Friday, January 16, 2009
How much are these bad debts worth? No one knows.
Even though ministers have injected £37 billion of public money into the banks' balance sheets, that was simply not enough to cover the huge losses that the banks' are facing from loans they made, based on the value of properties that have since tumbled in price, to people and companies that are now at risk of defaulting. Such losses could cause the complete collapse of major banks, bringing chaos to the financial system and further squeezing the wider economy.