Sunday, April 19, 2009
Moar bailouts plz, KTHXBYE
Crunch negotiations are due to take place this week between the Bank of England and a group of building societies in an attempt to prop up their levels of mortgage lending. The societies - including the Chelsea and the Skipton - were hit last week by credit ratings downgrades, affecting their participation in the BoE's £185 billion Special Liquidity Scheme. The downgrades are based on the scenario of house prices falling 40%, thus affecting the value of assets put up by the building societies as collateral for funding from the liquidity scheme. Societies may be forced to either put up additional collateral or hand back the Treasury bills unless a deal can be reached with the BoE.