Banks 'must be bailed out' - commercial mortgages

14 January 2009

The government should be prepared to bail out banks again if the need arises, it has been argued.

Michael Baxter, an economist at Defaqto, has highlighted the importance of supporting financial institutions in times of crisis.

"You cannot let the banks go bust; if the banks need more bailouts then you will have to do it, there is no choice in the matter," he remarked.

He noted that it is important for the government to try and get banks lending again, but added that this would be a "very difficult" achievement.

"They can't force the banks to lend," Mr Baxter commented, adding that ministers may have to take further action to inject more cash into the economy.

Such a move could have an effect on businesses in need of loans or commercial mortgages.

Recently, in his New Year's address to the nation, prime minister Gordon Brown pledged to give "real help" to businesses at the time when they need it the most.