UK Government Policies Essay Example | Topics and Well Written Essays - 1500 words

UK Government Policies - Essay ExampleThe basiss for the banking crisis were many including low real participation rates, too much liquidity and a misjudged faith in the financial system. These three factors created an entourage that was exceedingly optimistic and full of opposite opinions. By not infrastanding the sensitive situation, some banks have altogether themselves to blame (Singh, 2007). The tradition within the banking sector in the UK has been one of the risks taking type that lead to its eventual(prenominal) failure. Bankers made a mess of the financial reading and hence the financial situation (Singh, 2007). However, this failure was not just restricted to individual banks but also the system constructed to defend the public from risk. Banks got concerned around the value of their owe and also about the mortgages they had purchased from other institutes. For this reason they refused to lend to other banks in the cash markets (Singh, 2007)The measures that the presidencys stuck during the financial crisis were public investments like debt and equity which further resulted in acquiring banks and other institutions. Government investments ease the situation of banks that went bankrupt and failed to meet its obligations. It increased the amount of money or capital they had and able to bother them go on with their daily business routine. The banks that did not keep up to their reputations were legally intervened by the judicature as it is a part of legal procedure. This intervention means taking away the license from the banks if they were under performing to the level that they had huge debts. This practice however is very common in the USA and some examples include the closing of Washington the sale to JPMorgan (Giudice, 2012). In some cases a few banks could not be sold and so the regime decided to take over them by nationalization. For example in the UK the giving medication nationalized many banks and took over some by buying throug h common stock. Common stock gave them the ripe to owner ship of some of the largest banks in the UK like Royal Bank of Scotland and Lloyds (Giudice, 2012). To recover from this financial crisis, the governing of the United Kingdom came out with different schemes. One of the schemes was known as the recapitalization program. Under this scheme the government activity agreed to finance the largest banks in the UK by injecting ?50 billion worth of investment. A company called the UK Financials coronation Limited (UFIL) was created to manage investments in these large banks and to check if they were providing lending with reasonable rates of interest to the global public (Lybeck, 2011). The recapitalization program required an approval from Her Majestys treasury for banks to attain it. Eight banks and structure societies subscribed to the program including RBS and Lloyds who were granted funds worth ?20 billion and ?17 billion respectively. The government also put some demands for ward. It said that the banks, after receiving funds should try to help people with their mortgage payments so that they could stay in their homes. The government also kept the right to appoint new non-executive directors. The government recapitalized RBS and Lloyds and taking over 70% and 65% respectively. It took complete control over Northern Rock and Bradford & Bingley. The reason