Banking sector support

ePolitix.com Stakeholders comment on chancellor Alistair Darling's response to recent problems in the financial sector.

Speaking on Monday, Darling said he was acting to maintain public confidence in the banking system.

He said: "I want to put the matter beyond doubt"

 

Stakeholder response: The Council of Mortgage Lenders (CML)

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Michael Coogan, CML director general, said: "Consumers need to understand that the problem for lenders generally at the moment is in raising funds, not in lending quality. 

"The Bank of England would not have provided the loan to Northern Rock if it had concerns about the quality of the lender’s own business. 

"Lenders are facing funding pressure at the moment, and what they need is a return to more normal market conditions as quickly as possible. We welcome the Bank’s intervention and confirmation that it is keeping a close eye on the situation."

 

Stakeholder response: Federation of Small Businesses (FSB)

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A spokesman said: "The main issue with the current credit crunch is certainty. 

"Small businesses need to know that their existing loans will not suffer from increased nervousness at their banks and that if they need access to lending in the future that it will be available on similar terms as it has been in the recent past. 

"Higher interest rates are being paid by small firms because of the rate rises by the Bank of England. 

"But small businesses, who employ 60 per cent of the private sector workforce, will struggle if terms and conditions for loans are tightened or rates rise higher because of this credit crunch.
 
"These are worrying times for small businesses but they must also be worrying times for the government. 

"A reputation for economic competence takes a great deal of work to secure but it can be lost overnight. 

"The Conservatives are still recovering from Black Wednesday in 1992 and Labour were out of power for a generation after the Winter of Discontent and having to go to the IMF for assistance. 

"The announcement by the chancellor could be interpreted as a sign of recognition that Labour's economic record stands on the precipice or it could be a welcome sign that the chancellor has it all under control. It is not just the government that hopes it is the latter."