Alistair Darling on a mission to kick-start lending
Chancellor Alistair Darling is bracing himself to battle with the banks after the £37 billion bailout package for three UK banks has failed to kick-start lending.
Mr Darling is considering tough new laws to force banks to lend to small businesses, in particular those who are still feeling the effects of the banking crisis and the economic slowdown.
Meanwhile, pressure has been mounting on banks of late after the two recent interest rate cuts were not passed on to the consumer. However, some banks did eventually cave in and pass on the benefits to its customers.
John McFall, the Treasury Select Committee chairman, is demanding that banks start lending again to households and businesses.
Mr McFall told BBC Radio 4′s Today programme that he is firing a warning shot for the Financial Services Authority, banks and others, adding that banks have a responsibility to society which they must fulfil.
Mr McFall explained that if the refusal to lend continues, then a website should be set up whereby firms can report if they have been refused a loan and describe how they were treated. He added there was also a ‘nuclear option‘ where ‘the demand for full-scale nationalisation may well grow‘.
However, the British Bankers’ Association (BBA) said that banks have not yet received their injection of cash and that some of it was required to absorb their losses.
Angela Knight of the BBA explains that banks are facing a difficult time and that lending is continuing. However, she said if companies are not viable then banks will not lend to them.
According to the BBA, loans to small companies increased by 10% to £44.8 billion during the 12 months to September.
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