We are now seeing the benefits of Gordon Brown and Tony Blair subscribing to the Thatcherite vision of 'light-touch' regulation of Financial institutions ( the City ), which was ensured by constant lobbying from the latter, who firmly resisted any calls for regulation and stingily did not want to surrender part of their profits to pay for their 'regulation'. During Equitable Life's collapse, the incredible duo said "we (Government and Tax payers) are not in the business of bailing out private institutions" (who have acted irresponsibly). The City and the Government both espoused the 'virtues' of a 'self regulated' financial system allowed to maximise profits by operating under minimal supervision and according to 'free market' rules, where irresponsible companies (like Equitable life) would be allowed to be punished by the market place (in being allowed to collapse). Witness the hypocrisy and volte-face as they now line up cap in hand to the BoE !

Roman, London, England

Why is it that people ignore the fact that house prices are where they are due to the simple economic rule of supply and demand? The price is reversing because demand has stuttered due to finance not being available for many. There is no 'right' to own a house and the general populace need to learn that they have to earn things instead. Once there were about three basic mortgage products and the fact that we are down to a choice of 5000 from 15000 is irrelavent. Banks will vary theirs rates to their business model and have the right to do so, and under company law any Director who abuses their position and ignores what is best for the Company could and should face Jail. The only truism of the whole affair is that the BOE is there to manage the economy not interfere in business and the Government should not 'bail out' banks who can't manage their own affairs. Some balanced journalism may help as well for a change.

Andrew, Bromley, UK

The only way this crisis will stop is when property values stop falling. We have a LONG way to go. Buckle up, and be prepared for the worst. This is The Great Millenium Depression.

Social unrest is guaranteed if these moneylenders and usurers are bailed out with tax payers money. Mr Brown should be very careful what he sanctions.

Mervyn King should stand tall and stick to his "no moral hazard" guns.

Milton Keynes, Cheltenham,

The government obviously thinks that banks are entitled to make billions from us every year. So why don't they just introduce a new "Bank Tax" and take it straight out of our pay packets? Then we wouldn't need all this subterfuge about lowering interest rates for savers while the mortgage rate is still going up.

If we did have a direct bank tax we could keep interest rates higher, not have inflation going through the roof and make our businesses more competitive abroad.

As the government thinks our property prices are still too low, perhaps Sir James Crosby could be encouraged to suggest measures such as 50 or 75 year mortgages? Mortgages of 25 times salary? Why shouldn't our children help pay for our houses, they live in them while growing up don't they?

S Holroyd, Elgin, UK

Unbelievable arrogance from the CML. Maybe if the banks hadn't been so reckless with their lending criteria over the past 5+ years we wouldn't be in this mess.

I am shocked that we, the taxpayers, are being pushed to accept this subprime/buy-to-let debt when the banks are the ones who have royally screwed up.

If these banks were so short of cash why did we have them raising dividends only a couple of months back!

John, Ealing , London

This sounds like yet another story peddled by the banks in order to get more cheap money out of the BoE. I do not believe that the banks 'liquidity' problems are anywhere near as serious as they want us to believe. Why else was I recently offered a personal loan by one of the major banks when I didn't even want one?

Paul, Coventry,

Interesting to see that Steven Crawshaw, chairman of the CML, is also chief executive of Bradford & Bingley, the lender that is most likely to go bust.

If we all withdrew our money from the Brad & Bing, would this cause it go bust?
If it did go bust would, would the people who have mortgages with the B&B become debt free?

s wright, manchester,

Adam

The problem with that theory is that the only way banks will believe the others have cleared books is if only the worst assets are given to the BoE. Any write offs would either require tax payers money or the printing of money and then inflation and so a tax on savers and pensioners.

Why should the stupid and greedy get bailed out. They took on or gave too much debt. Let them suffer. The people at risk are those who took huge multiples, carried out mortgage equity withdrawal or had low deposits. These groups should not have been given mortgages in the first place!

We are returning to NORMAL. Get over it and let the frugal have their turn. Banks are a necessary evil? Fine. Lets help them but with equity stakes taken. Also, most companies go under if they run out of cash flow or have unsustainable models....

