Accommodation at the Bank of EnglandNot of the bed-and-breakfast type (of which I have just had a bellyful having sweated through week 1 of Wainwright’s Coast-to-Coast challenge walk) but of the “broadening asset” type.
Those that have tracked my Credit Crunch Diary will know only too well that the B of E only accepts securitised loans from individual banks and building societies as collateral security for using its discount window facility to borrow gilts.
After a three-month consultation period, this conservative category of securitised loans will be widened to include portfolios of loans to individuals and non-banks. The pay-back demanded will be greater transparency from lenders on the constitution of asset-backed securities and covered bonds. The objective is to allow more liquidity in the banking system but with greater transparency so that in the event of a default, the B of E is not left with its trousers down. That is to say, it has a good chance to sell on the securities received rather than having to take undue risk and demand expensive insurance against loss.
Credit crisis gone away and not return another day.
JGS 26th July 2010
