THE WALL STREET JOURNAL: LONDON -- Six months after the U.K. government scrambled to launch new bailout measures for Britain's foundering banks and economy, several of those efforts are languishing with few takers.
In January, for example, the British government created a guarantee program meant to revive the dormant market for asset-backed securities. The program aims to spur purchases of banks' asset-back securities, or bundled consumer loans, by guaranteeing them for buyers.
The guarantees were made available in April, but since then, none of the major U.K. banks has issued a security with such a guarantee. Bankers say it is too expensive; the government says the program is under review. So far, no changes to its terms have been made, and the program is set to expire in October.
The flop is among several misfires by the U.K. government in recent months among programs that haven't drawn interest from the banks and businesses they were intended to help. An effort to give firms trade insurance, for example, has seen only limited participation. The same is true of a loan guarantee for small businesses, which has been disregarded because it requires owners to put their own collateral on the line.
The snubbed bailout programs are a testament to the difficult balancing act governments face when attempting to aid their financial sectors and economies: They don't want to give banks and businesses a free ride, but fail to accomplish anything if their terms are not attractive enough. >>> By SARA SCHAEFER MUÑOZ and ALISTAIR MACDONALD | Monday, July 06, 2009
