other central banks. "They need to be ready to join in concerted international action to ease strains on bank liquidity,'' Lambert, director- general of the Confederation of British Industry, said in a speech in Edinburgh. "They should be working on ways to help unblock the logjam in wholesale financial markets.''[9] The British Broadcasting Corporation was the first to report on April 18 that the offer may total 50 billion pounds. The central bank's move allows financial institutions to add government bonds to their inventory of liquid assets and make it easier for them to both raise cash and lend, especially to consumers seeking home loans.[37]

The Conservative opposition had the support of 44 percent of voters, the most in 16 years, compared with 28 percent for Labour, according to a YouGov Plc poll finished on April 11. "What we are discussing with the banks and the building societies through the Bank of England and through the Treasury is what measures we can take to both inject liquidity into the market place on a more sustained basis,'' Brown said in New York on April 16. "We are also looking at how money can get through to first time buyers particularly those groups of people who have been denied the chance to get mortgages at the moment.'' The Bank of England said financial institutions bid for 50 billion pounds in its weekly auction, three times the amount offered and the most since January, as banks sought more cash to improve liquidity.[27] Tony Dolphin, director of economics and asset allocation at Henderson Global Investors, warned if consumer fears were not alleviated a vicious cycle could begin. "As house prices fall, people do not feel as wealthy as they did, and start to save a bit more - that causes spending output to be cut, employment falls, forcing others to sell their house, and the whole thing spirals out of control," he said. Reports claimed bankers representing groups such as Barclays, HBOS, HSBC and Royal Bank of Scotland, as well and a number of City investment banks, told Mr Brown that unless some action was taken soon, dozens of smaller financial institutions would be forced to stop providing new mortgages altogether. The government is reluctant to be seen to bail out banks out of concern that this would reward poor business decisions, encourage future irresponsible risk taking and postpone rather than resolve the market's current problems. Peter Bickley, chief economist at Tilney, the UK arm of Deutsche Bank's global private wealth management business, said this may be one of those times when the advantages outweigh the disadvantages. "Everyone has now accepted that when someone is having a heart attack, you try and keep them alive first, and then lecture them on their lifestyle later," he said.[33] The dearth of financing has forced mortgage lenders to cut back, putting an end to a rise in house prices that had been a major driver of consumer spending. Investment bank Morgan Stanley estimates a drop of that size could leave some 14% of Britain's mortgage holders owing more on their mortgages than their homes are worth. That situation probably would lead to a sharp rise in Britain's default rate, which is still low. In the U.S., futures markets expect a steeper decline, with house prices falling 27% from their peak earlier in the decade.[18]

The Bank of England has cut interest rates three times in the last five months but the benefits are not being passed on to home-owners. After the most recent cut, lending giants continued to hike their rates, adding more than £1,000 a year onto a typical mortgage of 158,100. One lender, Alliance Leicester, increased its charges twice in just four days - in the same week that the Bank cut rates.[22] JP Morgan said that, along with buy-to-let lender Bradford & Bingley, A&L;'s reliance on the contracting money markets left it "structurally challenged''. B&B;, led by Steven Crawshaw, dismissed suggestions that it is planning a rights issue, but JP Morgan analyst Carla Antunes da Silva said it was simply "a question of time" before these banks needed to raise additional funds and that some of these smaller banks needed to find strategic partners. Crawshaw, who is also chairman of the Council of Mortgage Lenders, warned a week ago that net mortgage lending could halve this year without urgent action from the Bank of England.[34]

Chancellor Alistair Darling said on Sunday that the Bank of England (BoE) would announce a scheme on Monday to loan banks money in order to restart stalled mortgage lending. "They'll be lending them money -- so it's got to be repaid -- and they'll be taking security in return for it," he said in a BBC interview.[30] "The Bank of England will be making an announcement tomorrow in which what it will do is effectively lend the banks money to unfreeze the situation we've got at the moment," Darling told BBC television. He said the move had been prompted by the drying-up of the market in mortgage-backed securities, which is where banks get the money to lend to customers as mortgages, following the sub-prime collapse. "It's got to be repaid and in the meantime, the Bank of England will take as security those mortgages," Darling added. "It's not giving the banks money, it's lending the money to the banks. "If that does not happen, then I think there's every chance that the situation will get worse, whereas if we go ahead with this. we believe this will be an essential step in trying to get the financial markets stabilised."[23] The plan's success "all depends on the scale,'' Buiter, a London School of Economics professor, said on April 18. "If they do 5 billion it's not going to do much. If they do 55 billion it would help deal with the overhang of illiquid mortgage-backed securities that mortgage lenders have on their balance sheet and prevent them from engaging in any new lending.'' "This is an essential initial step in trying to get the financial market stabilized and that in turn will help the mortgage market,'' Darling said today.[8] The Council of Mortgage Lenders said that more detail was needed before it would become clear how much mortgage borrowers would benefit. Michael Coogan, director-general, said: "It is still not clear if specialist lenders or smaller lenders who do not have mortgage-backed securities will be involved. We have to wait and see what the rates on the Bank's loans will be, and how those funds will then be recycled into the mortgage market through pricing and products." The council is also set to press for more state support for homeowners who fall into arrears with their mortgage payments. There are fears that smaller building societies, almost 20 per cent of which have either had to withdraw from the mortgage market completely or stop offering the majority of their deals, could be left in dire straits as the bigger banks get a leg-up from the Bank of England.[6]

Investors bought only $10.4 billion in European mortgage-backed securities in the first three months of 2008, down 92% from the same period a year earlier. That has left banks increasingly reliant on short-term lending markets, where jitters about potential bank failures are driving up interest rates and making borrowing difficult. Larger British lenders with diversified operations across Europe -- such as HSBC Holdings PLC, Barclays PLC and HBOS PLC -- can tap the ECB and others sources for short-term money.[18] Ever wondereed how exactly the mortgage market got itself into the current situation? Robyn Hall provides a guide to residential backed securities and why the banks have stopped lending money. What is securitisation? Thirty years ago, if you were lucky enough to get a mortgage, it was very likely that the bank would keep the loan on its balance sheet until the loan was repaid.[19] In the first operation, the Bank of England will swap up to 50bn of''high-rated securities backed by mortgages and credit card loans for newly-issued Treasury bills for up to three years.[24] LONDON -- The Bank of England is putting the final touches on its most aggressive plan yet to bail out cash-strapped U.K. banks and ease a credit crunch that is threatening to take a big bite out of the country's economy. The measures, which could be announced within a week, would help banks find a home for billions of dollars in hard-to-sell mortgages that have been piling up on their balance sheets and preventing them from making new loans.[38] Under a plan developed with the British Treasury, the Bank of England would offer commercial banks a home for billions of dollars in hard-to-sell mortgages that have been piling up on bank balance sheets, preventing the banks from making new loans.[18]

People familiar with the matter say it would allow banks to swap at least £50 billion, or about $100 billion, in mortgage loans for British government securities, which the banks could then use to raise cash. ( Please see related article.)[18] Securitization provides a new way to unlock the income producing potential of the mortgage and to leverage the associated cash flow. This can result in greater returns to the owners of that financial institution or simply give the likes of Halifax or Northern Rock more funds so they can make more loans to other borrowers and make more money So where did it go wrong? The mortgage melt-down started in the U.S. and it started in the so-called sub-prime mortgage market. This is where is gets complicated. When it comes to securitising mortgages there are two main categories ''' prime loans which are made to people with good credit records or sub-prime loans which are made to people with not so good credit records ''' they might have missed a credit card payment or telephone bill or may even be in arrears. When the pool of mortgages is sold they are given a rating ''' say AAA for a pool of prime residential mortgages or it could be BBB for sub-prime or indeed a mixture of both. This rating is based upon the perceived likelihood of the mortgage being repaid. They are then offered in the public market to investors, primarily sophisticated '''institutional''' investor. The better the '''rating''', the more attractive the mortgage backed securities are to '''institutional''' investors, including those seeking a conservative investment such as state pension plans. As a borrower repays his or her loan, the cash flow generated flows through to the investors who purchased the mortgage backed securities.[19] The move will see Government bonds swapped for high street banks' bad home loans. It would effectively allow the banks to borrow the cash for between one and three years. It is hoped the move will fill the gap in funding caused by banks' reluctance to lend to each other after the credit crunch in the U.S. and the Northern Rock fiasco.[39] The BBC understands that the government bonds would have a maturity of up to a year, but would be rolled over for up to three years. These would meet banks' demands for longer term loans, while escaping being accounted for in the national debt.[12]

The Royal Bank of Scotland looks like it is going to have to launch the UK's largest-ever rights issue after being hit by the subprime, while the Bank of England is going to offer the banking sector government bonds in exchange for mortgage debt, which the clearing banks now feel uncomfortable with.[10] Alistair Darling, the Chancellor, is to insist that banks offer more support for homeowners in exchange for the government's help in taking on some of the banks' mortgage debts. Plans include putting those with good credit records on flexible mortgage schemes allowing them to take a break from payments, which are then made up for with extra payments later, and allowing distressed homeowners to sell up to the lender but stay on as tenants, paying a rent to the bank.[40]

