Second economic bail-out

For the second time in three months the government has promised a bank bail out to get banks lending again and ‘insure’ bad debts. The scheme, under which taxpayers would foot the ‘potentially unlimited’ bill, is intended to cover bad debts and guarantee loans for homeowners and businesses. Other elements of the hundreds of billions of pounds package include increasing the government’s stake in the Royal Bank of Scotland, and measures to stimulate lending by Northern Rock. The chancellor has admitted he does not know how much money will be needed, saying ‘we need to talk to the banks’.