Britain Bails out 3 Banks | Voice of America - English
The British government has announced it is partially nationalizing three British banks with up to $63 billion of taxpayers' money. Prime Minister Gordon Brown promises the unprecedented bail-out is an important step in thawing out the frozen money markets.
In a bold move to get money movingagain, the British government will inject $34 billion-worth ofcapital into the Royal Bank of Scotland and just less than $30 billioninto Lloyds-TSB and HBOS, the two institutions currently renegotiatingmerger terms. The bottom line is, this huge infusion of moneymeans effectively that around 60 percent of RBS and 40 percent of amerged Lloyds-TSB HBOS will be taxpayer-owned here. Prime Minister Gordon Brown says to stand by and do nothing was never an option. "Inextraordinary times, with financial markets ceasing to work, thegovernment cannot just leave people on their own to be buffeted about,"he said. "For savers, for small businesses and for homeowners, we mustin an uncertain and unstable world be the rock of stability upon whichBritish people can depend." The money will come with stringsattached. The top executives of RBS and HBOS are leaving theirpositions. And the remaining banks have been told to revert back tothe mortgage and small-business lending levels last seen in 2007, whichis much higher than is currently being offered. British TreasurySecretary Alistair Darling says Britain alone will not be able to fixthe global credit problem, but he says others now appear willing tofollow suit. "It is striking, that in my conversations with mycounterparts at the G7 and the IMF in Washington over the weekend andwith the prime minister's discussions with his colleagues in Franceyesterday that right across the world governments are now ready to dowhatever it takes, whatever is necessary to stabilize and strengthenthe banking system and to help us deal with the uncertainly andturbulence," said Darling. Prime Minister Brown echoed thosesentiments and for the first time in weeks, his comments at a newsconference were tinged with a tone of optimism. "I think youwill find that in the rest of Europe over the next few days, exactlythe same thing is going to happen and I think that you will find thereare some discussions taking place in America around the Paulson planabout the use of the 700 billion that has been approved by [the] Senateand Congress for purposes that we are talking about this morning. So,this is perhaps the first government to do what I believe a largenumber of governments are going to do over the next few days and it isabout restoring trust and confidence in the banking system which isabsolutely essential for a successful banking system to flourish." At first reading, the European markets liked the move, trading firmly higher.