Interesting piece in the Financial Times.
British banks will be able to borrow from the Bank of England for three months using mortgages as collateral, the central bank announced in an extraordinary U-turn.So that's that then? Mervyn King doing the Treasury bidding?
The humiliating move for Mervyn King, Bank governor was announced on Wednesday morning when the Bank said that next week, it would be willing to swap £10bn of cash for a wider range of commercial bank assets "including mortgage collateral".
Up to now, Mr King has insisted that such action would be tantamount to bailing out banks that had made risky lending decisions and would sow "the seeds of a future financial crisis" because it provides after the event insurance for risky behaviour.