It is looking more likely that governments will be forced to buy up unwanted mortgage debt in order to avoid a recession or even a depression. If governments are holding large amount of morgage debt, policies will need to be put in place to ensure that the consumer boom continues when policies to manage-down risk need to followed.

The BoE is caught between a rock and hard place! Whatever happens they will be judged as doing the wrong thing.

Costas, Cyprus,

Bail them out by socialising the losses.. why should the tax payer want to buy all of the bad debt they have bought?
How about the senior executives admit they have made bad investment decisions, personally hand back all of the bonuses they have received over the past 3-5 years and then perhaps the BoE would feel there was less of a moral hazard and view them more favourably

Jonty, Warrington,

It is funny how the banks believe that the Bank of England should go that further mile to lend them money and bail them out whilst banks would go half a mile to extend banking facilities/overdrafts to small businesses but infact reduce or cancel overdraft facilities as soon as they think there is the slightest chance that there is not collateral easy to cash in to get their money back.

Johny, Kings Langley, England

If the banks are short of money then they should stop all dividends for the forseeable future, give out no bonuses to staff/directors for any reason. How about a request to shareholders for an injection of cash to help the business run? Then if they're still in trouble ask politely for my tax money and pay punitive interest rates on it.

Dave, Bristol,

I applied for a Halifax credit card and was given a credit limit of £7,200. The card offered 9 months interest free on balance transfers and purchases.

What credit crunch?

Phil , Luton,

And the Ban of England bails them out and drops the interest rate and the banks shareholders keep on making money.
The Bank Of England should tell them to prop up their losses with the bloated profits of shareholders.
Yet again it's the common taxpayer that ends up bailing out the shareholders.

N Morgan, Stockport, Cheshire

Now that the banks are expecting the goverment to bail out their bad debt, does that mean the chief execs and other people with multi million pound salaries will have these greatly curtailed due to the lack of risk being involved with any financial market?

Frank, somerset,

The Governor has joined Brown and Darling to form a triumvirate of ditherers. He is an academic economist who unlike predecessors such as Montague Norman, Cromer, O'Brien and George lacks sufficient banking experience to handle the present financial situation.

Howard Mitchell, Burford, Oxford

So much uninformed noise here:
1. The liquidity shortage results from banks fearing losses on interbank lending to eachother in case they chance upon a Bear Stearns, i.e. a bank with terminal liquidity issues
2. Tbe underlying cause is specifically US mortgage debt packaged as CDOs, general lending on cards and overdrafts etc in the UK is not relevant
3. The banks have not done all the thiings that various commentators have said, the banks here are suffering from the liquidity issue in the market as a result of what other banks have done
4. Banks with particular difficulties are those who are holding a lot of CDOs or (completely separately) have pushed their capital base (ie highly geared)

Stop conflating several different things ignorantly in order to make your political point. I assume you are the house price crash naysayers once again?

Andy G, London, UK

I have rarely been more incensed than when I listened to Burt's interview on the BBC yesterday. He said it wasn't true that banks were getting off scot-free - some people at the banks had actually lost their jobs as a result of their mismanagement. WOW - so that's all right then! Did they lose their old bonuses gained on the back of mindless, greedy practices? How are shareholders being penalised other than by temporary short-term share-price weakness? Through higher dividends perhaps? Banks should be made to pay a percentage of future profits to the treasury in return for being allowed to survive into the future and as a quid pro quo for the inevitable inflation that will be coming.

The final insult was that Burt then in essence said who cares what happens 5 years down the road - let's do any old thing now to get the banks off the hook. GREAT! As long as the banks are okay and survive to screw us all again, let pensioners of the future survive on worthless income. Get real Sir Peter

Steve Bloom, Eastbourne, England

Why don’t the banks try and take a more constructive approach, rather than always going cap in hand to the BoE. It is their own employees who got them into this mess, They should start legal proceedings now to recoup the bonuses that were paid out in the boom years, to people who, in the long term, have jeopardised the future of the companies they worked for. This could add billions to the banks balance sheets.

This solution would get the people who caused the problem to help sort things out. This would be much better than making others pay out for what is essentially their own stupidity.

