Guess who will pay for credit crisis

Apr 20 2008 by Alan Ross, Magic 1170

BACK in late summer — around August Bank Holiday — I wrote one of these pieces about what is now being called the credit crunch.

Since then, the Bank of England, in common with reserve banks worldwide, have been pouring our money down the ever-open drain that is the money market.

The mortgage lenders and bankers are still howling that this isn’t enough. We’ve had three interest rate cuts and more promised but, guess what? Most of the banks haven’t passed on the savings to you and me, the customers.

They always have an excuse and, this time, they are bleating on about the “interbank lending rate” . . . the rate banks charge to lend to each other.

After Northern Rock hit the buffers, banks are charging more and more to lend to each other. If, indeed, they want to at all.

The number of mortgage deals available has almost halved. Interest rates on mortgages, on average, have gone up, not down. If your street, like mine, is full of houses with “For Sale” signs, this isn’t going to help much.

What has reduced? Yes, you guessed . . . those of us lucky enough to have a few pounds put by, the rate we get on our savings has gone down, natch.

This time last year, they were falling over themselves to offer fists full of money to people who couldn’t pay it back even if they lived to 300.

Now, some banks are allegedly sending letters to credit card customers with perfect credit histories, telling them that they are a bad risk.

Gordon Brown called the top bankers into No 10 this week for what was spun as a “crisis meeting”, but then quickly said it was just another breakfast meeting with the great and the good of the banking world.

Will any of the top bods in the City of London who’ve received telephone number bonuses recently be inclined to return them? Don’t bet the house on it . . .