The Bank of England hopes the scheme will encourage banks to lend to each other again and also to homeowners. It is expected to be the biggest ever special initiative by the British monetary authorities to supply liquidity to the British banking system. Alistair Darling, the Chancellor, will meet the Council of Mortgage lenders this week to discuss ways to free up the mortgage market.[34] The Bank of England is set to inject billions of pounds into the financial system in a bid to ease the crisis in the mortgage market, Chancellor Alistair Darling said.[41] Chancellor Alistair Darling said that without the Bank of England's intervention, there was "every chance" the UK's financial crisis would get worse. He confirmed the Bank would be setting up a scheme to help banks operate during the credit squeeze but insisted the loans would have to be paid back.[15] A plan to loan billions of pounds to British banks is needed to stop the UK's financial crisis worsening, the chancellor has said.[12]

Banks including HBOS Plc have curbed lending and raised the cost of mortgage loans even after policy makers cut the benchmark lending rate three times since December to help avert a U.K. recession. "In total, they would have to do -- not in one big go -- at least 100 billion for it to really actually make a difference to the liquidity position of banks, but also act as the catalyst for getting that market going again,'' Buiter said in an interview. He served on the bank's rate-setting panel from 1997 until 2000.[20] If successful, "the liquidity support facility may help relieve at least some pressure on the Monetary Policy Committee to cut rates,'' said Nick Bate, an economist at Merrill Lynch & Co. in London. Darling, who didn't specify the size of the swap program in the interview, said he wants British banks to be as transparent as possible in declaring losses on bad loans. He also urged them to pass on interest rate cuts to consumers. "It's important the banks begin now to expose the extent of their losses and explain now how they are going to rebuild their capital,'' he said.[8] The finance minister urged patience, saying the credit crunch partly needs time to work itself out. Darling said one analogy was to someone with a dose of food poisoning, which "just has to work its way through the system.'' "We can help the process and the Bank of England's measures tomorrow will help the process, which in turn will help the housing market,'' he said. The Bank of England's most recent reduction in the cost of borrowing was on April 10, when it cut its benchmark interest rate by a quarter point to 5 percent.[8] "The idea is that it will open up the market and begin the process of opening up the mortgage market, which will help householders. We believe that this will be an essential step in trying to get the financial market stabilised." Last week, it emerged that Royal Bank of Scotland, Britain's second biggest lender, would seek to raise up to £12 billion from its shareholders in a "rights issue". Mr Darling indicated that he expected to see "much, much more of that". He said he wanted banks to "pass on the benefits of the three interest rate cuts" following criticism that the costs of mortgages had risen despite reductions in the base rate.[16] The idea behind it is that it will open up the market. which will help householders." Mr Darling, who said the financial turmoil caused by the credit crunch was "an unprecedented shock to the system", described his proposal as an"essential step in trying to get the financial market stabilised", which in turn would help the mortgage market. He also called for banks to begin disclosing their losses. This week, the Edinburgh-based Royal Bank of Scotland is due to announce a share issue of up to 12bn, the largest in British history, to help repair its financial base hit by the credit crunch. Other banks are likely to follow suit. Last night, board members were said to be considering the fate of Sir Fred Goodwin, the bank's Chief Executive, as reports suggested RBS is deliberating whether or not to sell its insurance arm for up to 5bn in a further bid to ease its liquidity problems.[5]

Mr Darling, who will make a statement on the situation to the Commons as it returns from a two-week recess, insisted the money will be repaid. "We believe that this will be an essential step in trying to get the financial market stabilised," he said. "That in turn will help the mortgage market too. It's also important that the banks begin now to disclose the extent of their losses and explain how they are going to rebuild their capital."[42] Darling said the central bank would "effectively lend the banks money to unfreeze the situation weve got at the moment." Financial markets have ground to a halt, he said, because banks do not know the exposure that other banks might have to the U.S. subprime mortgage market and to other risky assets.[2] "What it will do is effectively lend banks money to unfreeze the situation we have got at the moment. "We believe this will be an essential step in trying to get the financial markets stabilised and that in turn will help the mortgage markets too. "If this does not happen then there's every chance the situation will get worse." Likening the situation to a dose of food poisoning, he said that some aspects of the credit crisis "just need to work their way through the system".[12]

Britain, the world's fifth-largest economy, offers a prime testing ground for policies to counteract the global financial crisis, which stems in part from a bursting housing bubble. Its banks depend heavily on financial markets for the money they turn into mortgages and other consumer loans -- lending that has helped make Britons the world's most indebted consumers. Now, those markets have effectively shut down, putting Britain's banking system and its economy at risk.[18] Sir, please remember your independence, do not abandon us savers to Moral Hazard and protect our government gilts by restricting mortgage security purchases to 70% LTV (on the off chance prices crash 30%) and dont accept a single penny of unsecured lending in exchange for taxpayers money. I don't remember Parliament or the country being asked as to whether they are happy about putting up Â£50bn of taxpayer's cash to get the banks out of a hole. James in London, how exactly are rate cuts, which depreciate our currency, going to bail out the economy? Every rate cut makes Sterling a less attractive proposition for investors, who are dumping it in their droves.[35] One should note that even in Russia banks having access to foreign financing cut mortgage rates (by around 0.5% per annum) as credit rates in the United States have been reduced. After correction of the mortgage disbursal rules the Azerbaijani government is planning to keep social mortgage lending and maintain its development rate achieved in 2007.[43]

Total net mortgage lending in the year through February was 102 billion pounds, and outstanding mortgage debt that month was 1.2 trillion pounds, central bank data show.[20] Are these the very same banks that have been paying their staff 10'''s of ''millions in bonuses, while ripping the public off with unfair fees that the watchdog made them return. Now coming to the government cap in hand to bail them out with the public purse. The reason they are giving is that everyone is entitled to be a home owner, whether they can afford it or not, it seems. Maybe after the knee-jerk reaction to the Northern Rock debacle that will cost the tax payers of the UK upwards of ''25 billion due the irresponsible lending and corporate greed, this pathetic government should stop being led around by the nose by the financial institutions and show some leadership by not perpetuating this financial crisis that is only in its '''tip of the iceberg''' stage with far more losses to come, and either take shares in the institutions or stop the shares from trading until the debts are cleared to the government, i.e. in much the same way these financial institutions would treat lenders. It may also be an idea to stop any future bonuses being paid until these financial institutions are debt free to the government, otherwise it is the people of the country who are paying their bonuses, and surely bonuses should only be paid after they are liquid.[34] Under the controversial scheme, the Bank will loan money to banks and building societies in return for potentially risky mortgage debts. If the housing market fell and borrowers defaulted on their mortgages, taxpayers could be left nursing losses. The total size of the loans is expected to be £50 billion but officials said they were prepared to lend more, prompting fears that the taxpayers' exposure may rise.[16] The Bank of England will set out plans for swapping potentially risky mortgage debts in return for government-backed bonds.[42] Which is one of the reasons why it has become harder and more expensive for many of us to borrow money to buy a home. International investors' decision to boycott those mortgage-backed bonds is partly the banks' fault. Arguably many of them lent recklessly and stoked up a housing-market bubble. It is the pricking of that bubble which has scared off the erstwhile purchasers of mortgage debt. Now it was only a few weeks ago that Mervyn King was arguing passionately that banks should pay for their mistakes. He now needs to explain why he thinks they have paid enough and have learned their lesson.[29]

Pressure has been growing on the government and the Bank of England to do more to resolve a mortgage debt crisis that is threatening to slam the brakes on the British economy.[44] In exchange for government help, banks are expected to be urged to pass on the Bank's recent cuts in the base rate. "It's about saying firstly that they have got to be in a position to pass on the rate cuts, plus having a discussion about what to do about people who are in danger of defaulting on their mortgage payments," one Whitehall source was quoted as saying this weekend. "For example, putting people on flexible mortgages, so that they aren't being put into a position where they get into bad debt because they can't make their payments."[40] Mortgage lenders including HBOS Plc and Lloyds TSB Group Plc have raised the cost of loans, even after three, quarter-point rate cuts by the Bank of England to 5 percent.[37] There was even the old joke that you would go to see the bank manager to ask how you stand for a mortgage and the answer was that you don'''t ''' you kneel. That is no longer true and mortgage lenders are more likely to sell the loan to a third party. The third party often then packages your mortgage with others to investors ''' be they hedge funds or pension funds or the like. It is a flexible, efficient and low-cost way of raising capital. It works by grouping together assets with predictable cash flows or rights to future income streams (such as mortgage or even music royalties ''' most famously David Bowie) and turning them into bond-style securities that are then sold to investors.[19] The European Central Bank, which has always accepted mortgage securities as collateral for loans, recently began lending for periods as long as six months.[18] The Federal Reserve has taken a similar step in the U.S., but the British approach would allow banks to park mortgage loans with the central bank for an entire year, or possibly more.[18]

