The Government should consider imposing caps on the amount mortgage companies can lend to homebuyers, the Bank of England's deputy governor has said, according to a report in The Telegraph .
Sir John Gieve used his final speech before stepping down to indicate that the authorities must consider imposing more direct controls on the amount banks can lend to their customers. This might include caps on the loan-to-income and loan-to-value ratios - the key metrics banks use to work out whether to lend to prospective buyers.
He said: "In theory, a ceiling on these ratios could have provided an effective brake on the excesses of the last boom.
"If problems are concentrated within the property market then caps on loan-to-income and loan-to-value ratios might be effective."
Sir John, who is to be succeeded by Paul Tucker at the end of this month, has also supported plans to emulate Spain's financial regulation system. He acknowledged that the Bank could have set interest rates more appropriately in the decade before the financial crisis, saying: "the large and co-ordinated cut in interest rates at the start of this decade almost certainly contributed to the build-up of an ever larger bubble."
A slump in tax receipts caused by the recession has driven the Government's finances farther into the red than at any time for 15 years, says The Times.
Official figures confirmed mounting strains on the Treasury, with Alistair Darling forced to borrow £67.2 billion in the first ten months of this financial year. This was almost three times as much as the same period last year.
The news was followed by warnings from the City that the Chancellor's full-year forecast for public borrowing of £78 billion would prove to be far from accurate. Economists said that the figure for this year could rise to £100 billion, with borrowing set to surge still higher in 2009-10.
The Chancellor has already pencilled in borrowing of £118 billion for next year - equivalent to 8 per cent of gross domestic product and the highest since at least the early Sixties. Under the Conservatives the previous peak in public borrowing during recent decades was at 7.7 per cent of GDP in 1993-94, in the aftermath of the recession of the early Nineties.
UBS has tried to reassert the primacy of Swiss banking secrecy by launching a bitter attack on demands from the US fiscal authorities to disclose the names of more than 50,000 of its US customers, according to The Guardian.
Overnight the US department of justice (DoJ) shot down any hopes UBS may harbour that it has settled its long-running tax fraud case by presenting the demand for more names. This came just 24 hours after UBS struck a deal to hand over $780m (£547m) and admitted breaking American law by participating in a scheme to defraud the US internal revenue service.
The DoJ now accuses the bank of aiding 52,000 customers to hide accounts from the federal authorities. That is more than twice as many as the 20,000 customers previously identified as having sham offshore accounts.
"At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes," said John DiCicco, acting assistant attorney general in the DoJ's tax division, in a statement.IFAonline
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