Bank of England Helps Banks

The Bank of England has set up a new lending facility for banks.British banks will now be able to swap their mortgage-backed securities for treasury bonds.The facility is similar to one established by the U.S. Federal Reserve.The banks will be able to keep the bonds for up to three years.At that point,the swap will be reversed.The BOE is providing 50 billion pounds for the facility-that is about 100 million dollars U.S..Even if the banks' securities were based on good mortgages,they are viewed with suspicion in the current environment.If they couldn't swap them for treasury bonds,they might have to write them down as a loss.