The Government's latest bank bailout measures came under fire yesterday from the opposition as shadow chancellor George Osborne said that they just prove the failure of the £37billion bailout launched in October.
Commenting on the steps announced by the Treasury yesterday that will allow the Government to insure toxic bank loans and, in some circumstances, buy assets in companies, Osborne said:
"The Prime Minister finally has been forced to confront the truth, he hasn't saved the world; he certainly hasn't saved the economy, and he hasn't yet saved the banks."
On top of this the Liberal Democrat shadow chancellor, Vince Cable sees the bailout as a blank cheque for Britain's banks as too many details including the true costs remain unknown.
"Ministers are offering hardly any details about the terms of this underwriting. Taxpayers are being signed up to yet another bank bailout, when it is clear the Government hasn't done its homework.
"The £100bn insurance of bad debts
owned by the banks could result in enormous losses for taxpayers, since these assets are being insured in a falling market and there are still further big losses to come in the property market."
And, as experts condemn the Government's first bank bailout in October, Mr Cable added: "Why weren't the banks required to make a full declaration of their bad loans
when the £37billion was invested?"
Nevertheless, according to head of banking at moneysupermarket.com, Kevin Mountford, the latest measures were essential because the consequences of a failed banking sector would be far worse.
However, he said that the Government must make sure that banks are tied to lending and increasing interest rates on savings accounts
: "If these measures are to have any success, the Government must put some weight behind its calls on the industry to free up lending and encourage savings.
"In short, it must help the industry develop the tools to sort itself out in a transparent way," he added.
© Fair Investment