Keith, Ashford,

How about cutting the equity dividends and juicy bonuses!

Quid pro quo.

Simon, harrogate, UK

What ineffable cheek! HBOS and other banks overlend to all & sundry and then come whining and whinging to the BoE as soon as things go wrong. Have you considered making a donation or even a loan to HBOS of some of your vastly undeserved salary/bonus/pension, Mr Burt? If you crooks hadn't robbed your own banks over the last ten years the financial system wouldn't be in this mess.

Steve, Birmingham,

The BoE must do all it can to ensure the banking system does not collapse but it is absolutely right to be concerned with 'moral hazard' and lets face it, those banks who overleveraged in order to buy and sell financial instruments they didn't understand, lend to people with poor credit records, overlend to people who could not afford it, will now recover their debts from these customers without a second thought.

The banks must pay for their recklessness and the way to do this is to ensure ALL of the Directors of any bank that needs BoE funds are immediately sacked for gross negligence - ie without recompense.

David, Brighton, UK

So Mr Burt .. Its not the fault of the irresponsible Lenders who it would seem expect the B.O.E & the U.k Population to help you out ?? ..you must be having a laugh, Banks should be run like any other business, If My Business was to go to the wall would you help me out ??? nope didnt think so ..

Andy Cooper, Oxford,

The banks have made billions for their shareholders. Now that they are hitting a rocky patch they want the taxpayer to bail them out. This is against the core principles of the free market economy and must be resisted by the government and the BoE.

Hamad Lone, London, England

HBOS risks sending Britain in to depression if they stop increasing my credit limit how am i surposed to keep spending to do my bit for Britain. Its my duty to shop to protect all those jobs.

felicity, oxford, uk

Burt and his brood made their bed. NOW LIE IN IT!

James, London, UK

The situation reminds me of the Allies reaction to Germany after WW1. Letting Germany off would have amounted to creating a moral hazard. It took someone of Keynes nounce to realise that this was not the best way forward.

Today, I think the BOE must open it's vaults to get the banks off the hook for all our sakes. But afterwards there must be a clearout at the banks. More heads must role than during the French Revolution.

And let's not forget Gordon Brown's role in this. Does anyone recall him warning of the dangers of over lending by the banks ? Did he attempt to do hold the property market in check ? The balloon was blown up during his watch.

Anthony, London,

It's all really just a question of dealing with priorities rather than apportioning blame at this point. The blame game and regulatory action can and should proceed ,BUT priorities to protect the majority from harm is away on it's own at the top of the list for action. Towards that end it is absolutely beyond doubt that given the arrangement of our banking/financial system that in the event of a widespread banking run every single one of our banks is in fact insolvent from the viewpoint it could not hand back every pound demanded by even half it's depositors.
That being the case and given the consequences of such an event occurring it is paramount that no such possibility be allowed to happen. Unfortunately, that means action that many people will quite rightly say is protection for some individuals who are not deserving of same. However, such moral hazard will need to wait for the blame game when this issue has been made safe.

SC, Preston,

Labour government has allowed the money supply run out of control in order to tax both profits and spending to fund their absurd social programmes.

Reduce Income Tax sufficiently to allow people to pay for education and health.

People will exercise discretion and seek the best value for themselves and their children.

This will bring prices down to manageable levels and restore the balance between income and expenditure.

Corporation Profit Tax should be replaced by a Distributed Profits Tax (DPT) to would include all dividends; bonus payments; benefits-in-kind; share options; swaps; preferential loans; sale & lease back deals and any payments of a similar nature.

Retained profits might then be available for Research & Development; indigenous growth; and expansion of employment, by organic growth.

Lightly coloured devices, such as reverse take overs; voluntary liquidations and financial arrangement s that allow companies to repay share capital should represent a distribution.

