Bank of England to save banks in secret
Responding to subprime problems and the recent bank run from Northern Rock, the British government wants to allow the Bank of England to bail out failing banks in secret. Details would be public later. Stephen Beard reports.
Bank of England headquarters in London (Cate Gillon/Getty Images)
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Doug Krizner: I'm afraid we're not finished hearing about huge losses from the subprime crisis. This morning, Swiss bank UBS reported a record loss because of write-downs fir bad loans -- more than $4 billion for 2007.
Subprime crisis damaged many banks across Europe, particularly Britain's Northern Rock. Now, the U.K. government wants to change banking law. From London, Stephen Beard has more.
Stephen Beard: The British government wants to prevent a banking collapse from hitting consumer confidence. That's what happened with Northern Rock. When it appealed to the Bank of England for help, word got out, triggering the first bank run in Britain in 100 years.
Now, the government's planning to allow the Bank of England to bail out failing banks in secret. Details would only be made public later, once the bank had been rescued.
Howard Wheeldon of brokers BGC welcomes the plan:
Howard Wheeldon: Runs on banks are not very common, thankfully. We want to ensure that it doesn't happen again. This legislation, I think, goes a long way to ensure that that will be the case.
Today, Northern Rock is propped up with $50 billion of taxpayers' money. And, say the critics, Britain's style of financial regulation has been discredited.
In London, this is Stephen Beard for Marketplace.
