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Engagements

Answer

I should explain to the right hon. Gentleman—and he has the benefit now of a new shadow shadow Chancellor to help him on his way—[Laughter.] I should explain that when markets fail and banks are unable to do the job for which they are intended, the only agency that can step in is the Government. If the Government do not take action, no one else will. That is the lesson that has been learned in every single country of the world, and that is the lesson that President Obama said yesterday is the work that will be pursued in America. On the action that we have taken on banks themselves, every guarantee that we have made is set against the banks' assets. In the insurance policies that we have signed there is a fee, and every loan is to be paid for as a result of the credit that we have extended. The right hon. Gentleman referred to the asset purchase scheme, and what we actually announced on Monday was a process by which we will talk to the banks in individual detail, and we will look at their assets and liabilities with them. We will therefore conduct the audit of the banks' finances that he says is necessary. We will report back to the House on the nature of the insurance scheme that we agree, and the risks will be shared with the banks in the scheme. It is similar to schemes that are being adopted in other countries, and which may continue to be adopted in America and elsewhere. I believe that it is the right thing to do, but the right hon. Gentleman must decide which central proposition he agrees with—that the recession must take its course, or that, when markets fail, Governments must step in.

Secondary information

Type

Oral question

Reference

486 c745-6 

Session

2008-09

Oral question type

Supplementary

Chamber / Committee

House of Commons chamber

Subjects

Banks Finance Economic policy

Link

View this Prime Minister's question on www.publications.parliament.uk