WSJ: Darling urges G7 Ministers to adopt FSF proposals

08 April 2008

The U.K. government will consider the “full range” of options to ease financial market strains, Chancellor of the Exchequer Alistair Darling said. In a letter sent Monday to U.S. Treasury Secretary Henry Paulson and other Group of Seven industrial nations finance ministers, Darling urged “rapid implementation” of proposals from the Financial Stability Forum to tackle the credit crisis. “We should also consider the full range of policy options to ease current market conditions,” he added.

 

Darling’s letter comes ahead of this week’s G7 meeting in Washington. It also comes as pressure mounts on the Bank of England to ease the tightness in wholesale markets by accepting a wider range of collateral at its liquidity auctions.

 

“We continue to urge the Bank of England to use more broad-based and flexible measures to increase liquidity levels in the U.K. market so that firms have sufficient funding available to match consumer borrowing demand in 2008,” the director general of the Council for Mortgage Lenders, Michael Coogan, said Tuesday.

 

In his March 12 budget, Darling announced the setting up of a working group in part to tackle the problems for the mortgage market created by the credit crisis. The market strains have increased the wholesale costs of funding for lenders. As a result, lenders are culling more attractive mortgage products in a move some believe could lead to a sharper downturn in the once-booming U.K. housing market.

 

The working group will bring together mortgage industry experts with officials from the Bank of England, the U.K. government and the Financial Services Authority. –Laurence Norman

 

© Wall Street Journal