Ah, like the banks if banks did not have the ability to create money! Why is giving low IQ people enought debt to be a danger a social good? That priced so many out!

Raj, London,

Article quote, "...banks could be forced to halve mortgage lending..."

Back to 'normal levels' then? (re. Tim Walton, Leeds, England)

Yes, blame the banks and financial players, however just because the credit was available, the public competed with each other to see who could borrow the most, and be able to say over dinner, "My/Our property cost/is vallued at £xxx,000, where xxx is greater than 100, often 200, 300+. Funny, not too long ago it was 50-100. (re. Laurence, Chichester, UK)

The 'Lesson'. (you at the back, pay attention!)

1 Borrowers and... ...Lenders

2 Wage growth 2-5% ...property market rise
10-15+%.

3 Draw the graph (Time v. £) ...see lines diverging, (north and east)

4 Conclusion: ...'correction', only a
matter of time.

5 To be repeated: ...in each financial
cycle

End of 'Lesson'.

This lesson was provided free of charge to you by a holder of 'O' level maths, but no economics degree or
money-market/CML qualifications.

G Roberts, Hereford, UK

To Stephen Hulton: It's because the APR on the TV loans are around 30% (net margin: 25%) while APR on a mortgage is 6% (net margin: 1%). The risk on the TV loan is not 25x higher than the risk on the mortgage... If I were a banker I would choose the TV loan anytime!

Paul Roberts, London, UK

Paul from Coventry has a good point.If the banks havn't got enough to lend,why for example are they still offering loans on TV?

stephen hulton, eure, france

The same old message, those who have been sensible must bail out the imprudent through taxation.

david webb, bournemouth, uk

JC, London,

Thats called volatility. Our banks reported healthy profits this year despite fantic media reporting (Times included) ... to the contrary: writedowns to date are declared: see the 1.5 billion or so hit that BARC and RBS took this year on Sub-prime CDO's etc.

A cynic might say that the institutions have lept onto the sub-prime debacle, refused to lend cash cheaply, or pulled the plug on cheap finance. The people with the cash to lend, will be looking at the situation at this point and saying that if I don't lend it now, I'll get more next week.

So nobody lends, that means no-body can borrow, which in the current climate implies stagflation.

The result of which will be a uniform compression of your pension's value, dividends, and higher inflation to boot.

The winners are those short on UK PLC, who get both interest and capital gains by selling stock they don't own. We all pay for it in the end. Time it was stopped.

Langley, London, UK

"It will be a mixture of first time buyers and re-mortgagers that will be affected"
So basically everyone!

Daniel Stafford, London, England

I'm fed up with reading how the banks are suffering 'liquidity' problems and hence need the BoE to bail them out. To add to the personal loan (which I didn't want) offered to me last week by Alliance & Leicester, today I received some junk mail informing me that I would be 'better off with a Halifax Credit Card'.

If HBOS can afford to loan money to someone who has never even been one of its customers, it can certainly afford to finance the mortgages it already has on its books. If other banks are still trying to hook new credit card customers, then not only is the BoE underwriting mortgages, it is underwriting credit card debt as well, thereby encouraging more of it.

Paul, Coventry,

Another PR stunt by the banks in order to pressure government into taking on non-performing loans.

Rather than ask the tax payer the banks should ask shareholders for the extra cash!

Costas, Cyprus,

A lot of the so-called greed of bankers reported here is actually a result of bankers needing money to support pensions and pension schemes, in times of stockmarket downturns and bank rates held down by politicians and/or political interference. The major shareholders are pension funds, financial institutions and companies themselves. Private individuals are really very miniscule fry in the shareholding fraternity. Banks' lending behaviour was welcomed by Brown as that fuelled his bubble feel-good tactics: he himself has also borrowed this country up to the hilt.

Mike, Exeter, UK

It is disingenuous of the CML to infer that the Bank of England is behind its lending problems. Here and in the US the problem has sprung from bad management and short termism. More disciplined lending would have served everyone, banks, customers and the wider economy, much better. Time now for the CML members to feel the pain of their folly.

