Are we one step closer to a government financed toxic bank?
Gordon Brown has today announced another banking bailout with up to £500 billion of taxpayer's money set to be used to insure banks against toxic assets which are literally ripping the industry apart. This is in effect a "bad" bank in all but name as the Royal Bank of Scotland gets ready to transfer £250 billion of toxic assets into the scheme.
In theory the creation of the "bad" bank will allow the UK government to take control of potentially catastrophic toxic assets and allow the UK banking sector to rebuild for the future. However, many of these toxic assets are worthless, or potentially worthless, with little likelihood of a significant increase in value in the short to medium term. This literally leaves UK taxpayers financing another massive investment into an industry which would under normal circumstances be left to its own devices.
The rumour is that the UK government will only instigate the "bad" bank project if it receives written assurances that new credit lines and additional finance will be made available to the UK public. This process appears to have started already with the announcement of a £14 billion mortgage program by Northern Rock, even though the company still owes the UK taxpayer tens of billions of pounds.
Share this..
Related stories
UK care for the elderly in doubt
In what will be the first of many live TV debates as we move towards the general election, a debate regarding care for the elderly descended into chaos today with the three parties unable to agree on plans for the future. Indeed the Tory health minister Andrew Lansley refused to attend a forthcoming conference covering the subject of Britain's ageing population until the UK government drops its de...
Read MoreHas Scotland Escaped The Worst Of The UK Property Price Falls?
As the general UK housing market continues to fall there are signs that Scotland may well be fairing better than others in the UK. Figures from the Council of Mortgage Lending show that Scotland’s share of new mortgages in the UK actually increased by a third since the start of the year. While there was still a 20% fall over the period and a 40% fall in the number of transactions over the...
Read MoreFSA step into short selling saga
The Financial Services Authority (FSA) has today indicated they are willing to look at an extension of the ban on short selling which could incorporate all shares on the UK market. The blanket ban on short selling is seen by many as a knee-jerk reaction and the result of a witch-hunt against investors and investment companies in the city. What exactly will a short selling ban achieve?
Read More
Free banking is disappearing at an alarming rate
As we hear news that Egg, the Citibank owned credit card brand, is set to reintroduce an annual fee for holders of the company's credit card it appears that the days of free banking in the UK are fast disappearing. While there are those who believe that free banking was never actually available in the UK, with UK banks using consumer deposits to fund their other operations, we will start to see th...
Read MoreLow deposit mortgage agreements very scarce
It has been revealed that a great number of mortgage providers in the UK are rejecting low deposit applications with some estimating as many as 90% of such applications are turned down. Despite the fact that the industry would like us to believe competition in the mortgage market is on the increase and first-time buyers are now coming back to the fore, it seems very much to be the opposite. So whe...
Read More