British Finance Minister Alistair Darling (right) listens as Prime Minister Gordon Brown addresses a press conference at 10 Downing Street in London -- October 8, 2008.
TEXT OF INTERVIEW
Renita Jablonski: Good to have you with us this morning as we continue with Fallout: our special coverage of the global financial crisis. Markets around the world are deep in the red. Selling is escalating as worries about credit reach a new level.
Part of that reality this morning is an announcement from the British government -- it's creating a rescue package for banks. The plan will help support several big names you probably recognize -- HSBC, Barclays, and Royal Bank of Scotland among them.
Our European Correspondent Stephen Beard joins us now from London. Stephen, how is this going to work?
Stephen Beard: This is a big and very complicated package, but a main part of it is an offer by the government to put in up to $90 billion of taxpayers' cash into the British banking system. So banks can apply for this cash, and in return for some of the cash they would hand over preferred shares to the government. So the British taxpayer will get a substantial stake in the banks. This is the part nationalization of the British banking system.
Jablonski: So some clear differences between this and the U.S. Henry Paulson bailout.
Beard: Yes. Unlike the Paulson plan, this isn't the government buying up the toxic assets. This is the government stepping in and with the backing of the taxpayer becoming part owner of some of the country's biggest banks. Now this isn't outright nationalization, they're not taking control over the day-to-day running of any of these banks, but there are going to be some strings attached. Those banks that do take part in the scheme will have restrictions on bank executives' pay and restrictions on dividends, for example.
Jablonski: How unusual is a move like this, given the circumstances?
Beard: Well, the British government has already nationalized two big mortgage lenders, Bradford & Bingley and Northern Rock, but this really is something else. This is slamming into reverse the whole trend of British government policy -- that is privatizing state-owned assets. What we're having here is a public stake in some of the country's biggest banks. It is a pretty dramatic and extraordinary move.
Jablonski: OK, our European correspondent Stephen Beard in London. Thanks a lot, Stephen.
Beard: OK, Renita.