The Worldwide Credit Crisis
It seems that recently there has been incredible events happening mainly in the American finance sector which are greatly effecting the rest of the world credit wise, where banks are not confident about lending money to other banks as there is so much market instability.
Recently in the UK Lloyds TSB has merged with the HBOS group which includes the old Halifax building society, BM solutions, IF, TMB (Though recently withdrawn) and the Bank of Scotland. This merger would mean the new bank will have 28% of UK mortgage share more than the competitions board allows and 38 million UK customers.
This could mean thousands of job losses as high street branches close to allow for just the one branch. What is also a major concern is because the banking competition has been watered down by having a large player in the financial market good deals on mortgages and lower rate loans could be impeded.
The Federal reserve and the US government is trying to now work out a way in which the toxic debt which is crippling the financial markets and the housing market can be resolved. It has been suggested that the government actually pay $700,000,000 for the loans in order to remove the adverse debts. The problem is will it work. Will the US tax payer be paying for banking errors, will the bank owners be rewarded for their mistakes and how will it be fair, transparent and adequately policed to the satisfaction of everyone.
What also will happen to the home owners who have a bad credit mortgage with high interest rates and fees. And little loan to value within their properties to bargin with.
Finance markets have dropped heavily due to the uncertainty. The worry is even if the US pass the bill to own this toxic mortgage debt then there are still grave concern that is the end of the financial troubles. Many companies and lenders could go under yet and there is a real concerns that even the global economy will be effected. Though the far East has seen an incredible boom it still needs a spending US and Europe in order to maintain it's growth.
There is a feeling that this is part of a series of bad economy news waves that will hit the UK markets in the coming months.
European countries are potentially looking for unity on banking policy. For example the amount of guarantee a country will offer savers on their deposits on their saving accounts. If countries are offering different levels of deposit guarantees, then this causes problems as savers in other countries may be tempted to deposit money in a country that has a higher guarantee level. And so that would have the effect of finance deposits leaving a country which is obviously not a good situation.
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