The European Central Bank, the first central bank to react to the credit crisis in August, has extended the maturity of money auctions to help cash-strapped institutions. Investec's Shaw says the term of the Bank of England's swaps may need to be longer than those under the terms of the Fed's program, maybe as long as a year.[37] Mortgages have become less cheap and easy to obtain in part because banks - like many others - fear that house prices rose too high and will now fall for an indeterminate period. Just because they will have access to new money from the Bank of England doesn't mean they will splash it around in the form of new cheap mortgages, as though the euphoric madness in credit markets of the past few years had never ended.[29] The pound rose to a 10-day high against the euro yesterday, posting the biggest weekly gain in more than a year, after the Wall Street Journal reported the Bank of England would take infected mortgages off lenders' balance sheets to ease the credit crisis.[9] The Bank of England will unveil a rescue package of up to £50billion this week to save struggling mortgage lenders from the credit crunch.[39] The package "could come as early as next week. We're working closely with the Bank of England on this," the source told Reuters, on condition of anonymity. "This is a high priority but the important thing is that we get the details right and we're focusing on that." Finance minister Alistair Darling is due to meet mortgage lenders next week on his return from a visit to China.[44]

Alistair Darling will today tell MPs that the Bank of England is to allow lenders to swap assets for government-backed bonds in an attempt to restore confidence and ease the effects of the credit crunch.[6] Reports have suggested the Bank will swap ''50 billion of Government bonds for lenders assets, prompting critics to claim that the taxpayer is taking on the banks' risks.[41] The BBC understands that the Bank will announce the plans to swap about '50bn worth of government bonds for British banks' mortgages.[12] In London, while the Bank and the Treasury has been tightlipped about the details of the Whitehall plan, it is thought the package will involve swapping 50bn of gilt-edged government bonds for mortgage-backed securities.[5] The British plan follows a similar initiative announced last month by the U.S. Federal Reserve, which said that it would swap up to $200 billion of U.S. government bonds for mortgage-backed securities.[2]

The Bank of England's package to restore liquidity and confidence to the money markets could provide the economy with a significant boost and head off part of the widely expected economic downturn, analysts say. While details of the package were still being hammered out this weekend, the broad shape is believed to be a £50 billion swap arrangement in which the Bank will take mortgage-backed securities onto its books in return for gilt-edged securities.[35] The U.S. Federal Reserve last month made up to $200 billion available to banks in return for debt including mortgage-backed securities.[37]

The majority of building societies do not issue mortgage-backed securities, so are unlikely to benefit from the Bank's latest move. Despite a sharp rise in deposits in building societies in the wake of the run on Northern Rock, many of the smaller mutuals are finding it nearly impossible to offer competitive mortgages as they are overwhelmed with demand. A spokeswoman from the Building Societies' Association said: "Some societies were inundated with applications, and had to restrict their lending to local areas."[6] In the meantime, the Bank of England will take a security." Prime Minister Gordon Brown's government is trying to encourage lending after a surge in borrowing costs prompted banks to withdraw their best mortgage offers, threatening to exacerbate the worst housing downturn since 1992.[26] Hornby revealed the bank's annual results in February with more references to prudence than the average Gordon Brown Budget speech. He had a number of reasons to be cheerful: an 18% hike in the dividend, double-digit growth in several divisions and encouraging signs that British consumers are turning into savers. The optimistic tone fooled no one in the City, which marked the shares down sharply on fears of a slowdown in some of its core activities, including new lending. It revealed a ''434m exposure to U.S. sub-prime mortgages and a 13% fall in retail profits. While Hornby expects the bank's share of the mortgage market to return to its normal level of about 15'''20%, this looks like being on a reduced overall lending market.[34] "The picture for mortgage approvals for new business and prospective lending levels in the next few months is worsening,'' said Michael Coogan, director general of the CML, in a statement today. "We await the eagerly anticipated announcement of action by the Bank of England to respond to these rapidly worsening market conditions.'' Brown met with bank executives in New York and London this week and Fed Chairman Ben S. Bernanke this morning in Washington.[27]

The Spanish banks are proposing a good solution for low income mortgage holders. When rates increase to make monthly payments difficult they will increase the period of repayment at no charge to the client. This seems a good solution beneficial also to the lender who avoids another probable failed mortgage. It won't- banks will be able to now PART fund their existing pre-08 mortgage portolios, but will still be tightening their lending criteria on mortgage rate resets and new products. The credit card applications have stopped falling through our letter boxes and the pain for consumers in outgoings in utility bills,petrol,food and mortgage payments will now be the driver.And for those blinkered morons who consider this 'inflation' to be needing rate HIKES, I point out that wages are subdued and thus that means lower spending and a slowing economy.[35] We did indeed have White Wednesday on 16/09/92.There is a small problen,however,if we think we can have another one.Anyone care to guess at what is is?The man at NÂ°11 obviously doesn't know. If nobody is lending any money it doesn't matter what the BOE do with base rates.Hence,surely it would be better to increase them and keep inflation down.Higher rates would attract more cash. Those banks desperate for this cash should be allowed to go bust, in the same way as Northern Wreck and taken out of their shareholders hands. The prudent lenders who have not over-extended their balance sheets should be given additional funding to replace cowboy banks such as the RBS, HBOS etc. Penalise the bad, reward the good.[35]

Chancellor Alistair Darling said: "We are trying to unbung that situation so that the Bank will be making money available to the British banking system. "It will be lending the money, so it's got to be repaid, and we will take securities in return for it.[42] "What it will do is effectively lend banks money to unfreeze the situation we have got at the moment." He added: "We are trying to unbung that situation so that the Bank will be making money available to the British banking system. "It will be lending the money, so its got to be repaid, and we will take securities in return for it.[41]

Explaining the Bank's move, the Chancellor told the BBC: "What it will do is effectively lend banks money to unfreeze the situation we have got at the moment." Fears have persisted that the proposal will simply mean the taxpayer will take on the banks' risks but the Chancellor stressed: "It will be lending the money, so it's got to be repaid, and we will take securities in return for it.[5]

Mr Darling denied that the scheme was a bail-out for the banks. "The Bank of England will be lending the money, so it's got to be repaid, and we will take securities in return for it," he said.[12] "The Bank will be making money available to the British banking system. "They'll be lending the money, so it has got to be repaid, and it'll take securities in return for it.[22] "We are trying to un-bung that situation so that the Bank will be making money available to the British banking system. It's got to be repaid, and we will take securities in return for it.[16]

The Bank of England financing plan is expected to be announced towards the end of next week. It will be the biggest ever special initiative by the British monetary authorities to supply liquidity to the British banking system. In the creation of this financing plan, there has been tension between the Bank of England, on the one side, and the Treasury and Financial Services Authority on the other. The Treasury and the City watchdog have been frustrated at what they perceive to be the slowness of the Bank in launching what they regard as an initiative badly needed to prevent the crisis in the banking markets from turning the UK's economic slowdown into a recession.[14] LONDON -- As the Bank of England prepares to quickly take on banks' securities in a £50 billion ($100 billion) plan, U.K. banks are expected to raise tens of billions of pounds in capital and also increase write-downs in coming weeks.[45] The plan is a change of approach by the Bank of England after three interest-rate cuts since December failed to ease the logjam. "It's been a long time coming, but what's important is that the bank is recognizing commercial banks' problems,'' said Philip Shaw, chief economist at Investec Securities in London. Success may depend on the credit ratings of the securities the Bank of England accepts and the duration of the plan, he said.[37] The arrangement is intended to run for just over a year, by which time the authorities believe a degree of normality will have returned to credit and money markets, particularly the market in mortgage-backed securities. While officials refused to speculate on the arrangement ahead of this week's announcement, sources close to the discussions said it would involve the the Bank imposing a "hair-cut" on the securities it takes onto its books - valuing them at a discount.[35] The announcement is expected towards the end of next week. Commercial banks have been asking for longer term finance from the Bank of England to fill their funding gap following the collapse of the market for mortgage-backed securities last August.[13]

"We can re-open the financial markets because that is an essential pre-condition for the provision of mortgages.'' To date, the Bank of England has widened its collateral requirements just for three-month lending. It accepts only top- rated government securities at its weekly auctions.[37] Banks will be able to draw on it on a daily basis, as needed. The Bank will say that it expects around ''50bn of these securities to be issued to banks in the first instance, but that it would be prepared to provide more help if required. The scheme will remove any stigma from banks' requests for such financial support, because the fee for the funds will be set at a commercial, risk-based level: there won't be the penal rates or charges that the Bank of England has traditionally demanded for emergency help.[29]

Richard Lambert, another former central bank policy maker, said in September that the Northern Rock situation made Britain look like a "banana republic.'' On April 18 he called for the Bank of England to be ready to take action, also in conjunction with other central banks. "They need to be ready to join in concerted international action to ease strains on bank liquidity,'' Lambert, director- general of the Confederation of British Industry, said in a speech in Edinburgh. "They should be working to on ways to help unblock the logjam in wholesale financial markets.''[20] British press reports said that the central bank would make available government bonds worth 50 billion to 100 billion, or $100 billion to $200 billion.[2] The central bank and the Treasury may offer a swap of 50 billion pounds ($100 billion), the British Broadcasting Corp. reported yesterday.[8]

The scale of the bailout alarmed some opposition MPs and comes just months after the nationalisation of Northern Rock, which exposed the taxpayer to as much as £100 billion in liabilities. Vince Cable, the Liberal Democrat Treasury spokesman, said: "It is necessary for action to be taken to unblock the mortgage market and to break the crippling effects of the credit crunch. "However, we cannot have a situation where the banks are able to privatise their profits and nationalise their losses.[16] Commenting on the reports, Labour's John McFall, chairman of the Commons Treasury select committee, backed the move but conceded it was a risk. He said: "I think it's something that is necessary. If we don't have this what this will mean is that the whole mortgage market and perhaps the real economy will freeze up." Everybody involved in the decision, he said, has "had to swallow some pride". Banks' shareholders would have to "take some of the pain," he said, as reports suggest the Royal Bank of Scotland is planning a multibillion-pound rights issue to shore up its balance sheet. The Bank of England, Mr McFall said, had changed its stance and the Government is "sticking their neck out by taking a political risk here - but I think it's worth it".[36]

