UK unveils 2nd banking rescue

Britain announced a second rescue plan for the country’s ailing banks on Monday,hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets...

Written by Associated Press | London | Published:January 20, 2009 12:46 am

Britain announced a second rescue plan for the country’s ailing banks on Monday,hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold. Prime Minister Gordon Brown said the government would offer to insure banks against default on toxic loans in exchange for legally binding commitments to make credit more freely available to British businesses and home buyers who are struggling in an economic downturn. Brown and Treasury Chief Alistair Darling acknowledged that October’s pledge of 37 billion pounds (about $55 billion) to bail out Britain’s banks hadn’t done enough.

Brown said stimulating lending is vital to spark Britain’s economy and to attempt to limit job losses as Britain tackles a recession prompted by the global downturn. “Good businesses must have access to credit,jobs should not be lost needlessly,” Brown told reporters at his Downing Street office.

Britain’s Treasury said the government will offer to insure banks against losses on about 90 per cent of specific toxic loans. The plan would require banks to identify their riskiest assets which,for a fee,could be insured with government backing.

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