Sunday, September 28, 2008

Taxpayers Saddled With B&B's Bad Bits

Taxpayers look set to be saddled with Bradford & Bingley's bad debts, as it emerged the government is planning to nationalise the ailing bank. B&B is just the latest casualty of the false economic boom, relying on the buy-to-let market and self-certified mortgages to make a fat profit. 

Now the cash to prop up the toxic debt side of the business has dried up, the bank is looking to its pals in government to help it out. 

With no chance of anyone buying up all the whole of bank, bad debts and all, the cunning plan would be to use billions of pounds of taxpayers cash to buy up the bank, then sell off the profitable savings side of the business to a predatory buyer. 

That leaves the government and the taxpayers with the toxic 'bundled' bad debt side and the defaulters.

The BBC's Robert Peston, who seems to be moonlighting for the treasury these days, reports that the bank will be nationalised using special legislation the Treasury put through when it took Northern Rock into public ownership earlier this year.

But the public have no appetite for another Northern Rock which made huge profits during the good times, leaving customers saddled with debt. Taxpayers won't stomach taking on the liability of Bradford & Bingley as well as the Rock.

In the US, Bush's much-vaunted $700 billion bail-out deal hit the rocks when voters reacted violently to the thought of their tax cash being used to bail-out bank shareholders and executives, while millions suffer under the sub-prime housing misery. 

Few would begrudge the government for protecting the savings part of the business and cushioning the blow for lenders faced with unrealistic debt. 

But the buy-up move is the latest in a string of government measures to dig itself out of a hole, after creating the false 'booming' economy. 

Buying up B&B and just selling off the best bits will leave people asking just how far is this government prepared to go, to mask its economic incompetence and keep its pals in the City sweet. 

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