Prime Minister Gordon Brown met the bosses of Britain's high street banks last week amid a backdrop of gloom about the state of the economy and bad news about house prices. Newspapers reported Friday that one of them, the Royal Bank of Scotland, will ask shareholders for a cash boost of between five and 12 billion pounds (6-15 billion euros, 10-24 billion dollars) this week after being hit by subprime-linked losses plus surging costs linked to its takeover of ABN Amro.[23] The Financial Times, citing unidentified people familiar with the matter, reported today that Royal Bank of Scotland will show about 4 billion pounds in losses from the credit turmoil next week.[9]

Brown met Friday in Washington with the Fed chairman, Ben Bernanke, and other officials. Darlings announcement came amid press reports that Royal Bank of Scotland, the second-largest British lender after HSBC, was preparing to announce a loss of 5 billion to 7 billion, and would seek to raise as much as 10 billion to 12 billion to restore its capital. Fiona MacRae, a Royal Bank of Scotland spokeswoman, said that the bank had noted "recent speculation about a possible rights issue," and that it would be updating investors on its trading performance and capital situation this week. She declined to comment further.[2] Along with King, deputy governor Sir John Gieve and head of markets Paul Tucker have been most closely involved at the Bank. The senior Treasury officials advising Darling and Gordon Brown have been Dave Ramsden, head of its macroeconomics division, and Tom Scholar, who recently returned to the Treasury after a brief spell as Brown's chief of staff at 10 Downing Street, and who heads the Treasury's financial-services arm. While it is recognised that this week's package is only one element in containing the effects of the credit crunch, there is optimism at the Treasury this weekend that Royal Bank of Scotland's proposed rights issue was greeted enthusiastically by the markets.[35]

Many lenders already offer mortgage holidays in specific circumstances. So-called "rentback" schemes, where homeowners sell up and rent their property from the bank, are also controversial. Housing charities say that private companies which have operated the schemes are exploiting distressed homeowners by buying their properties at less than two-thirds of their value. Mr Darling is to meet with the major banks and building societies on Tuesday of this week, with Yvette Cooper, the chief secretary to the Treasury, and housing minister Caroline Flint also due to attend.[40]

The government in February nationalized the mortgage lender, the first U.K. bank to fall victim to the credit freeze stemming from the collapse of the U.S. subprime market.[37] At 03:12 am on 21 Apr 2008, GwynfrynWilliams wrote: The banks and the whole of the financale sector have had it there own way for more the twenty years, and have not shown any care of the victims of the disasters they have caused. They have taken their commission knowing that when it goes wrong for their customer, they suffer no penalty and move on to the next victim. It took the catastrophy in John Major?s time to give any relif to the struggling mortagees, and that was only to save the mortage lenders, a bitter pill for the conservative of Britain. Those in the Banking and Finacial severces were strident critics of any form of handout to those in need, and succeeded in having their taxes lowered so they didn?t have to contribute their fair share for the running of the UK. All I can say to the Banks and the Finacale sector is ?Welcome to Social Welfare? To the British people, beware things are worse than they are letting on. On a final note, it is not just the U.S. and the UK that are suffering; in Australia over a decade of taxpayer funded speculation which has caused a similar catastophy of rising house prices, that to pay off a mortage now requires both partners to work, and the renting of a house is so high that the only growth in Australia is the homeless sleeping on the streets, and cars.[29] I find it crazy that people are surprised that cash is becoming more popular.Perhaps thats whats been missing during the kast 5 years?You pay with cash you know you've paid for something.You pay with credit and no-one appears to have a clue whose paid for it,if anyone. Not unlike the Lloyds crash all over again, where speculators and investors were happy to take the profits, and then cried foul when they had to pay the losses. In the housing market, values can go down as well as up, so why should the government help keep the housing market artificially inflated? Strange as it is to find myself in agreement with the Lib Dems, why am I and every other taxpayer underwriting the banks potential losses to ensure that house prices stay at a level at which I can not afford personally to enter the market? And what happens when the EU decides that all this is state aid and fines the government? Oh, yes, us taxpayers have to pay all over again. The only thing to get things back on track is a much needed housing crash to enable people on average wages or less to be able to buy their own homes.[6]

Essentially the money markets shut up shop. And so came the credit crunch The phrase is used so often but it started off as a liquidity crisis before it turned into the "credit crunch", which is what happens when banks start hoarding cash like it is going out of fashion. Banks are becoming very wary of whom they lend to and trying to attract fewer borrowers, not more. That has massive implications nationwide ''' both for businesses and the government.[19] Banks have been reluctant to lend money to one another following the collapse of the sub-prime mortgage market, limiting the amount of cash available for new home loans.[42] In return, the PM wants the banks to offer loans to first-time buyers and people struggling to find new mortgage offers after coming off fixed-rate mortgages.[34] The Bank may offer £1 in taxpayer-backed loans for every 80p or 90p in mortgage debt.[16] Banks would have to put up greater amounts for credit card and sub-prime mortgage debt.[16]

Taxpayers' money could be put at risk under Bank of England plans to take on credit card debts from high street banks struggling to raise money because of the global credit crisis.[17] Around ''50 billion is expected to be made available in an effort to "unbung" the crisis caused by banks' fear of lending money to each other following the U.S. credit squeeze. This is a CRIME, They must have seen Pres Bush do exactly the same crime in the U.S. 2 weeks ago.[4] The meeting resembled similar efforts that are said to have helped to ease the credit crunch in the U.S. and Europe. It coincided with some of the most downbeat property market news in recent memory from the Royal Institute of Chartered Surveyors, and revelations the BoE had injected another £15bn into the markets, despite latest Libor figures showing banks were still avoiding lending to each other.[33]

Not the other way round. Market forces must be allowed to take their course. Politicians find this very hard to accept however and they constantly meddle and intervene. Such intervention is all too easy given that the money involved is not their own but that of tax payers. There are strong parallels here with events in the U.S. 1929-1933 when Herbert Hoover used every tool of intervention at his disposal to try and cure the Great Depression. He should have left office a conquering hero but instead he left America in complete ruin and the Great Depression lasted 11 years. Irresponsible buyers, irresponsable banks and now an irresponsable government! I assume bankers will still get their sky high salaries + bonuses, and share holders their usual dividends? whilst the rest of us (tax payers) receive bad debt in return! This is madness. A government's desperation in the face of sour news has its own sour smell.[6] Mr Darling is also braced for a row over whether the bonds should be counted as government debt. British banks, uncertain which institution has lost what, have hoarded cash reserves to protect their own positions.[6] The Fed's effort allows banks to exchange mortgages for government bonds for 28 days.[18] A Bank of England spokesman declined to comment. Because the government bonds are almost risk-free, they are easy to trade, and banks will presumably be more willing to lend to one another.[2]

The Bank of England is, in effect, replacing much of the vital finance banks have raised over the past few years by selling mortgage-backed bonds to international investors. Since last August, those investors have no longer wanted to buy those mortgage-backed bonds.[29]

Crawshaw said the Bank of England misunderstood the reasons for the mortgage drought. Lenders are hoarding cash not because they mistrust each other but because they fear running out of cash later in the year, he said. Andy Hornby, chief executive of HBOS, the Edinburgh-based bank, has also seen his star begin to wane. Once dubbed banking's "boy wonder", he has been forced to pull a few rabbits out of the hat to maintain confidence in Britain's biggest mortgage lender.[34] The Chancellor hopes that the cash injection - the biggest ever by the Bank of England - will lead to cheaper mortgage deals and stop the housing market slipping further.[16]

About 1.2 trillion pounds of mortgage loans remain outstanding in Britain, according to Bank of England figures.[27] When America sneezes, England catches cold. Nowhere has this axiom more aptly demonstrated than the ongoing financial crisis initiated by the housing market meltdown in the U.S. and the subsequent sub-prime mortgage crisis. Although the effect on English financial institutions have been markedly less than the travails assailing American banks, they are serious nevertheless.[13] The Bank of England will today reveal plans to inject 50billion into the financial system to halt the threatened mortgage meltdown.[22]

Which brings me on to the second reason why the Bank of England should be bracing itself for a storm of protest. Many bankers are convinced that if this scheme had been in place last August or in early September, Northern Rock would have been able to raise enough money to avoid the humiliating financial crisis that took it from run to nationalisation during an autumn and winter of very public mayhem. The City watchdog, the Financial Services Authority, desperately wanted such a generous mortgages-for-loans swap scheme to be established months ago.[29]

"The Bank will be making money available to the British banking system. the idea behind it is it will open up the market and it will begin the process of opening up the mortgage market, " Finance Minister Alistair Darling said on Sunday.[3] The move would help ease the funding problems which many banks face, opening up the mortgage market to benefit householders and would-be buyers, Mr Darling said.[12] "Radical action seems to be what is needed,'' Trevor Williams, chief U.K. economist at Lloyds TSB, said in a Bloomberg Television interview in London today. "It will help to ease the strains in the mortgage markets and allow the banks to continue to offer good deals to borrowers.''[27]

