Britain’s Brown: financial crisis needs boldness
Prime Minister Gordon Brown will say bold and far-reaching action is needed to tackle the global financial crisis when Britain unveils a multi-billion pound bank rescue package Wednesday.
The package, due to be announced at about 7 a.m. (0600 GMT), will involve what a government source has described as a large-scale injection of capital into major retail banks, some of which have lost half their value this week.
“Extraordinary times call for bold and far-reaching solutions,” Brown will say at a news conference with finance minister Alistair Darling scheduled for 9 a.m. (2:00 a.m. EDT), according to extracts released by his press office.
“This is not a time for conventional thinking or outdated dogma but for fresh and innovative intervention that gets to the heart of the problem.
“These decisions on stability and restructuring are the necessary building blocks to allow banks to return to their basic function of providing cash and investment for families and businesses (payday loans).”
Financial analysts expect the package to involve the government providing up to 50 billion pounds to the banks in exchange for equity stakes in the form of preference shares, which could see taxpayers benefit if the banks recover.
The package follows a meeting Tuesday involving Brown, Darling, Bank of England governor Mervyn King and the head of the Financial Services Authority. There was pressure from bank chief executives to act.
British media have suggested the package could also involve a stand-by facility that would effectively allow banks to tap as much money as they need, but the government source played this down.