Relief drives European confidence
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TEXT OF INTERVIEW
Scott Jagow: Obviously, European investors seem to like where the U.S. government is going. Stephen Beard joins us now. What’s behind the European confidence?
Stephen Beard: A great collective sigh of relief. The belief is growing that by taking concerted action, we could see a turning point in the financial crisis because all the major governments are on the same page.
Jagow: And by that you mean that governments in Europe and now the United States have agreed that going down the path of investing in banks is the way to go. The Brits have already started down this road, do we have any idea how that’s going?
Beard: Well yesterday, the British government took control of a huge swathe of the commercial banking sector. And you’ve got a lot of worry about what the long-term implications of this could be for the British economy.
Jagow: Like what?
Beard: Well, the fact that effectively, the British government is now controlling almost half the country’s residential mortgage market. Yesterday, the British prime minister said that he wanted to see these banks return to mortgage lending at last year’s levels. Well, we’ve got economists coming out of the woodwork here this morning saying that would be disastrous. I mean last year, there was too much credit. This would create another housing boom and an even bigger bust. The worry is that because the British government has now got control over such a huge swathe of British banking, they could wield this economic power for political purposes and not for the sake of the long-term health of the British economy.
Jagow: All right, Stephen Beard in London. Thank you.
Beard: OK, Scott.
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