The cash package is designed to help banks cope with the after effects of the subprime mortgage crisis in the United States.[31] Why the IMF would be able to prevent a crisis the Federal Reserve missed completely is beyond me. Somehow I do not see the current bureaucrats at the World Bank joining Greenpeace or giving up their limousines for little cars powered by soya protein. Actually, given its remit, the World Bank would do better to ignore the environment and do something about funding global farming to help cut food price rises which are a greater, real and immediate threat to the lives of more than a billion of the world's poorest people than a wee bit of global warming.[10] A reason to cut rates. Everyone seems to be believe this credit crisis stopped the economy growing at those heady rates when in fact the signs were there that the housing boom was turning before july of last year. The government has not choice but to do this Â£50 Billion mortgage swap.[35] Alistair Darling will unveil an unprecedented scheme to offer £50 billion in taxpayer-backed loans to high street mortgage lenders today in an attempt to solve the credit crisis.[16] The Council of Mortgage Lenders said April 18 that the value of new home loans fell 17 percent from a year earlier to 26.3 billion pounds last month.[20]

Britain's banks have for years raised vital finance by selling tens of billions of pounds of mortgages to international investors.[31]

Global banks have had losses and write-downs totaling $200 billion since the collapse last summer of the market in securities based on subprime U.S. mortgages.[2] Ideas batted around include creating a British version of Fannie Mae, which could create a "gold standard" for mortgage securities by buying or guaranteeing high-quality loans, or a government-sponsored agency for troubled mortgages along the lines of the Resolution Trust Corp., which took over and sold off bad thrift assets in the aftermath of the U.S. savings-and-loan debacle of the 1980s. Any such approach could require the government to pony up taxpayers' money -- an option Mr. Brown has said he wants to avoid.[18] Now, Prime Minister Gordon Brown, facing declining approval ratings, is eager to get money flowing to British consumers and homeowners. In return for emergency aid to banks, he is demanding banks make loans easier to get and build their capital cushions.[18]

The plan to swap asset-backed bonds for gilts came after Monday's Downing Street summit between prime minister Gordon Brown and the heads of Britain's largest banks.[33] If the Treasury had chosen the simpler route of issuing bonds of two-year and three-year maturity, the new bonds would have been part of the national debt under accounting standards. This in turn would have contravened fiscal rules led down by Gordon Brown himself when he was Chancellor of the Exchequer under Prime Minister Tony Blair.[13] If the Treasury had chosen the simpler route of issuing bonds of two-year and three-year maturity, the new bonds would have been part of the national debt under accounting standards. This would probably have led to a breach of the so-called fiscal rules put in place by Gordon Brown in 1997 to keep the public sector's balance sheet in reasonable shape.[14]

The FSA rang the alarm bells in Jan 2003. It described as unsustainable the escalation in mortgage debt. What was the Treasury doing about the borrowing binge? Gordon Brown failed to take effective action against inflationary pressures coming from one asset that mattered in his campaign to deliver stability.[6]

The Treasury said the ''50 billion figure is "speculation" but added that Chancellor Alistair Darling and the Bank's governor Mervyn King are working to help the market return to normality. [36] The package has been master-minded by Mervyn King, the Bank governor, in consultation with chancellor Alistair Darling and senior Treasury officials - who will have to sign off the arrangement and order the additional issuance of gilt-edged securities.[35]

Officials from the CML will visit Chancellor of the Exchequer Alistair Darling on April 22 to talk about how banks can help borrowers who fall into arrears. Bank of England Chief Economist Charles Bean said yesterday that officials are working to try to relieve the strains, though he didn't give any details of the package being put together.[27]

Mr Darling said: "What it (the Bank of England) will do is effectively lend banks money to unfreeze the situation we have got at the moment.[22] In an interview with the BBC yesterday, Mr Darling said the economic turmoil had created an "unprecedented shock to the system". "What it will do is effectively lend banks money to un-freeze the situation," he said.[16]

Taking out a mortgage to acquire an asset is an investment decision. Homeowners must live with that decision and not expect anyone to take away the downside for them, whilst they have reveled for years in the upside. It is fundamentally immoral and obscene for anyone to intervene in this. Look, the housing market is inflated, it doesn't need "saving"! It is abmornal! This country is run by complete morons. This is the wrong thing to do. For years we have moaned about banks making money too easily available and being generally irresponsible as they seek to lend more and more.[6] The loans are intended as a short-term measure lasting for up to three years and government sources say the banks "have to guarantee the money is returned".[16] Darling denied that the government was taking on any risk. "Its not giving the banks money, its lending the money to the banks," he said.[2] The Bank of England is planning to provide around $100 billion of support to British banks and lending institutions.[31] British banks have found themselves short of tens of billions of pounds for lending to all of us.[29]

Never. This market will fall at least 30% in real terms. It had best do so without printing another Â£50 billion to bribe banks and further debase an already debauched currency to temporarily stave off an inevitable departure from office of a wildely unpopular Brown government never elected by the British public. This is destructive and pointless.[6] the government gave Northern Rock Â£50 billion, the Bank of England is now giving the Government Â£50 billion.[6] A Treasury spokesman said government officials are working closely with the Bank of England on the plan, though the timing of the announcement isn't certain.[27] The Financial Services Authority (FSA) and the Treasury are understood to be putting pressure on banks to consider rights issues before the Government's bail-out plan is announced. Others, such as Barclays, are expected to announce similar schemes.[17]

A senior Treasury source told The Herald: "He is not putting a pistol to their heads. It's a difficult situation. We will continue to help, and what we are saying to the banks is that we would like them to do what they can to help the punters." Ah, the terminology of the racecourse - very appropriate for the Las Vegas-style economics of this London Casino government! Smoke & mirrors. It's a difficult situation. We will continue to help, and what we are saying to the banks is that we would like them to do what they can to help the punters." Ah, the terminology of the racecourse - very appropriate for the Las Vegas-style economics of this London Casino government! Smoke & mirrors.[5] A spokesman for the Treasury said the £50bn figure was "speculation" but added that Mr Darling and the Bank's governor Mervyn King were working to help the market return to normal.[39]

Darling will speak in Parliament around 3.30 p.m. and will also update lawmakers on the progress of the Bank Act, which would give British authorities power to seize control of failing banks. The central bank announced its last measure to tackle the credit crisis at 9 a.m. on March 20, when it said it would extend additional emergency funds.[37] Lambert, a former member of the central bank's rate-setting panel, said there was "not a lot'' policy makers could do to prevent a slowdown. "That is not to say the financial authorities should just sit back and do nothing,'' he said. He also welcomed speculation of a move by banks including Royal Bank of Scotland Group Plc to shore up capital through a share sale. RBS is considering such measures, according to a person with knowledge of the plan. "It is right that these major banks should be taking a lead in raising new equity and rebuilding confidence,'' Lambert said.[27] Royal Bank of Scotland Group Plc, the U.K.' s second-biggest lender, is considering a share sale to shore up capital depleted by credit-related writedowns and its part in the acquisition of ABN Amro Holding NV last year, according to a person with knowledge of the plan.[8] Royal Bank of Scotland Group Plc, the country's second-biggest lender, may sell shares, a person familiar with the matter said, a signal the worst of the liquidity squeeze may be over. Traders pared bets on lower rates, with the yield on the December sterling futures contract this week surging by the most in at least four years.[9]

The move will free up bank balance sheets and allow banks to lend more to consumers suffering the effects of an economic downturn. The Royal Bank of Scotland is also expected to announce a share issue this week, in a move that analysts believe can raise more than $20 billion (R154 billion) and lead to similar calls on shareholders by other UK banks to shore up their balance sheets.[28] City currency dealers said talk of a rights issue by the Royal Bank of Scotland was positive for sterling because foreign shareholders would have to buy pounds in order to obtain new shares. The pound, which has lost heavily against the dollar and the euro in recent weeks, bounced back at the end of this week.[46]

The Item forecast is for a significant rebalancing of the economy on the back of a weaker pound and the squeeze on household spending. It sees the share of gross domestic product taken by consumer spending dropping from 63.5% to 61%, balanced by a rise in the contribution of net exports. Spencer said this shift was likely to continue even if the Bank was successful in stabilising the markets. Economists do not expect credit conditions to return to where they were before the global financial crisis hit last summer.[35] Friday 18th April 2008 The Bank of England's plan to ease the credit crisis could be exactly what the economy needs. That is according to the Fair Investment Company (FIC), which has praised the Bank for stepping in.[32]

Former Bank of England policy maker Willem Buiter, now a London School of Economics professor, said on April 18 the plan's success "all depends on the scale.'' "In total, they would have to do -- not in one big go --at least 100 billion for it to really actually make a difference to the liquidity position of banks, but also act as the catalyst for getting that market going again,'' he said.[37] The BBC said the plan would be the biggest special initiative by British monetary authorities to supply liquidity to the U.K. banking system and would meet banks' demands for "longer term loans'' while escaping being accounted for in the national debt.[9] However the bankers' bonuses should now be secure for another year or two. How Mervyn King has the gall to stay in his job after this comprehensive U-turn is beyond me. Sure they could have saved Northern Rock if they had offered it earlier but then the reckless lending and trading of dodgy debt would have continued. With the sacrifice of Northern Rock, banks realised they had to mend their ways.[29] LONDON -- Britain's central bank is preparing new steps designed to solve a problem dogging policy makers on both sides of the Atlantic: a drought in bank lending that could take a bite out of global economic growth.[18] The central bank lowered the key interest rate by a quarter point to 5 percent on April 10.[20] The Bank of England declined to comment on the BBC report. Central bank Chief Economist Charles Bean said April 17 that officials are working to try to relieve market strains, though he didn't give any details of the package being discussed.[20]

