Latest Debt News
Taxpayers foot the bill for chancellor's bail out plan, says Cable
21/04/2008 12:16:00
The chancellor's plans to invest £50 billion into the financial services system could put taxpayers at risk of shouldering more national debt, one politician has claimed.
Vince Cable, the Liberal Democrats Treasury spokesman, said that something did need to be done to prevent the credit crunch inflicting any more damage upon the economy.
However, he criticised the government's plan to will lend the banks about £50 billion of government bonds, and taking banks' assets, in the form of mortgage-backed securities, as collateral.
"Since the mortgages from the banks are of inferior quality and higher risk than the government bonds they replace, the implication must be that taxpayers are shouldering the risks and losses of the banks. This cannot be right," said Mr Cable.
Meanwhile, chancellor Alistair Darling said that the plan is an attempt to "unbung" the situation so that the Bank will be making money available to the British banking system.
There is speculation that the amount could be doubled if it does not initially ease financial pressures.
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