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| Version 2 | Version 3 |
|---|---|
| Plan to revive mortgage lending | Plan to revive mortgage lending |
| (10 minutes later) | |
| The government may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds. | The government may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds. |
| The recommendation is part of a report commissioned by the Treasury that looks at possible ways to revive the UK mortgage market. | The recommendation is part of a report commissioned by the Treasury that looks at possible ways to revive the UK mortgage market. |
| But such a move would be controversial and could be seen as the partial nationalisation of mortgage finance. | But such a move would be controversial and could be seen as the partial nationalisation of mortgage finance. |
| The report expects the shortage of mortgage finance to persist till at least the end of 2010. | The report expects the shortage of mortgage finance to persist till at least the end of 2010. |
| The assessment of the outlook for mortgage finance is due to be published later by Sir James Crosby, the deputy chairman of the City watchdog, the Financial Services Authority. | The assessment of the outlook for mortgage finance is due to be published later by Sir James Crosby, the deputy chairman of the City watchdog, the Financial Services Authority. |
| Gloomy | Gloomy |
| Sir James's assessment of the health of the British mortgage market is about as gloomy as it's possible to be. | Sir James's assessment of the health of the British mortgage market is about as gloomy as it's possible to be. |
| FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
| This former banker blames a collapse in demand for mortgage-backed securities, or investments created out of mortgages and sold to banks and big investors. | This former banker blames a collapse in demand for mortgage-backed securities, or investments created out of mortgages and sold to banks and big investors. |
| This is not just a City of London phenomenon. | This is not just a City of London phenomenon. |
| Sir James fears that a long-term mortgage drought would turn the current downturn in house prices and consumer spending into something considerably worse. | Sir James fears that a long-term mortgage drought would turn the current downturn in house prices and consumer spending into something considerably worse. |
| So he believes it may be necessary for the government to guarantee new better quality mortgage backed securities, to re-stimulate demand for these securities. | So he believes it may be necessary for the government to guarantee new better quality mortgage backed securities, to re-stimulate demand for these securities. |
| That may be necessary, Sir James is expected to say later this morning, in view of the government's objectives of supporting financial stability and operating in the long-run interest of consumers and the economy. | That may be necessary, Sir James is expected to say later this morning, in view of the government's objectives of supporting financial stability and operating in the long-run interest of consumers and the economy. |
| But it would be seen as the taxpayer underwriting the mortgage market, the partial nationalisation of mortgage finance, and it will be immensely controversial. | But it would be seen as the taxpayer underwriting the mortgage market, the partial nationalisation of mortgage finance, and it will be immensely controversial. |
| Good idea? | |
| The Liberal Democrat Treasury spokesman, Vince Cable, told the BBC that he was uneasy with the idea for two reasons. | The Liberal Democrat Treasury spokesman, Vince Cable, told the BBC that he was uneasy with the idea for two reasons. |
| "First of all this is a straightforward proposal to let the government take the risks for private lending and companies will continue to make their profits from it," he said. | "First of all this is a straightforward proposal to let the government take the risks for private lending and companies will continue to make their profits from it," he said. |
| "Secondly because it could have an effect of simply reflating this housing bubble that is now bursting in a rather painful way and reflate it in a way that prevents first time buyers ever getting on to the ladder." | "Secondly because it could have an effect of simply reflating this housing bubble that is now bursting in a rather painful way and reflate it in a way that prevents first time buyers ever getting on to the ladder." |