When the dust settles, the proposal will spark controversy - though not because the Bank of England will become directly exposed to the downturn currently afflicting the housing market. In this kind of long-term collateral swap, the credit-risk on the mortgages being handed over to the Bank of England will remain with the banks and building societies that provided the original mortgages.[29] If there were a sudden rise in mortgage defaults and the value of the swapped mortgages fell, well then the banks would have to provide new, unimpaired collateral to the Bank of England.[29] If the RBS can do a rights issue to raise 12 billion why is 50 billion needed to prop up the dumb as mud companies that cannot do the same. If banks are deserving of 50 billion why just the other day was he complaining they weren't passing on his drop in interest to new mortgage customers to shore up prices.[5] With the cost of mortgages soaring despite the Bank's base rate falling, home-owners are paying the price for the credit crunch which is crippling banks.[22] At 11:26 pm on 20 Apr 2008, Paul_Amery wrote: Taking '50 bn of unsaleable bonds from the banks' balance sheets and giving gilts in return won't reinflate the housing bubble, and the cost of mortgages won't fall by much, if at all.[29] The BBC said the one-year bonds would be issued to fill the high street banks' gap in funding caused by the crisis in the mortgage-backed securities market in the wake of the sub-prime crash.[36] In the first half of 2007, British banks raised '60bn from the sale of mortgage-backed securities but next to nothing since then.[14]

Britain's Sunday Times newspaper reported that the arrangement was intended to run for more than a year. The arrangement would involve imposing a "haircut" on the securities the bank had taken on to its books - valuing them at a discount.[28] In times of trouble the U.S. has always turned to isolationism and, regardless of which hopeful is in the White House next year, if the U.S. is still facing serious economic problems it is likely that the president will circle the wagons and the rest of the world will be outside. He seems to think that the IMF could develop some sort of global early warning system that would prevent problems like the credit crunch while the World Bank would have a role as an environmental champion.[10] THE credit crunch, which has claimed a number of scalps in the U.S., is now spreading its poison into mainland Europe, leaving questions over who might be next in the firing line as UK banks scramble for ways to shore up battered balance sheets and personal reputations.[34]

The banks have been asking for longer-term finance from the Bank of England ever since the credit crunch started to bite last August.[39] The Bank of England's largesse won't miraculously lead to a great gush of loans to all of us from the credit tap.[29] "Banks are not being bailed out. They are paying commercial rates for the loans offered by the Bank of England."[6]

Sub-prime Mortgage banks in America made a lot of loans on property to people who couldn'''t afford the repayments after the initial discount period of the mortgage had worn off. That meant that the loans they had sold to investors started to turn bad.[19] About half of Britain's 11.8 million mortgage holders are on lenders' standard variable rates or tracker loans and will benefit from rate cuts. Many on fixed-rate deals coming to an end face large increases in payments if they take out a new deal or go on to the standard rate. Trying to find a way of reviving the market is Sir James Crosby, former HBOS chief executive, whose working party is due to report to the Treasury later this summer.[34]

Mr Darling said the Bank will make an announcement about how it intends to get cash into the system, secured on the mortgage assets of lenders.[41] In return, the government will hold the riskier mortgage-backed assets as security. "This is an essential initial step in trying to get the financial market stabilized and that in turn will help the mortgage market,'' Darling said.[37]

Former Bank of England policy maker Willem Buiter said that may not be enough. The authorities may need to provide double that amount to kick-start the mortgage market, he said in an interview.[8] The Azerbaijani government continues considering the proposals submitted by the National Bank of Azerbaijan (NBA) for commercialization of mortgage practice.[43] Willingness on the part of banks to raise cash from investors rather relying simply on government action to ensure stability should help sell the mortgage-swap plan to voters.[3] RBS will sell discounted shares to investors in a rights issue to raise the money. The move, which will formally be announced this week, has undermined the position of Sir Fred Goodwin, the bank's chief executive, who had previously rejected the plan.[17]

The plan could dovetail with moves by U.K. banks to raise money by issuing stock to existing shareholders. One issuer could.[38]

The pound was also supported by comments from a top Bank of England official that higher energy, food and commodity prices are fuelling UK inflation.[46] The gap between borrowing pounds for three months and the Bank of England's benchmark rate, currently at 5 percent, rose to 93 basis points on April 14. That was the biggest spread since December.[27]

Cable also reminds Osborne that the role of an MP is to protect taxpayers. He says: "You say the bankers agree with you. They do. It is their job to maximise profits for themselves and lay off risks to someone else. It is our job as responsible ministers or shadow ministers to protect taxpayers, not let the banks and other businesses take us for a ride." According to Cable bank shareholders, not tax payers, must put their hands in their pockets to rebuild their capital base. He says the extension of the traditional lender of last resort function to embrace inferior collateral or to be market maker of last resort is necessary but must be on strict conditions laid down by the Bank of England. He says in the letter to Osborne: "I really liked your line about fixing the broken plumbing of the financial system.[25] Which is not to say there is no risk for the Bank of England or by extension for the taxpayer. The Bank of England and taxpayers would emerge as losers if there were a collapse of a bank to which it had lent - but, to be clear, a bank collapse would be much more likely in the absence of this kind of liquidity injection.[29]

"The short term need is liquidity,'' Mark Spelman, a senior partner at consulting firm Accenture Ltd., said in a Bloomberg Television interview. "The coordinated action they're going to get with the Fed and the Bank of England is aimed at getting more liquidity into the system.''[27]

The plan is a change of approach by the Bank of England after three interest-rate cuts since December failed to ease the logjam.[26] The Bank of England wouldn't comment on the timing of the swap announcement or give further details of the plan.[37]

"What the Bank of England will do is in effect lend the banks that money. In the meantime, the Bank of England will take a security,'' he said.[8] Without that investment it meant the likes of Northern Rock didn'''t have the ability to raise funds and ended up borrowing money off the Bank of England.[19]

A Bank of England spokesman declined to comment on Darling's remarks when contacted today by Bloomberg News.[8] Simon Ward, an economist at New Star Asset Management Group Ltd., said action is needed from the Bank of England.[9]

In the UK Halifax Bank of Scotland is the biggest securitiser of assets and that allows, or had allowed, it to fund relatively low cost mortgage deals without having to rely on savers deposits to hedge against.[19] 'For development of mortgage lending we and commercial banks are negotiating with international banks and organizations about raising financing for mortgage lending,' Rustamov emphasized.[43] "We've had an unsustainable housing boom. If we get 50 billion pounds of net mortgage lending this year, that would be ample to sustain mortgage financing at a reasonable level.''[20]

On April 17, financial institutions bid for 50 billion pounds in the bank's weekly auction, the most since January and triple the amount on offer.[8] Northern Rock Plc, the first casualty of the credit crunch, relied on about 25 billion pounds of government loans and guarantees until it was nationalized in February.[27] There will be a "haircut" between the value of the government loan and the value of the mortgages offered in return.[16]

The BBC said the mortgage rescue plan involves government bonds with a maturity of up to one year. They would be rolled over for up to three years, it said.[20] The plan, to be unveiled in the coming week, involves government bonds with a maturity of up to one year, the BBC said. They would be rolled over for up to three years, it said.[9]

The current bailout is not without some concerns, however. Opposition parties may very well criticize this Treasury of creative accounting, by keeping the bonds out of national debt with a lending facility of three years while limiting the maturity period to one year. [13] The lending programme could open up the Treasury to accusations of creative accounting by opposition parties by limiting the maturity of the bonds to one year, but allowing the lending facility to be in place for three years.[14]

The hope is the package maintains the improvement in sentiment. "It is not the solution but it is part of the solution," said one senior banker. The banks have become frustrated waiting for action from the Bank and have accused King of dragging his feet. Peter Spencer, economic adviser to the Ernst & Young Item club, which uses the Treasury's model of the economy, warns in a report this weekend that the economy is on course to slow to 1.5% growth next year after a weak 1.8% this year, alongside a 10% fall in house prices. Spencer, who said the need for action from the authorities was urgent, said that it was possible that the Bank, if successful, could both stabilise and improve the outlook. "If it does the job things could look quite a lot better next year," he said. [35] Research published today by the Ernst and Young Item Club, the economic forecasting group, predicts that house prices will fall by 10 per cent and the number of people moving home will fall by 40 per cent in the next two years. Another study found that asking prices for properties fell in two-thirds of England and Wales in the past month. The average asking price fell by just 0.1 per cent to £239,521 but this figure disguised severe price cuts in some parts of the country, according to Rightmove, the property website. In Bedfordshire, for instance, sellers had to knock off £7,529 on average and those in Essex chopped £8,289 from their asking price. The falls are significant as it is the first time since Rightmove started its survey six years ago that it recorded a fall in April - a month that usually heralded the start of the house-selling season.[16]

