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January 5, 2009

Government considers second bail out for banks

by Richard Kilner

Story link: Government considers second bail out for banks

The banking sector, which has already been given £37bn to recapitalise by the British Government, may have a second bail out.

Although the government’s action did stabilise the banking sector at a critical time, credit markets remain stubbornly tight and viable businesses and creditworthy individuals are finding borrowing conditions ever more difficult.

Coupled with the fall in house prices, the difficulty in acquiring mortgages is not helping the general economic situation as the country enters recession.

In order to try and loosen liquidity in the credit markets, Treasury sources have told the BBC that a fresh set of measures are being considered by Chancellor Alistair Darling.

Yesterday the Prime Minister insisted he was speaking to the banks in an urgent effort to get them lending more.

However, any further cash given to banks would be deeply unpopular with the public, who have seen a number of big high street names already go to the wall (most notably Woolworths) and are less than sympathetic to the sector which helped cause the credit crunch in the first place.

 

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