$100 billion plan for U.K. credit crunch
Pushing harder to get British banks to lend and borrow again, the Bank of England says it will issue $100 million worth of new government bonds and swap them for mortgages the banks can't unload. Steven Beard has more.
Bank of England headquarters in London (Cate Gillon/Getty Images)
More on International, Europe
TEXT OF STORY
Renita Jablonski: Overseas there's a $100 billion plan on the table to help ease the credit crisis. The Bank of England is offering to swap U.K. government bonds for mortgage-backed securities. From London, Stephen Beard explains.
Steven Beard: The Fed has been doing something similar for months, but the Bank of England's plan is more significant. The Bank says it will issue at least $100 billion worth of new government bonds. The Bank will then swap these bonds for the mortgages, which the commercial banks can't sell. With those mortgages off their books, it's hoped the banks will then feel free to lend and borrow again. This is an about turn for the governor of the Bank of England. He'd wanted the commercial banks to suffer more pain for reckless lending. Andrew Hilton of the CSFI think tank.
Andrew Hilton: The governor had his head in the clouds, and he's actually looking around the real world and he's seeing that there is a problem, and that the Bank has an obligation to try and sort that problem out.
He says the credit crunch is now beginning to bite in Britain. The U.K. may be six months behind the U.S., but he says, "We're on the same rocky road."
In London this is Stephen Beard for Marketplace.