The Bank of England will on Monday morning perform what some will see as one of the greatest u-turns in its 300 year history.[29]

Mortgage rates range 8% (maximum rate on AMF standards) up to 18-20% in commercial banks. [43] "I would like to see banks do more to pass on the interest rate cuts,'' Darling said.[8] I've got some rubbish in my shed, wonder how much darling will offer for that. What we need is government that is prepared to take on the banks and put a harness on them.[6] Darling's decisions seem light on logic, but remember, there is an election round the corner. It's tax payers money to mainly shore up the Labour party, not so much the banks. I believe Halfords have some dual piston air pumps which will be as much use as this money for reinflating the housing 'boom'. We have had the boom, now its bust time.[6] "We are trying to unbung that situation so the bank will be making money available to the British banking system."[4] Yesterday the embattled Chancellor insisted that the money will have to be repaid. He said: "It is not giving the banks money. It is lending the money to the banks.[22] The banks need to come clean, and any mortage debt with a LTV of more than 70% needs to be kept on the banks balance sheets. It needs to be paid with the money shareholders would recieve as dividends.[35] Rescue Package? Surely you mean Nationalising the banks bad debts, in return for valuable national bonds, which we can kiss goodbye too.[46] The BBC reported that the bonds would have a maturity of one-year - and therefore would not be counted as part of the national debt. Mr McFall said he would not be surprised if the final financing plan was greater than ''50 billion.[36] The Government is also likely to face a row over whether the bonds should be counted as Exchequer debt.[42] Bonds with a maturity of less than one year, issued in what is known as a "repo" operation, do not count towards the national debt.[13]

Brown's focus is on channeling cash to building societies and specialist mortgage lenders whose credit dried up after the subprime collapse in the U.S. last year. [27] British authorities have suffered months of criticism for failing to act as aggressively as U.S. and European central bankers, and then jumping in to nationalize troubled mortgage lender Northern Rock PLC.[18]

Darling will meet mortgage lenders on Tuesday to discuss ways to help homeowners in difficulty.[35] After five months of trying to find a buyer, the government nationalized the Newcastle-based mortgage lender in February.[20] House prices dropped 2.5 percent in March from a month earlier, the biggest drop since 1992, HBOS, the country's largest mortgage lender, said April 8.[37] The BoE should be raising interest rates to protect the economy from inflation and the currency from devaluation. The government policy is to keep exorbidant house prices despite the IMF sating they are too high.[6] Obviously the best thing for 'first time buyers' would be if house prices fell to an affordable level, instead of the government trying to prop up unrealistic prices. This does not preclude the government from trying to help, in some other way, those in trouble at the moment who bought at the top market level and are now suffering.[6] What about affordability? You can lend all you want but if you're raising a family, trying to make ends meet, the only thing which will help is a housing crash to make prices realistic again with affordable monthly payments. Trouble is this boom has to some extent relied on dual income couples - but what happens when you need/want to give up one salary to start or extend your family? We talk about poor childhood wellbeing in the UK (UNICEF report), well is there any wonder when both parents need to work and have no time left to devote to the kids? Kids end up institutionalised in daycare (enouraged by this government so people earn and spend more thus fuelling 'growth') or worse still 'home-alone' banging away on the computer all day unsupervised, or hanging around street corners. It's a raw deal when families can't even afford to put a roof over their heads (home is a necessity not a profit making venture) and save for their future/education.[6] " wants to do everything he can to help people get on the property ladder." This is absolutely scandalous and inept. This is the last thing the government should be asking the BoE to do. A huge injection of easy cash is not what the housing market needs, instead the slowdown should be allowed to run its course so that property prices can come down to a sensible level.[6]

The Bank is expected to say that it expects around '50bn of these securities to be issued to banks in the first instance, but that it would be prepared to provide more help if required. [15] Buiter said that pledges on future aid will be important if a plan does get announced. "If they do this kicking and screaming and the indication is we shouldn't count on it any more, it won't help as much as if the bank said it will do whatever it takes to get the markets moving again,'' he said. "It's the old credibility issue.''[20] Mr Darling will reveal the full details of the plan to MPs in the House of Commons after the announcement by the Bank.[15] The current crisis, which has been compared to the 1930s Depression, requires urgent action, Mr Darling said yesterday. He confirmed to the BBC's Andrew Marr that the Bank will make its long-awaited announcement today. He will then give a statement to MPs.[22]

The extent of the difficulties afflicting the sector was brought to a head last week when the chief executives of the banks were called for unprecedented crisis talks in Downing Street.[34] Royal Bank of Scotland is set to raise cash from its shareholders next week, in a move which could raise $20 b.[2] A person with knowledge of the plan said yesterday Royal Bank is considering a share sale to shore up capital.[9] Carolyn McAdam, a spokeswoman for Royal Bank, declined to comment today when contacted by Bloomberg News.[9] Well, the banks are cock-a-hoop, which tells you something. Only the biggest banks will have direct access to the standing facility, so the Financial Services Authority is gearing up to put pressure on those gorillas to pass on some of the new money to the smaller banks and building societies - which are the ones currently experiencing the most acute shortage of liquid funds.[29] Investec's Shaw said the central bank may provide the funds on a rolling basis as needed by financial institutions.[37] The timing of the issue is considered to be arranged to coincide with the central bank's expected announcement around that time.[13]

"We need urgent reassurances from the Government that the exchange is taking place on a discounted basis so that the banks and not taxpayers carry any losses." [22] We have been supportive of the Bank's moves in recent months but, if as reported, the Bank and the Government are now moving to provide significant and sustained liquidity we are very supportive."[6] Michael Hume of Lehman Brothers said the Bank's scheme appeared to be along the right lines. "Providing banks with funding for an extended period would be a genuine novelty that would - if we are right that the principal problem is one of liquidity funding risk - get at the heart of the problem," he said. He warned that the liquidity facility might eventually need to be much bigger than is now envisaged. "Given the scale of wholesale funding it is questionable whether, say, £50 billion, or even £100 billion, would be enough," he said.[35]

Sounds like the old "Europe cut off because of fog in the channel". 0.87 is hardly a tumble, when viewed where the Euro came from, more like the pound tumbled and recovered ever so slightly. Brown would like them to admit it was them that got it wrong and not his policies that allowed the banks to smash and grab the world's economies. [46] One source said that the gloomy sentiments expressed by some bankers gave Brown an overly pessimistic picture of the banking industry. Brown made it clear that he wanted the banks to play their part in getting out of a crisis of their own making.[34] Gordon Brown's presidential-style visit to the U.S. fell a bit flat last week, when his global pronouncements were rather overshadowed by events back home. True he did get invited to dinner by George W Bush and all three candidates looking to move into 1600 Pennsylvania Avenue took the trouble to drop their campaigning to meet Britain's greatest-ever chancellor. His publicity machine was a bit side swiped by the Pope pouring his heart out about his days in the Hitler youth, but in the UK it was his decision to abandon his 10 per cent minimum tax regime and the latest fall out from the subprime crisis that hit the headlines. It would appear that Gordon and his chancellor, Alistair Darling, have lost a bit of their golden touch. Now I have always been an admirer of this pair. I enjoyed many a lunchtime refreshment with the pair of them in the Jinglin Geordie in Edinburgh in the days when Gordon was a journalist and Alistair the transport convener of Lothian Regional Council.[10] With little wriggle room available to cut taxes or spending, and widespread agreement that credit should not be as readily available as it has been until recently, economists noted the most useful contribution the prime minister and chancellor Alistair Darling can make now is to keep UK consumers feeling positive about the economy.[33] Chancellor of the Exchequer Alistair Darling "has made very clear that work is under way at the highest levels to ensure that the secondary market returns to functioning normally,'' an official at the U.K. Treasury told Bloomberg News late yesterday.[9]

The plan will "unfreeze the situation we've got at the moment," Chancellor of the Exchequer Alistair Darling told the BBC, without specifying how much would be made available.[26]

'20bn set aside for Northern Rock, now '50bn to protect the mortgage market. That an awful lot of money that is no longer available for spending elsewhere. This Chancellor and PM have the cheek to talk of a "black-hole" in the SNP spending plans.[5] Sterling yesterday extended a late week rally on the foreign exchanges, notching up gains against the dollar, yen and euro on expectations that the Treasury will soon announce details of a plan to ease tight conditions in the mortgage market.[46] Indebted homeowners could get "mortgage holidays" and other deals to prevent or offset the pain of repossession, under government plans due to be discussed this week.[40]

LONDON (Reuters) - British authorities are working on a plan to break a lending squeeze gripping the home loan market and could announce details as early as next week, a source close to the situation said on Thursday.[44] I think it is out of the question to speak about one digit rates of mortgage loans,' Rustamov said. In 2007 reduction of rates of the NB Azerbaijan Mortgage Fund's mortgage loans from 12% to 8% has led to growth of such lending, exhaustion of AMF resources and mortgage lending stoppage.[43] Mortgage lending in the country began on March 25, 2006 in accordance with standards of the Azerbaijan Mortgage Fund (under the NB) and social mortgage lending has been conducted since February 7, 2007. Demand for mortgage loans exceeded State Budget appropriations and since mid-2007 the AMF has stopped financing mortgage loans on its standards.[43]

