A report in Bloomberg News discusses actions taken and possible action the Central Bank of the United Kingdom might take to "ease the strains'' in financial markets, although it's not considering requiring taxpayers to assume credit risks. Britain's central bank said it is "not among'' those that the Financial Times reported earlier today were contemplating the purchase of mortgage-backed securities to smooth lending to consumers after a worldwide surge in borrowing costs. The Federal Reserve also denied it's in discussions to buy such debt.
That's for now. And, BTW, why in the name England, when it's the bank of the UK? Anyway.
The surge in credit costs has choked off lending to consumers in the U.K., especially for new home loans. Banks including Alliance & Leicester Plc, Bradford & Bingley Plc and HBOS Plc Scotland have withdrawn loan offers and raised the cost of borrowing in recent weeks.
The LIBOR has risen 75 basis points, or .75%, above Bank of England target because banks have raised borrowing costs, and they're crying that the Central Bank isn't helping them.
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