Bank of England made secret £62 billion loans to bankrupt banks

[Hannah Bell]

Bank of England governor Mervyn King has revealed for the first time that in October 2008 the Bank had lent Halifax Bank of Scotland (HBOS) and the Royal Bank of Scotland (RBS) £62 billion. These loans, issued at the height of the international banking crisis, were to prevent the collapse of not only the two banks but the entire banking sector.

King told the House of Commons Treasury Select Committee that the Bank had acted in its capacity as the lender of last resort in order “to prevent a loss of confidence spreading through the financial system as a whole.” ...A spokesman for the prime minister said that it was “a powerful reminder” of how the banking system had nearly collapsed.

The Bank of England, the Treasury, the government and the banks themselves have kept these loans secret for nearly a year. To do so they took advantage of new legislative powers passed in February 2008. RBS had received emergency cash that peaked at £36.6 billion and HBOS had drawn on £25.4 billion of government funds—the largest ever support provided to British corporations. In return for the £62 billion loans, they had provided the Bank of England with collateral of £100 billion. This alone indicates how little faith the Bank had in their balance sheets. But as well as residential and commercial mortgages, a significant portion of the collateral was in the form of the government’s own debt.

It was also revealed that Chancellor Alistair Darling had agreed to underwrite the Bank’s loans in the event of HBOS and RBS defaulting on their repayments...

http://www.wsws.org/articles/2009/nov2009/loan-n30.shtml

[SpiralHawk]

1. Sounds like the Brits embraced Republiconomics

I am Shocked & Awed at their Republicon-style FAIL. Not.

[AllentownJake]

2. Yes and I'm sure if the FED was audited

you would notice a transfer to the central bank of the UAE this weekend.