Jo backs £500bn bank rescue plan

2.38.33pm GMT Wed 8th Oct 2008

An 0.5% interest rate cut was announced alongside the rescue package

Jo Swinson has given her support to the bank rescue package announced today by the Government but warned that East Dunbartonshire taxpayers' money must be handled with care.

The rescue package contains measures that could add up to as much as £500bn. Jo also called for a wider range of steps to help ordinary families hit by the credit crunch.

Commenting on the rescue plan, Jo said:

"At this time of crisis for our banking system, it is important that all parties pull together to support this package, for the long-term good of the British economy.

"Ordinary taxpayers in East Dunbartonshire will be staggered by the huge sums of money involved in this deal. They need to be given reassurances that the Government and the banks are going to handle their money with extreme care while they steer a course through this crisis. It is not clear what 'plan B' would be if this rescue package does not succeed, and not likely that taxpayers could repeat a bail-out of the banks on this scale.

"Alongside this rescue plan, steps are also needed to ease the burden of the credit crunch on families in East Dunbartonshire. As well as the interest rate cut announced today, the Government should introduce tax cuts for those on low and middle incomes. The regulations governing banks must also be overhauled to end to the short-term bonus-driven culture of the city."

The rescue plan provides funds that could total up to £500bn:

• Banks must increase their capital by at least £25bn and can borrow from the government to do so.

• An additional £25bn in extra capital will be available in exchange for preference shares.

• £200bn will be available in short-term loans from the Bank of England.

• Up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other.

Related Link:

BBC News: rescue plans for UK banks