MR. MYLES STANISTREET, NERAC, FRANCE

Somehow I'm not surprised that Peter Burt doesn't complain about a regulatory regime that let UK banks become the weakest-capitalised banks in Europe, as many analysts and the Financial Times have pointed out recently. The FSA should stop making a fuss about shortsellers allegedly spreading rumours, a practice I don't agree with. The FSA, Bank of England and thegovernment should ask themselves why, not how, they let UK banks become so vulnerable to gyrations in financial markets. It's not only the balance sheet management of UK banks that compares badly to their European counterparts, it's also their slowness in using modern technology to improve productivity and require pin codes for card transactions, the latter some 12 years after it got introduced in continental Europeans (I worked 6 years for a UK bank in the UK). Some City institutions are certanily cutting-edge, but UK banks just aren't.

Richard Schreuder, The Hague, The Netherlands

why doesnt sir peter burk give back some of the vast sums of money he has stolen , so he wants taxpayers to pay twice does he??the banks steal off of us now he wants the government to steal off us to pay for the problems created by the banks in their greed for more profits.
how on earth have the people in chargeof the fsa banks mortgage lenders the government when they could not see what might happen if... did they think that property prices would just go up and up and up??they were too busy with their snouts in the trough of greed,i wonder if their mortgages are paid off ??capitalism, accountants, thieves.....

adam, london, england

the high st banks have been making billions for the last few years.where has all the money gone?they bleed us dry and now they are crying...they fuelled the so called boom......i didnt hear them warning of problems and being responsible when handing out money for mortgages at 10x peoples incomes.....

let them use their own reserves.......let them use the directors money.....they are private companies yet want money from us...no thanks..if they lose thier jobs or go bust so be it.......it is nothing to do with the BOE.....

mmason, southend, uk

If HBOS is so short of money why are they like other banks paying out record dividends - surely it makes sense to scrap the dividend and not ask for public money. Even if HBOS get public money how will that help the consumer as they never pass on the benefits only the detriments to ensure their profits are even bigger. This means more loan,mortgage and card defaults losing them even more money. LISTEN banks you have fleeced the consumer dry we have no more money to give you - so go ahead and make the problems worse - RIP-off britain is coming home to roost in a big big way.

Harry, warwick, uk

Without a European presence UK banks cannot tap the European Central Bank for funds. It would be ironic if a depression is caused by our NON-membership of the euro.

Peter B, Lincoln,

The Banks, their shareholders and directors have all made money from a poorly considered lending regime. Perhaps the directors should put some of their easily earned pay and bonuses back into the banks to support them and not expect the taxpayer to bail them out.

Richard, Torrevieja, Spain

There are regulatory bodies like FSA who were sitting on the side when Economy is Flying and banks were doing blunders. Now Ecoomy has taken a u trun and now every damn regulator points finger on all institutions. Why didnt it stop in the first place.
People in UK are feeling the same pinch even when the economy was good and more when its bad. I am asking why the hell do they spend internationally when their own people in here are suffering. Creating troubles in other countries and spending billions there which is useless and at the same time we are struggling for bread and butter. I feel shame to live in this country.
Moreover why the BOE and Govt doesnt want to take recessionary tackling steps rather than just hover on interest rate changes which is a temporary solution. STAGFLATION is the word where interest rate will be high to control inflation and uk is in recession. My suggestion is guys sit tight its just a start of storm its going to be worst

Jilany, London,

A few people need to GET REAL. If one bank collapses it's highly likely that most of them will - and then the 1930's depression will look like a brownies' tea party.

Think no work for anybody. Think no food (remember 50% of UK's food is imported). Think riots and complete loss of all law.

So FIRST the problem has to be resolved before it becomes a catastrophe.

THEN we can start to point fingers. That's the easy bit-: greedy "want it now" and stupid borrowers combined with greedy loan-sellers. Ably assisted by UK and US governments who allowed debt mountains to build up: - the extra money in their economies perpetuated the MIRAGE of economic prosperity.

FINALLY we can make sure it doesn't happen again:- As the general public seem incapable of borrowing sensibly, tighter REGULATION needs to be brought in – with JAIL SENTENCES for transgression. Just as the wearing of seat belts is now compulsory, unfortunately the law must be used to protect idiot Joe Public from himself.

