The Bank of England said it will lend 10 billion pounds ($20 billion) to commercial banks in an emergency three-month auction and widen the range of securities it accepts as collateral. ``This measure is being taken to alleviate the strains in longer-maturity money markets,'' the bank said in a statement today. The Bank of England, which will accept ``mortgage collateral'' in the auction, said the minimum rate it will lend at is 6.75 percent. The decision is an about-face by Bank of England Governor Mervyn King, who last week said that widening the collateral accepted by the central bank or offering money for ``longer periods'' would risk ``moral hazard.'' The government and the bank on Sept. 14 had to rescue Northern Rock Plc after the lender struggled to raise money in credit markets. http://www.bloomberg.com/apps/news?pid=20601087&sid=assp1WjgAThI&refer=home KING = BABBLER ?
Looks like their little experiment backfired. The actions of the BoE over the past few weeks has been Very embarrasing. I'm looking for someone to make me good odds on Lomax being the next in charge. Worth a punt!!
The shareholders in Northern Rock have lost out. Floated at 680p in 2002, rumour of low bid from Lyoyds at 200p. Why should the shareholders be bailed out by BOE? I have more insurance in an IB account than any Uk bank account.
BOE really rocks. They kept hiking and kept hiking when everybody was shaking their heads and now they bail out the banks. What's next? More hikes and more bailouts? LMAO.
They have not stopped property prices rising though. If this panic has no effect on property prices then it is one way market.
I read somewhere that London prices are down. Anyway, BoE is definitely the clown among central banks.
Does the BOE consider at all that the London property boom is driven less by interest rates than Russian and international business and mafia guys moving to London in droves? They can hike to 20% these Russian billionaires will keep buying and pay in cash. They don't need loans.