From This is Money:
The Treasury is considering a £40bn scheme that would see the kind of guarantees offered to Northern Rock extended to home loans.
The move, possibly as early as next month, would be the next phase of Gordon Brown’s plan for cushioning the effects of the economic downturn.
But offering taxpayer backing for the mortgage market would be a high-risk proposition and provoke fierce criticism.
The Treasury is aware of a number of pitfalls, including the danger of encouraging reckless behaviour by banks.
City banker Sir James Crosby, the former Halifax boss, is currently completing a study for the Treasury into ways of reviving the mortgage market, paralysed by the credit crunch.
One Treasury insider said: ‘One major problem is a lack of mortgage finance, so if there is anything we can do to help with that we should think about it.
‘If Sir James comes back with something credible that doesn’t expose the taxpayer to too much risk then we would be wrong not to consider it.’…
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