Defaulting banks - where will it stop?

[Jan Klimkowski]

Proof that Gordon Brown does not get it, and is in fact stark raving mad. "2007 levels" means the very worst, fundamentally unsustainable, excesses of lending against house prices.

All together now, in a broad Scottish accent (Dad's Army's Private Frazer for us Brits): "We're doooooomed..."

A government plan for major banks to return mortgage lending to 2007 levels is just a broad aspiration, says the Council of Mortgage Lenders (CML).

The government wants RBS and Lloyds TSB to boost lending to house buyers and small businesses as a condition of its injection of £37bn into the banks.

Earlier, the CML said the plan seemed not to be "prudent or desirable" and called for clarification.

The CML now welcomes the proposal, but confusion still surrounds its terms.

Some £20bn of taxpayers' cash is likely to be pumped into RBS, with a further £17bn to be put into HBOS and Lloyds TSB.

This would give the government a significant stake in the banks, and the government has attached some conditions to this investment.

These include "maintaining, over the next three years, the availability and active marketing of competitively-priced lending to homeowners and to small businesses at 2007 levels".

http://news.bbc.co.uk/1/hi/business/7667072.stm