Jim, Corwen, UK

Many British banks could improve their services and cut costs by examining their banking ethics..... just so an internet search on British banks and Robert Mugabe and you'll see how disgusting their behaviour is.

steve, white river, south africa

to Alfred, Isle of Wight, UK

Go and see the internet film "The Money Masters" on Google. If you haven't the time to see the entire film, go to their FAQ's and read the info under, "What Caused The U.S. Housing Collapse". The Banks role, and why they receive this special treatment are explained in detail. Cheers,

victor compton, Cherbourg, France

This PR stunt from the CML is quite bizzare next to the headline showing that € 33Bn of debt was raised last week in the bond markets. Stop moaning and spinning and get on with the business of offering good products to investors instead of borrowers, would probably be a better use of Mr Crawshaw's time.

Chris, Haslemere, Surrey

Langley, my pension goes up and down. It is not solely invested in banks shares so not a huge impact if one sector does not pay a dividend and sorts its house out now rather than later. This lack of reporting is assisting the short sellers. If the market had the facts, it can price it. No facts, so price is ohh and the short sellers have a field day.

Everyone want stability and it is about time the banks, published the losses, increased there capital and got back to work lending responsibly.

JC, London,

What surprises me is the shameless bi-polarity of the UK government as it desperately tries to appeal to more voters..

It is not so long since.... "House prices are too high - we must build more houses to increase supply and reduce prices"

Now that a correction mechanism is on the horizon, how quickly policy seems to change!!

Ben, Shanghai, China

Credit to solve bad payment, is the BOE turing into one of thos dodgy debt consolidation companies??

Andy, Melbourne, Australia

I think that the correct spelling is "repaid".

The B of E is not here to protect people or institutions who have made a living on making a one-way bet on property prices.

The B of E's function in his situation is to ensure that the entire banking sysytem in this country does not disintegrate. We are some way from that.

Marek, London,

Alfred, seems as if we have plenty of money to splosh around paying for wars, a few pennies (by comparison) to actually do something productive for society and to ensure the people of the UK do not suffer would go a long way.

Farrukh, Woking, UK

"collatoral"? "insitutions"? "repayed"?

Is the Times spell-checker broken? Shocker.

Coco, London,

Repayed is spelt repaid. Just by the way.

Pantene, Devon,

"And why are banks more worthy of government subsidies than manufacturers and miners?

Can someone explain this to me!

Alfred, Isle of Wight, UK"

Simple. Banks can offer incompetent ex-ministers cushy non-exec directorships with which to line their pockets and fill their time when not snoozing in the House of Lords.

Clive, Chichester, UK

Why can i not borrow direct from the Bank of England at the current base rate ? High street banks want me to pay for the gambling and greediness of thier directors. They can borrow from The Bank of England is there to help the big banks what about the little people who are not being passed on the rate drop!

Shona , Canterbury,

Maybe there should be a new rule: If lenders lend money they don't have and go bankrupt - the "money" they are owed should be written off, since it never existed anyway. This way the borrowers would be out of trouble, the lender would be out of business (hopefully for good) and it would put a stop to the arcane and unrealistic financial instruments that are burdening the economy.

Tsai Chi, Cambridge,

The BOE is slowly abandoning its primary objective to keep inflation under control due to unrelenting pressure from the media to keep house prices stable. But there actions are 'too little too late' as can be seen from the reaction of the big lenders in raising their rates. Mervyn King should confine his committee to thier original remit if we are to survive the credit crunch.

john, milton keynes,

Langley, London, UK

I agree in times like these shorting stocks should be curbed in order to bring stability.
Companies that are economically sound are being manipulated and hammered by institutional focused shorting. This in turn is increasign instability.

Rob, ex Notts UK, Vancouver BC

It appears to me that the lenders are asking for the Bank to take more risk on property loans. If the loans are as good as the lenders say then let them be sold to those who want to take the risk. The public purse is not a place where loans with any risk sould be kept.

John Smith, London, England

The British economy has reached the moment of truth. The British economy is balanced on a kinife edge. I hope that the British economy doesn't fall on the blade.

The government has already taken on £100 bln of mortgage debt when it nationalised NR.

