Brown calls for international unity on banking crisis
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Your support makes all the difference.Gordon Brown has called for international action to end the banking crisis as frantic efforts continued through the weekend to put together a second bail-out for Britain's high street banks.
Speaking to reporters in Downing Street yesterday, the Prime Minister said the biggest problem facing UK banks was their exposure to international losses as a result of the collapse of the sub-prime mortgage market in the United States.
His comments came after the banks suffered another day of heavy losses on the stock market on Friday, with 25% wiped off the value of shares in Barclays at one point.
"As far as British banks are concerned the greatest problem that we have is international. It is the exposure of British banks to international losses that is the biggest problem that we face," Mr Brown said.
"So what we need is an international solution."
The Prime Minister - who will host the G20 summit of leading economies in London in April - said he had been talking to leaders around the world and that he expected the discussions to continue "over the next few days".
"They will lead up to decisions that I believe that the international community has got to modernise and change and reform and get to the roots of the problem that make us angry about the way that the system is operating," he said.
In the meantime, talks were continuing over the weekend between Treasury officials and banks on a second package of assistance in an attempt to get credit to businesses and families going again.
He has also stressed that it was essential that the banks came finally clean about the true scale of the so-called "toxic assets" still on their books.
Friday's falls - triggered by fears that the banks still had further losses to declare - prompted an intensification of efforts, which have been under way for some weeks, to agree a new bailout package.
Restoring confidence in the banks is seen as essential if they are to resume to flow of lending to business vital to the prospects for economic recovery.
The Treasury said that it was looking at "a range of options".
One proposal said to be "in the mix" was a taxpayer-backed insurance scheme which would pay out to the banks if the value of their so-called "toxic assets" fell below a certain level.
Officials were also thought to be considering guarantees for inter-bank loans and new consumer lending.
However suggestions that the Government could use billions of pounds of public money to buy up "toxic" assets from banks were however being played down in Whitehall.
The plan would involve creating a so-called "bad bank" in order to cleanse the books of the institutions and free them to lend again, but that was said to be proving too complicated in practice.
The Government has already attempted to shore up the banks with a £37 billion recapitalisation scheme, but the rescue has failed to kick-start lending.
Many are due to report figures to the markets imminently, with more massive write-offs anticipated.
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