Bank of England Reveals Secret £62bn mission to save banking sector within hours of collapse

Posted by Kendall Harmon

Royal Bank of Scotland and HBOS were given a secret £61.6 billion in bridging loans last year on top of the £500 billion of support that the banking sector received from the taxpayer, the Governor of the Bank of England disclosed yesterday.

MPs expressed astonishment when Mervyn King told them about the emergency funding, which indicated that the two banks were in far greater peril than first thought. The Government has since indicated that the whole sector was within hours of collapse.

Vince Cable, the Liberal Democrat Treasury spokesman, accused the Government of treating taxpayers like children in keeping the bailout secret for more than a year. “What is particularly concerning is that the Government was pumping billions into HBOS at the exact same time it was convincing Lloyds to take it over,” he said. “The Chancellor knew he was selling Lloyds a lemon, but he did it anyway to save his own skin.”

Read it all.

Filed under: * Economics, Politics • Economy • The Banking System/Sector • The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- • * International News & Commentary • England / UK

4 Comments
Posted November 25, 2009 at 5:00 am [Printer Friendly] [Print w/ comments]



1. Terry Tee wrote:

What I understand about economics you could probably write on the back of a postage stamp.  But here goes.  IMHO the whole capitalist system rests on the confidence of consumers.  Financial institutions lend out far more than they can repay, since the loans are backed by collateral that often cannot be easily realized (eg real estate) and sometimes only partially backed.  Stock market prices are based on future profits.  As long as people keep on buying there is no problem.  But once doubt sets and sales drop, future profits seem uncertain, stock prices sag and companies breach their loan protocols with the banks.  Banks panic and begin a fire sale of collateral assets, and then as worry sets in people start withdrawing their money, so banks start to tumble into illiquidity, squeezed between loan defaults and depositor flight.  Here endeth the Economics 101 lesson.  Now, don’t get me wrong:  I am no swivel-eyed socialist and I am a firm believer in capitalism and free markets.  My question, ultimately, is a spiritual one:  Is there a link between consumer confidence and spiritual confidence?  We shy away from such a gross question, because we are well aware of Jesus’ teachings on the danger of wealth and the worship of Mammon.  But people of faith have confidence in God who created the world and said that his work was good, who made us stewards of his creation, who came among us in Christ and assured us of his eternal love.  Believe in this and you believe in a future in which you can invest, and in the blessings of life which you can not only enjoy but also share.  However, our Western culture under the assaults of secularism and cynicism has moved into a phase of self-doubt, exacerbated by the depredations of Islam.  Not surprisingly, our economy has stumbled also.

November 25, 7:48 am | [comment link]
2. Kendall Harmon wrote:

I happened to come across this story via the BBC Today programme on the morning run.  It really is amazing at so many levels, but these 2 stuck out:

1—how close we really were to meltdown in the fall of 2008
and
2—how many people knew and yet this story did not leak

November 25, 7:51 am | [comment link]
3. Br_er Rabbit wrote:

Terry Tee, you must own a rather large postage stamp.

November 25, 8:49 am | [comment link]
4. Terry Tee wrote:

Or else have very small handwriting.

November 25, 2:13 pm | [comment link]
Registered members must log in to comment.



Next entry (above): AP: Atheist student groups flower on college campuses

Previous entry (below): The Gloves come off at Amazon & Wal-Mart

Return to blog homepage

Return to Mobile view (headlines)