Jon Leigh, Beautiful Rural Southern, France

If HBOS paid higher interest rates to the public they would not have to borrow from BoE on the cheap

John, Surrey,

But HBOS doesn't need any money. They said so this week. It's completely sound, efficient, solvent and well-run. (Of course they said it a couple of hours after borrowing 750 million at an astonishing 9.5%, but we weren't supposed to notice that.)

eric campbell, harrogate, uk

Banks want to protect their money, yet still nothing is being done to protect savers or investors money. When Northern Rock were in financial difficulties the government declared that £100,000 in peoples bank accounts would be protected or guaranteed, instead of £35,000 as at present. Yet after all this time that has passed since the Northern Rock crisis, its still only the Northern Rock accounts that are subject to all the money in peoples accounts being protected. The government and the media have conveniently forgotten about guarantees for savers and investors money in other banks should these banks get into financial difficulty. So it is still the case that if a bank gets into trouble, savers or investors in that bank are only guaranteed to get the first £35,000 of their money back. Only 10% of any money over that will be returned. Why hasnt the government kept its promise that all such savings/investments will be guaranteed and why are the media so quiet about it

michael pickles, bournemouth, england

What happens when my account goes overdrawn?

What would happen if I failed to keep up my mortgage payments?

Yet the high street banks receive special consideration when they have mismanaged their finances by just a few billion here and there!!

I know people reading this will say "but they are banks!", thats exactly my point. If they can't keep their finances in order what hope have the rest of us?

Seems one rule for one and another for the banks.

Mike, Liverpool, UK

So essentially the banks want the British taxpayer to bail them out from all the bad debt they are holding.
Non government intervention during the debt fuelled binge and obscene profits, now the party is over those poor city boys want to socialise the debt.
What a wonderful country we live in.

R Moseley, Birmingham, UK

It is the high street Banks that have caused this crisis and coming depression by their irresponsible lending on multiples of their deposit capital, and not the Bank of England's fault for not wishing print more inflationary money to bail them out.

George, London,

The Government not the Bank should be funding the economy with all that money Gordo put aside when he told us the economy was wonderful. Where is it?

Loans from the Bank should be at penal rates and banks encouraged to issue more Tier 1 capital; indeed Directors and senior executives should put in their all too.

That is "putting their money where there mouth is".

Now is that nice Mr Peter Burt mortgaging everything and subscribing to HBOS shares?

Thought not.

Damian, Sussex, UK

I've got an idea, Sir Peter; why don't you and you extremely well-rewarded peers lend responsibly and stop fuelling a bubble next time?

What about it, is that TOO hard?

Paddles, London,

Burt is now Chairman of a private equity company. PE companies create nothing new so are of no real strategic benefit to UK Plc but they do need huge amounts of borrowings to keep going. With a bit of luck the credit crunch will kill them all off.

DickW, Aberdeen, Scotland

Why should the taxpayer accept sub-par collateral to bail out a private bank? They've led the party during the good times, now the hangover is arriving and they want to force more of their liquor (bad debt) down our throats ... no thanks!

H Thomas, Llandeilo, Wales

Ridiculous. So is HBOS really in trouble after all then?

This crisis was caused by getting drunk on cheap credit and now our banking leaders are saying the cure is some kind of hair of the dog.

The BofE should not be trying to solve this through more cheap credit or low interest rates. The government should reduce spending and cut taxes.

Kevin Smith, Great Waldingfield, England

The banks are in a mess of their own making - what a nerve that they expect the BoE to pull them through. Private sector problem - let the private sector sort it out. Let market forces prevail....

Bart Codger, Cardiff, Cardiff

"Thursday’s auction was three times oversubscribed, while the auction of an extra £5 billion on Monday was almost five times oversubscribed, indicating the desperate need among Britain’s banks for additional liquidity."

Not neccessarily. The BoE represents a more agreeable and predictable source of money then the international money markets, albeit one at a slightly higher cost to the banks. The banks would be fools not to try and get some when it is offerred, whether they were in dire straits or not.

As it is Mervyn King should shy away from condoning risky business with large splurges of cash. The inflationary risks are substantial and the problems of the banks are mostly of their own making.

Gareth, Leeds,

Well he ain't the BANK OF ENGLAND is he ?

Ian Payne, WALSALL,