State Budget 2008 allocated AZN 34 million for refinancing of mortgages disbursed by the AMF agents, although earlier the government expected to finance AZN 35 million to the Fund for subsidized social mortgage lending.[43] NB chairman of board Elman Rustamov said that the proposal package submitted to the Cabinet Ministers sets a goal to commercialize and register mortgage lending.[43]

BILLIONS of pounds will today be injected into the UK banking system in an effort to make mortgages easier to obtain for homebuyers. [4] Arguing that cutting the 10pc rate will not hit people badly does not really hold water. If, as intended, the cut will save the treasury '9 billion then clearly someone is losing this cash.[10] The initial offer is for £50 billion worth of bonds, but senior Treasury sources told The Times yesterday that further cash injections up to a total of £100 billion were possible.[6]

"FT", "Financial Times", "Money Management", "Investment Adviser", "FTAdviser", "Mortgage Adviser" and "Financial Adviser" are trademarks of The Financial Times Limited and their associated companies. No part of this publication may be reproduced or used in any form without prior permission in writing from the editor. [33] Why should the government use taxpayers money to shore up inflated property prices which have no correlation with household income and beyond the reach of most first time buyers.[6] If the government wants to revitalise the housing market, surely increasing the thresholds of stamp duty is more cost-effective than using taxpayers money to shore-up the lenders. Result - more poeple able to afford houses, rather than pay the government a king's ransom for the privilege of buying their house.[6]

Government would have to house you and you would start life with a clean sheet after a year. Most people will be spending less this year than last,why.Everything except a sofa and a plasma sceen TV has gone up by around 10%.Wages will be going up by around 3% if your lucky.In addition to this thare is Â£1.4 trillion to be serviced.Conclusion,a slowdown in consumer spending.If the BOE keep cutting rates,increased consumer spending,more debt,falling pound,higher prices.However,the problem will be worse in 2009.It needs sorting out now,not after the next election.[35] As many have said before - the UK is built on debt, the BoE knows it and has caved in. They, in all fairness, have no choice but to cave is. They (BoE) are not independent at all. Just another old boys club and when they are dead and buried they won't be thinking about the mess they have left behind for the next generation. What with Blair lying to the people and Brown pushing them over a debt free fall cliff I wonder just what the end will be? It is no wonder over 300,000+ educated and hard working people leave every year.[6]

An increasing number of Labour politicians have expressed unease about Brown's decision to scrap the 10 pence income tax band, a move that could leave millions of the poorest Britons worse off. Brown had to interrupt a visit to the United States last week to call a junior minister and convince her not to resign over the matter. Darling said on Sunday he would return to the issue in future budgets but could not make changes this tax year. Brown's popularity has plunged since he took office last year over fears he cannot manage the economic downturn despite a successful decade as finance minister, and his party now risks a drubbing in local elections on May 1 -- and losing power to the opposition Conservatives in general elections due by mid-2010.[3] Brown also faces a government rebellion in the next few weeks over plans to extend to 42 days the period in which terror suspects can be detained without charge.[3] Gordon Brown and his ruling Labour party still face an uphill battle convincing voters the government can deal with the effects of the credit crunch.[3] With the credit crunch continuing to have an impact on our daily lives, it is more important than ever to listen to the advice of your fellow mortgage gurus.[32]

Because the loans had turned sour, that meant investors around the globe started to shy away from investing in mortgage backed securities.[19] The main changes will touch commercial mortgage. In particular it is offered to increase its rates and thereby make them commercially attractive for investors. It will range between the NB rate making now 14% and mortgage loan rate of 8% of the Azerbaijan Mortgage Fund (AMF) standards.[43]

We can't afford another Northern Rock, so we need to bail out the now reformed (we hope) banks. Same happened in the U.S. Maybe Bear Sterns thought the Fed would come to their rescue their recklessness had to be punished. [29] If you're new to BBC Blogs, creating your membership is quick and easy. At 11:11 pm on 20 Apr 2008, YummyCarolKirkwood wrote: Many bankers are convinced that if this scheme had been in place last August or in early September, Northern Rock would have been able to raise enough money to avoid the humiliating financial crisis that took it from run to nationalisation during an autumn and winter of very public mayhem.[29] Protecting many greedy and stupid people, while preventing millions of others from owning a home to live in. It already did that over the last ten years by failing to build new houses and allowing a huge population increase, both of which led to greater demand/higher prices. The financial traders with their massive bonuses and wealth are the new landed gentry.[6]

I was recently offered a 5x salary mortgage with very few in-depth questions as to my true ability to keep up repayments. The FSA should draw up new guidelines for lenders to reduce risk for both them and the borrowers.[6] The number of mortgage deals fell below 4,000 for the first time since the crisis started.[22] As the crisis deepens, pressure will rise on the British government to get creative. "If these latest moves don't have a material impact and the situation doesn't stabilize, then I suspect they'll have no choice but to take more radical action," says Howard Archer, chief U.K. economist at consulting firm Global Insight.[18] Then we're all on a much sounder footing. In the meantime, if the Government wants to do something useful, it should stop british people being ripped off daily for most things they buy. It would help push down inflation and make this country competitive again.[6]

"But the idea behind it is that it will open up the market and it will begin the process of opening up the mortgage market which will help householders."[42] Chuck Prince of Citigroup and Stan O'Neal of Merrill Lynch were early casualties, taking the blame for massive losses in the U.S. sub-prime mortgage market. Jimmy Cayne of Bear Stearns and UBS's Marcel Ospel also lost their jobs.[34]

Stressed parents = stressed children. To describe it as a "US sub-prime crisis" is to mis-state the problem; this is a problem brought about by profligate, irresponsible lending that has acted as a bicycle pump exuberantly (to use Greenspan's word) blowing up the economy for the past seven years. Why should the tax-payer - the loyal hard-working tax-payer now bail out both rash bankers and equally rash borrowers when through the years the mine industry, the car industry et al have been allowed to fail. This is flash Gordon trying vainly to rescue his tarnished image as his self-styled image as "the world's greatest chancellor" - let us not fall into the error of throwing good money after bad; markets must be allowed to fall as well as rise; to not so allow will just give the irrational bulls full, and dangerous run. [6] The British banking system is poised for an unprecedented ''50bn cash injection, designed to ease fallout from the credit crunch.[42]

SOURCES

1. Bank of England eyes 50 bln stg mortgage rescue-BBC | Markets | Markets News | Reuters
2. Bank of England to provide liquidity to British banks - International Herald Tribune
3. Bank of England to detail mortgage plan on Monday - Forbes.com
4. Government billions to unlock mortgage market - Scotsman.com News
5. Treasury To Save Banks With A 50bn Bailout Package (from The Herald )
6. Alistair Darling plans unprecedented £50bn bank bailout - Times Online
7. Only Finance.com'' - Banks To Investigate Before Lending Money
8. Bloomberg.com: Worldwide
9. Bloomberg.com: Europe
10. Untitled
11. Lenders 'need $213b to fix ailing mortgage market' | smh.com.au
12. BBC NEWS | Business | Bank's '50bn rescue plan 'needed'
13. domain-b.com : Bank of England mulls '50-billion bailout for British banks hit by credit crisis
14. BBC NEWS | Business | Bank '50bn mortgage rescue plan
15. BBC NEWS | Business | Bank to detail '50bn bonds plan
16. Alistair Darling in '50bn gamble to aid banks - Telegraph
17. Bank of England to take on credit card debts - Telegraph
18. BOE Maps a Plan To End Credit Crisis, But Will It Work? - WSJ.com
19. The liquidity crisis and the credit crunch
20. Bloomberg.com: Worldwide
21. Govt to issue billions in bonds to BoE - 18 April 2008
22. Darling accused of 'nationalising' bank debts as he pumps another '50billion into market to ease financial crisis | the Daily Mail
23. AFP: Central bank to unveil help for British banks: finance minister
24. FT.com | BoE to accept 50bn MBS
25. Cable attacks Osborne's Bank of England swap plan - 18 April 2008
26. Britain to unveil plan for lending - The Boston Globe
27. Bloomberg.com: U.K. & Ireland
28. Business Report: Bank of England to unveil debt rescue plan
29. BBC NEWS | The Reporters | Robert Peston
30. 50-billion pound mortgage plan to be unveiled | Reuters
31. Bank of England announces $100b bank rescue package - ABC News (Australian Broadcasting Corporation)
32. Credit_crunch_plan_receives_mixed_reaction - Introducer Today
33. FTAdviser.com - Government tries to calm consumers
34. Bankers fear the bullet in credit crunch cull - Scotland on Sunday
35. Mervyn King's liquidity deal may avert economic downturn - Times Online
36. The Press Association: Bank 'planning ''50bn bonds swap'
37. Bloomberg.com: Worldwide
38. Free Preview - WSJ.com
39. 50billion bailout on home loans - Sunday Mirror
40. Alistair Darling to call for 'mortgage holidays' - Telegraph
41. The Press Association: Bank to inject billions into system
42. The Press Association: Bank to detail ''50bn rescue plan
43. Azerbaijan Business Center
44. UK mortgage rescue plan could come next week -source | Reuters
45. Free Preview - WSJ.com
46. Pound Extends Rally Ahead Of Mortgage Rescue Package (from The Herald )

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