The UK government has announced a package of measures aimed at rescuing the banking system that makes available £400bn ($692bn) of fresh money.
It will initially make extra capital available to eight of the UK's largest banks and building societies in return for preference shares in them.
It is "designed to put the British banking system on a sounder footing", said Prime Minister Gordon Brown.
Some bank shares rose on the news although the main FTSE 100 index fell.
2 comments:
whats interesting is that the government not only bailed out their own banks, but also had to secure the assets of failing Icelandic banks that had branches in Britain...
Britain's credit crunch reverberated through Iceland, whose banking sector was once considered a fairy tale story, with assets and return on those assets exponentially rising each year..
Basically, the financial system took on too much debt, and banked on a system that depended too much on financial engineering, rather than true supply n demand...
I think these bail outs are going to make things worse in the long term. What we have to do is change the way banks do business right now.
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