Quote:
Originally Posted by pegasus
Dave, why does the debt of the bank need to be repaid by the public?
Iceland, has refused to repay the debt that the national banks incurred, and carries on regardless....maybe we should take note...?
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Iceland allowed its national banks to fail, as in go bankrupt. The savers who put their money in these banks were covered under a guarantee scheme much the same as in we have in the UK. The receivers of the bank were then forced to sell off the assets of these banks to repay the government for the money which it paid out.
We chose a different path where by we partially nationalised the big banks at a cost of £123bn, giving them a big cash injection allowing them to continue to function as banks and saving us from having to pay out for the money for people's savings. For the UK this was a better deal given that so much of our economy is driven by the financial sector.
Try to keep in mind that we haven't given them the money for free, we took ownership of large fractions of these banks, as the economy continues to recover then we will be able to re-privatise our holding in these banks, by all accounts we are expected to make a reasonable profit from the deal. Also, the banks are paying fee's and interest which as to now has covered the interest on this debt.