Tensions between the Treasury and the Bank of England mounted yesterday as Mervyn King, the Bank's Governor, abruptly dismissed measures being considered by Alistair Darling to end the mortgage drought, The Times reports.
Mr King signalled his strong opposition to a move being examined by the Chancellor to expand the Bank’s emergency financing programme for lenders, the Special Liquidity Scheme. The Governor also poured scorn on a second, more controversial measure, whereby the Treasury would temporarily guarantee high-quality mortgage-backed bonds to help struggling lenders to boost the funds available for mortgage lending. MERRILL LYNCH YESTERDAY forecast that banks still need to raise £30bn in new capital to repair balance sheets shredded by the credit crunch and will be forced to write off a furthe...
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