coming to america soon,
28 days, then 90 days, than 6 months, than a year, then maybe
lifetime? i betcha its coming. meanwhile we must not pamper the little
guys, after all, they must be self responsible.
i wonder how many more 4 pound lobsters, french champagne, and
bonuses will be consumed after this little give away to the free
market.
http://biz.yahoo.com/ap/080421/britain_credit_crisis.html
Bank of England facilitates bank debt swap
Monday April 21, 7:40 am ET
By Robert Barr, Associated Press Writer
Bank of England offers banks $100B program to swap mortgage-backed
securities for UK issues
LONDON (AP) -- The Bank of England, aiming to deal with the crippling
impact of the U.S. subprime mortgage crisis, on Monday announced a
$100 billion plan to allow banks to swap mortgage-backed securities
for British Treasury bills.
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The bank's aim is to unblock the interbank lending market and restore
normal lending practices to banks and home buyers hampered by the
subprime credit crisis.
The asset swaps are for one year, but renewable for up to three years
-- and only for assets which existed at the end of last year, the
central bank said. The risk of losses on the swapped assets remains
with the commercial banks, not the taxpayers, the Bank of England
said.
"The Bank of England's special liquidity scheme is designed to improve
the liquidity position of the banking system and raise confidence in
financial markets while ensuring that the risk of losses on the loans
they have made remains with the banks," said central bank Governor
Mervyn King.
The Bank of England is offering the swaps starting Monday and
continuing for six months.
Banks will be able to swap a range of high-quality assets, including
AAA-rated securities backed by UK and European residential mortgages
for Treasury bills. Even though the assets have value, banks can't use
them to raise money because such securities are tainted by the crisis
over lower-quality securities backed by mortgages to people with weak
credit.
The swap gives the banks assets they can use to operate, in hopes they
will then resume lending more -- and sup****t the housing market and
the overall British economy.
Britain's biggest casualty of the credit cruch was mortgage lender
Northern Rock, which had to turn to the Bank of England for emergency
funding and eventually wound up in public owner****p.
"Given its scale, the scheme is indemnified by the Treasury, but is
designed to avoid the public sector taking on the risk of potential
losses," the Bank of England said.
"Banks will need, at all times, to provide the Bank of England with
assets of significantly greater value than the Treasury bills they
have received. If the value of those assets were to fall, the banks
would need to provide more assets, or return some of the Treasury
bills."
The Bank said the size of the liquidity injection would depend on
market conditions, but it said the commercial banks suggested that
they were likely to subscribe for about 50 billion pounds in swaps.
The Bank of England's announcement came as property website Rightmove
re****ted that asking prices in England and Wales have fallen by 0.1
percent over the past month as sellers accept their homes are no
longer worth as much as they once were.
The fall in asking prices between March 16 and April 12 followed a 0.8
percent rise in March and a 3.2 percent jump in February.
The annual rate of price growth has also slowed sharply, falling to
just 1.3 percent during the year to April 12, down from 5 percent a
month earlier.
The British Bankers' Association said the plan was an "an innovative
and unique policy response."
"The banks expect it to make a significant contribution to alleviating
the pressures in the U.K. money markets. Restoring confidence in the
wholesale funding market will strengthen the financial system and the
stability of our economy," the association said.
Bank of England, http://www.bankofengland.co.uk/
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