FINANCE: We can't rule out total nationalisation of banks, Bank of England governor Mervyn King warns MPs
By Becky Barrow
Last updated at 10:36 AM on 26th November 2008
Getting banks to lend to families and firms is 'the single most pressing challenge', the Bank of England governor has warned.
Mervyn King said that if banks do not start handing out money, Britain faces a much steeper, sharper and more painful recession.
He issued a clear warning that banks could even face nationalisation, telling MPs on the Treasury Select Committee: 'It would be a serious error to rule out measures which may prove necessary.'
Mr King, who also signalled a further interest rate cut, spoke as new figures showed the number of mortgages being granted has halved over the last year.
He emphasised that banks had received billions of taxpayers' money.
It was 'vital' that they realised the money was not 'merely to protect' them, but to ensure the flow of funds to their customers.
If the banking giants continue to hang up the 'Closed' sign, he said, the Government may have to legislate to force them to open up.
Mr King said lending to families and firms had been 'extremely weak' over the last month, and a continuation of this could push good companies over the edge.
He said: 'I am in no doubt that the single most pressing challenge to domestic economic policy is to get the banking system to get lending in any normal sense.
'That is the more important than anything else at present.'
His warning was backed up by a Treasury statement making clear the banks were recapitalised for a specific purpose - 'so they can continue to extend new lending.'
Mr King said it was highly likely that the Bank of England interest base rate, which has already fallen from five to three per cent in two months, will go even lower.
http://www.dailymail.co.uk/news/article-1089326/FINANCE-We-rule-total-na...
See also:
"Is Britain going bankrupt?"
"Alistair Darling has had to admit that the British economy faces the most sudden economic collapse since World War Two, and the worst budget deficit of any major country in the world."
http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/11/24/is_...
And:
Bankruptcy figures jump in third quarter of 2008
The number of people declared bankrupt in England and Wales during the third quarter of 2008 have jumped by 9.5% compared to the same period in 2007 according to the latest figures released by the Insolvency Service.
http://www.bankrupt.co.uk/Bankruptcy-Figures-3Q-England-2008.htm
Catherine Malandrino
This is scary. Govt can't take care of the money they do have much less anything else.
1It is scary. I knew things were bad in England, but I didn't realize it was this bad.
2nationalizing banks... why does this sound familiar? Oh yea, that's right, history repeating itself and all.
3They have already started this. We will probably see it all over. But the thing is we got into this mess by making banks give bad loans and then we ranted about it and smacked their bottoms and now we are asking them to loan again. They got spanked, doesn't the government think the banks learned something from that.
4***************
"Enjoy life, it's ungrateful not to." - Ronald Reagan
amen Sy amen
5Excellent point Sam!
This is going to rock some people to the core, know, Europe not being perfect and all, and showing that higher taxes and more social programs are not conducive to a productive economy.
Absolute power, corrupts absolutely.
6Know should say "you know".
Absolute power, corrupts absolutely.
7In the '60s and 70's that was slogan of the American Communist parties; every policy statement either led with or closed with "Nationalize the banks!”
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