PS...

We will ignore moral hazard. That in itself should be enough, but if you need more....

Oversight was limited because of lobbying groups of banks and now they don't believe in laissez faire..

does what you say change the fact that regulatory stupidity has left us so vulnerable that banks cannot lose, they get bailed.

The rules do not seem to impact shareholders. They just gain but give nothing back in good times.

And no cost to the tax payer? That depends on how it is done. True, an NT collapse meant using tax money, so not good...

BUT, cheap financing has an implied cost to the govt: if the BoE follows the Fed it is taking on riskier assets...

That changes its balance sheet structure and there is that cost. So there is a cost, perhaps less than NR...

BUT this issue of helping banks that are still profitable is sickening, particularly as the easy credit has been so bad for us...we are now so panicked because of lax lending, so lets encourage more.

Trevor, UK,

Tristan, Oxford, thank you for hitting the nail on the head.

The people need to understand what is going on here. The majority will suffer as the Bank goes to the aid of the greedy and the reckless.

A Harris, Kettering, UK

If no-one wants to buy these mortgage backed securities, why on earth should the BoE consider taking them as collateral? What is there worth - who is to decide? Please don't make this country bankrupt, in preference to the banks!

Nan, Reading, UK

Senior bankers are more interested in keeping their enormous incomes rolling than any stability in the system. As for big profits, they can happily take no account of the off-balance sheet stuff. Banks are semi-corrupt these days and do not serve the interests of society in general, only those of the bankers with their fingers deep in the pie. As for blaming America... that is beneath contempt.

David, Guildford,

PS wrote:

"For once and for all:
The credit the Bank of England supplies to the merchant banks is not financed by taxpayers' money. It is in the power of the BoE to create money. If that sounds amazing, so is aspirin."

True, it's not tax revenue, but if they printed some more money then the value of each pound we (the tax payers) have all saved would drop. But worse than that, whoever it is that gets the pounds first spends them at the old rate. The banks are near the start of the chain so they get our hard-earned wealth to say thanks for risking the British economy for us.

Unfortunately you armchair economists all think that money is the very definition of wealth and that printing money just makes new wealth that didn't exist before. It doesn't, it just takes wealth off of the prudent savers and gives it to the reckless gamblers.

Only work and invention make wealth -- everything else is either trade or theft. Devaluing a currency sure ain't trade.

Tristan, Oxford,

King is doing an excellent job at the bank of England under difficult world conditions no other person could be more capable in looking after the countries financies.
Brown & his government have brought on a lot of these financial problems since 1997 & they are coming home to roust now with hidden stealth taxes & rapid inflation just one item is the 100 percent increase in council tax in the last ten years plus many other hidden taxes. About time we had a change of government it can not be any worse than this lot.

John E Rodway, Thornton -Cleveleys, England

When the good times come back the banks should be made to pay for the taxpayer funded support via windfall taxes

Chris, Birmingham,

Yet again greed applies. All the banks want is a profit and the country and direct share holders should not be bailing out said people and the excessive high earners who then moan about non-dom tax. Does it ever stop. simply restrict lending multples to businesses and individuals to control the liquidity in he first place, banks brought it on themsleves.

ss, overseas,

Isn't it all slightly confusing - the banks made huge profits in the reporting season just ended but their reserves are being eroded?! If the banks are insufficiently capitalised to lend profitability shouldn't their shareholders be willing to subscribe for rights issues, so that those who expect to profit from the lending put up the capital to allow it to happen?

william, bath, somerset

King despite his complete incompetence, arrogance and lack of touch was reappointed because of the damage he could inflict on Labour if sacked - instead he is now able to very effectively further damage our economy and thereby ordinary people. King is the wrong name - emperor Nero would be more apt. Gordon Brown you would rise in the opinion polls if you sacked the idiot!

David, London,

Lets be clear what the central issue is here: mortgage-backed securities and over valued houses...no one wants to buy mortgage-backed securities as the UK property bubble is scheduled to follow the US down the pan.

Rather than let market forces do their thing the UK tax payer is about to underwrite the biggest bubble in history.

KJ, Newcastle, UK

It is a national scandal that the big banks that have pocketed billions for years are now getting bailed out by the taxpayer. We should all refuse to pay our taxes this year until this daylight robbery is halted.

Jonathan Bean, London, uk

The British ignorance of the banking system is amazing. I am told most have at least an 11-year school education. But of course, Britain works its teachers to death and they have no authority these days, so nothing gets learnt.

Even Mervyn King has huge gaps in his knowledge, witness his appalling handling of the Northern Rock crisis, and yet he was a Professor of Economics at the illustrious British London School of Economics. That is how bad things have got. Oh dear, the lectures the ECB and Fed and Britain's own bankers have been giving him recently! They have been teaching him the Economics he should have learnt in his first term at uni.

For once and for all:
The credit the Bank of England supplies to the merchant banks is not financed by taxpayers' money. It is in the power of the BoE to create money. If that sounds amazing, so is aspirin. Do yourselves a favour and study the real world instead of watching ignoramuses like Vincent Cable baa-ing like sheep about taxpayers' money

PS, London,

Isn't it all slightly confusing - the banks made huge profits in the reporting season just ended but their reserves are being eroded?! If the banks are insufficiently capitalised to lend profitability shouldn't their shareholders be willing to subscribe for rights issues, so that those who expect to profit from the lending put up the capital to allow it to happen?

william, bath, somerset

"Banks demand BoE cash"
Hello, Hello, who's cash is that then?
Is it the same source of cash that supported Northern Rock, I think we should be told............

Victor ., Cricklewood,

Surely, any help that is offered to prop up the banking system and thus keep the banks profitable, must come with the conditions that pay and bonuses to top executives at the banks is capped until such support ends, and that bonus pools, along with an agreed proportion of future profits are used to pay the taxpayer back for (involuntarily) assuming massive credit risk. The only people who should be allowed to prosper inordinately through any scheme, are taxpayers.

Mike Hughes, Loughborough,