There isn't enough money to fund mortgages; house prices need to fall to match the available funding.

Costas, Cyprus,

The solution to this problem is quite simple! Let house prices fall back to normal levels(50% fall) and regain strict lending cryteria then the supply of credit will be ample! problem solved.

Tim Walton, Leeds, England

Given that the massive amount of cheap money and plentifull supply over the past decade of New Labours Tax and Spend days contributed to massive house price inflation, that priced young hard working British Families out of their houses.

Keep the interest rates going up please, kill inflation, and make the UK earn a living in the world rather than getting itself deeper into debt. The only miracle about the economy of the last decade is that the public were stupid enough to take on 200k mortgages to buy a house that required only a 50k mortgage when New Labour came to office.

Laurence, Chichester, UK

Am I right in thinking , that the banks in the most trouble are
offering the highest saving rates.......i.e birmingham midshires
(hbos).?????????????
any chance of some feed back regarding above?

a.garrick, kings lynn, england

Since when was I, the taxpayer, supposed to subsidise the banks and building societies who have pocketed huge profits over previous years? Let them offer high enough interest to attract the cash they need for their business - ie. pay for the supplies they need as every other business has to.

Why am I being penalised with lower interest on my savings because banks have greedily bought up high risk loan products?

It is time the finance industry returned to the prudent ways which make for long term stability.

Peter Raby, Ashreigney,

If dividends reduce then so does your future pension JC London.

The hedge funds betting short are making billions of your money .... its not shareholders its the "anti-shareholders" you should worry about.

Langley, London, UK

The banks have had more than enough help already. To balance their books they will need to raise interest rates to attract savers, which in turn will mean needing to raise mortgage rates and / or restrict lending.

The BoE should now realise that lowering the base rate - by pushing inflation through the roof - is causing far more harm than good, as it lowers everyone's disposable income.

Paul, Coventry,

If liquidity is the problem , why don't the banks offer incentives to pay off your mortgage early , to help grease the wheels .
There are some people who didn't mortgage themselves up to the eyeballs , for whatever reason, who may be disposed to throw some money at the banks during these difficult times.

Nick Dixon, Sutton Coldfield, England

Alfred - the difference is that this is money being lent to banks, against good quality collateral - it is expected that the BoE will get the money back, plus interest, as well as providing a social good in allowing people to get mortgages. Subsidies to uncompetitive businesses that provide little utility to the public is not the same, clearly.

Adam, London,

My message to CML and its members is this. I urge you, to stop asking the Bank of England / Goverment and therefore the tax payers to "bail you out" as you created this mess.

During the past ten years, you have reduced your lending criteria to increase your profits. This has significantly increased your risks and caused a housing boom. Now the boom is over and about to burst, your risky past is coming home to haunt you. I can remember the last housing crash, I am surprised you do not. Stop swimming around your bowl, Mr Banker with a Goldfish Memory, and look to the past.

Now is the time for you to act: recapitalised, stop paying the huge bonuses and reduce your dividends. Start acting responsibly.

Everyone else in this country is tightening their belt, why should you be different.

JC, London,

The bubble has been inflated to bursting proportions. Those who took the greatest risks will lose out. Gordon Brown encouraged people to get in debt up to their eyeballs and can not bail them out since he also took on massive debts.

Rosalind , London, England

If they had put up interest rates maybe they would have more money to lend as people would be more likely to deposit money with UK banks.Who would want to invest in a falling currency?

stephen hulton, eure, france

Why should the BoE bail out the banks? These problems were caused by the banks so they should solve them. The current situation is extreme only when compared with the state of the market before the crisis. However the situation pre credit crunch could itself be described as extreme i.e. bank desperate to loan money to anyone, unsustainable business models etc.

The BoE should not step in here unless the economy in general is under threat, which currently is not the case. A rationalisation of property prices is well over due. Lowering rates and pumping the money markets to avoid a property price correction will only delay and magnify the pain.

giuseppe moschella, London, UK

Who is going to pay for this "help" to banks - the taxpayer?

And why are banks more worthy of government subsidies than manufacturers and miners?

Can someone explain this to me!

Alfred, Isle of Wight, UK