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Alistair Darling, the Chancellor, will announce this morning [MON] that the Government is taking over the bank’s mortgages and selling off the savings business and the branches. Savers are reassured that their money is safe although people owning shares in the bank will lose out.
The Government may merge the bank, which has mortgages worth more than £40 billion, with the nationalised Northern Rock. Every taxpayer in Britain will be exposed to the equivalent of £5,500 in mortgage debt as a result.
In another day of frantic action around the world, the American Government also agreed a $700 billion deal to take on bad banking debts following several days of intense talks in Washington. However, British taxpayers are now more exposed to mortgage debts than their American counterparts, who are saddled with the equivalent of £2,750 per taxpayer.