Taxpayers bearing risk from Funding for Lending Scheme

Funding for Lending Scheme will load the risk of private sector bank lending directly on to the taxpayer

Commenting on today's government announcement of the Funding for Lending Scheme, Prof Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:





"The Funding for Lending Scheme is going to load the risk of private sector bank lending directly on to the taxpayer. 
It is a curious aspect of government policy that the government is doing this, whilst, at the same time, banks are being saddled with much higher capital and liquidity requirements to try to ensure that the taxpayer is not exposed to the risks of banks making bad lending decisions.



"The government and the Bank of England are directly trying to compensate for the damaging effects of their other policies that have restricted bank lending to the private sector by introducing the funding for lending scheme. More and more, government intervention designed to undo the effects of previous government interventions seems to be the hallmark of policy in this area. It is a throwback to the mid 1970s."
  

Notes to editors:

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