CML welcomes rescue package

The CML believes the steps address both relevant issues – funding and capital – and provide both the short-term framework to enable banks to raise finance, and the longer term strengthening of their capital position that should help to re-instil confidence and stability. It should also help to underpin consumer confidence that the tripartite authorities will actively manage the problems of the current downturn in the economy.

The fact that both banks and building societies are eligible is also welcome. However, specialist lenders appear ineligible, so this scheme does nothing specifically to help them, other than through the indirect effect that improved confidence should create for the wider market.

The Treasury specifically refers to the caveat that will apply if the Government provides capital to institutions that it “will require a full commitment to support lending small businesses and home buyers”. No further detail is yet available.

CML Director General Michael Coogan comments: “From what we can see so far, this seems to be a decisive, coordinated and reasonable package of measures that address both the relevant factors necessary to support a return to market stability. The flow of funding to support mortgage lending has been severely constrained, and these measures will help to create more positive conditions for the mortgage market.”