This comes at a time when a report into funding issues of UK banks is being prepared by Sir James Crosby, the interim version of which will be presented to the Treasury tomorrow. The report is expected to show that funding issues arising from the faltering securitisation markets could require tens of billions of government support as more than a third of the market was previously financed in this way.
It is anticipated that the government will produce a scheme whereby lenders can swap new mortgage debt for guilt-edged government securities, which is similar to the Bank of Englands Special Liquidity scheme.
