Further Government Funding To Help Restore Availability Of Loans
As the effects of the credit crunch and the economic down turn have continued and become deeper over the past few months, the government has today (Monday 19th Jan) announced a range of measures to help support the economy as a whole and particularly to help banks and building societies restore the liquidity they require to be able to offer realistic loans to individuals, to try and help the economy recover faster.
Today’s announcements are intended to build on previous government initiatives over the months running up to Christmas last year, during which time a number of plans were introduced to support the main high street banks and other loan companies in order to help restore new secured loan levels and provide a much needed boost to the housing market, which would, in turn have a knock on effect in other areas.
The Government intends to extend its Credit Guarantee scheme for banks, which should lower the risk of inter bank lending and make it easier for banks to be able to grant loans to potential borrowers.
The Treasury is also making available an additional £50 billion in the form of treasury bills, which will be used to relieve the pressure on banks and other lenders from bad debts and therefore build confidence for loans between financial institutions in the wholesale markets, as recommended in the report issued last year by Sir James Crosby.
Those banks which have previously been part nationalised, such as the Northern Rock, are also to start offering secured loans once more in an attempt to help boost the housing market.
The investment being made by the Government is being backed with assets, fees will be charged to the recipients and the investments held for as short a term as possible, thereby limiting the exposure to the UK tax payer to a minimum level.
