(A) All domestic non-financial enterprises that currently have access to bank financing and whose loans, overdraft facilities, credit lines or whatever other financial arrangements expire during the coming year, have the right to an automatic one-year extension of the expiring arrangements on the same financial and non-financial terms as the expiring arrangements. This mandatory ‘creditor [...]
The reason why the government had to rescue Britain’s banks is not that their shareholders and executives deserve special favours, but because businesses and jobs depend on the availability of credit. There is no public interest in propping up banks that won’t lend. For sure, banks should not be lending with reckless abandon as they [...]
Banks would normally be wary of lending to someone whose liabilities were 50 times their net assets, but they happily lent to each other on that basis – until, one day, they stopped. If you want a one sentence explanation of the present crisis, that is it. From the FT.
The Guardian, 9 October 2008. The UK government’s measures will stave off economic collapse and get banks moving, but calling them a bail-out is misleading
Posted 09 Oct 2008 in Economics, Finance, Published articles, The Guardian
The Guardian, 7 October 2008. If the government is bold and recapitalises the banks, Gordon Brown will reap a political dividend. Only ruin awaits indecision
Posted 09 Oct 2008 in Britain, Economics, Finance, Published articles, The Guardian
Allowing Lloyds TSB to take over HBOS was an act of desperation: even though the merged entity would dominate the UK banking market, the government signalled that it would approve the merger in order to stop HBOS going under. But now that the government has stepped in with its bank recapitalisation and funding plan, wouldn’t [...]
Tony Blair once said that the government was best when it was boldest. Gordon Brown is – finally – heeding that advice. The government’s three-pronged plan to shore up Britain’s banking system is bold and right. It is our best hope of pacifying the financial panic, getting credit flowing through the economy again and thus [...]
What bank investors need from authorities is clarity. A concerted, pan-European drive to inject capital might provide it. As US fund manager John Hussman has suggested, that injection could be achieved via a “super-bond”, countable as capital and subordinate to customer deposits, but ranking ahead of both shareholders and even senior bondholders in the event [...]
