Chancellor concerned over banks failure to lend
The Chancellor Mr Darling is "extremely concerned" that banks may not be abiding by their pledges to increase lending during the economic downturn.
Alistair Darling has warned that he will take action if he discovers that banks have increased the cost of loans for small and medium-sized businesses despite sharp reductions in the Bank of England base rate.
Today, Mr Darling will meet with the main high-street banks to scrutinise their controversial lending practices.
Small businesses are claiming they are being denied cheap loans by British banks, despite the banks receiving tens of billions of pounds in Government assistance. It is feared that the failure of banks to increase cheap lending may be hindering an economic recovery.
Mr Darling said that the Government did not bail out banks out of "some kind of charitable act".
"We need them to lend money. They've got to live up to the promises they have made. We will be going through with each bank, why is it when the cost of borrowing has gone down, it would appear the cost to small businesses has gone up."
He added: "The public will not understand it if they [the banks] don't seem to be doing their part.
"I want banks to rebuild their balance sheets, but at the same time because of the particular circumstances we are in now, we also need them to re-lend money."
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This Latest News article was created on 27th July 2009
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