The future of Banks
Banks should come clean
Prime Minister, Gordon Brown, has demanded that banks admit how many "toxic assets" they have on their balance sheets.
Gordon Brown believes that banks should come clean in order that trust can be rebuilt.
Bank’s new role
The Bank of England’s new role will mean that it can buy up to £50bn of high quality assets directly from companies, whereas before it could only buy assets from banks or financial institutions.
This will work by a new subsidiary company being set up to buy the assets and the Bank’s executive deciding what sort of assets it will buy and from whom.
The list of assets can now include corporate bonds, which will mean that some companies will now have the ability to effectively borrow money directly from the Bank of England.
Liberal Democrat treasury spokesman Vince Cable believes the Government have not gone far enough and should nationalise the whole banking sector.
"The Government must bite the bullet on the public ownership and control of the banks to ensure that lending is maintained to sound companies who can keep the economy ticking over in these turbulent times."
Previous bank rescue terms have also been changed. Northern Rock has been given a longer period in which to repay its loans from the Government.
RBS have agreed with the Treasury to swap the £5bn of preference shares the Government holds for new ordinary shares. This means that the Government will now own 70%.
The merger of HBOS and Lloyds TSB has now been completed to form Lloyds Banking Group.