Crosby report

Sir James Crosby’s report into mortgage lending was released yesterday giving further impetus to the government’s financial bailout, concluding that lenders’ inability to obtain capital to lend to homebuyers was the ‘sort of market failure that might call for government intervention, perhaps even on a significant scale’. The report suggested that without help the shortage of funds would mean net new mortgage lending would fall below zero. As expected from the interim review, the Crosby report believes the government had to intervene with a ‘large injection of funding’ into the banking system including providing a temporary guarantee, by taxpayers, of mortgage-backed securities to fund further lending.