New bank bailout unveiled

By staff

The government has announced a second bailout of Britain’s major banks, four months after it injected £37 billion into the sector.

The new plans are aimed at freeing up blocked credit and encouraging the banks to start lending again.

“We will do everything to maintain stability, support economy and expand lending,” Gordon Brown said this morning during a joint press conference with chancellor Alistair Darling.

“I will not sit idly by because of the mistakes of a few bankers.”

The prime minister added there would be no return to the mistakes of the past over irresponsible lending.

“The word is at risk of a damaging spiral – damaging to jobs and businesses everywhere in the world,” Mr Brown said.

He explained banks around the world were retrenching and focusing on domestic economies – so international action was needed.

Mr Darling said: “It’s a huge problem to get that lending starting again.”

Further protection for banks against toxic assets in the form of a new insurance scheme is also part of the bailout, as is a £50 billion purchase of the worst debt.

Northern Rock, nationalised last year, will be repaying a government loan at a slower rate.

The Treasury insisted the impact of the bailout on the public purse would be “mostly temporary”.

“Investments will be held for no longer than is necessary to ensure stability and protect taxpayer interests; liabilities will be backed by assets; and fees will be charged for relevant schemes,” a statement said.