UK's Brown declines to rule out complete nationalization of the banks

Discussion in 'Wall St. News' started by Cdntrader, Jan 17, 2009.

  1. Brown says British banks must clear up bad debts
    Saturday January 17, 10:49 am ET

    British prime minister says British banks must clear up bad debts

    LONDON (AP) -- Britain's banks must reveal the full extent of their losses due to so-called toxic debts, Prime Minister Gordon Brown said in an interview published Saturday.

    The Financial Times reported that Brown declined to rule out complete nationalization of the banks or a fresh injection of taxpayers' money to help get banks lending again.

    "One of the necessary elements for the next stage is for people to have a clear understanding that bad assets have been written off," Brown was quoted as saying. "We have got to be clear that where we have got clearly bad assets, I expect them to be dealt with."

    Brown's economic team is considering a second round of bailouts to help stabilize the banking sector and other measures to deal with bad debts linked to the failure of the subprime mortgage market in the United States.

    One of the proposals expected to be discussed in coming days is the establishment of what has been called a "toxic bank" to hold the bad debts so that banks could clean their balance sheets and resume normal lending operations.

    Brown's government has already used 37 billion pounds ($54.5 billion) to help recapitalize banks, but the lending slowdown has continued.

    Concern has mounted recently about the banking sector, highlighted by the nearly 25 percent drop Friday in the share value of Barclays PLC, one of Britain's largest banks.