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Nocitybailout - epetition reply

3 January 2008

We received a petition asking:

"We the undersigned petition the Prime Minister to not bail out mortgage holders and mortgage lenders with my taxes."

Details of Petition:

"As a responsible citizen, I do not believe it is right for you to ask me to pay for the City's financial excesses, especially since a bailout encourages lenders to continue making predatory loans, with the assumption that taxpayers are on the hook. Any proposed bailout will only reward lenders and borrowers who acted irresponsibly, and it will punish people who work hard and diligently manage their finances by not buying houses which they cannot afford. The banks profited hugely on the upside, they absolutely deserve the losses that stem from their failure to exercise good judgment in their investment decisions. The housing market has begun a process of correction. This is necessary in order to keep housing affordable in the long-term. Let the market correct so we can achieve stability and affordability again."

Read the Government's response

Details of the Government's response to the situation at Northern Rock have been set out in statements to Parliament and the wider public. These statements explain the background to Northern Rock's difficulties, how the situation developed, the actions taken by the Tripartite Authorities (the Bank of England, Financial Services Authority (FSA) and HM Treasury), and the objectives and principles within which the Tripartite Authorities operate.

The responsibility to minimise risks and prevent problems from happening in a particular bank lies first and foremost with the directors acting on behalf of its shareholders. It is not the role of taxpayers to protect directors and shareholders from the consequences of their decisions. The Government's response to the situation at Northern Rock was necessary to avert a threat to the stability of the UK's financial system and avoid a serious disturbance in the wider economy. As the Chancellor explained to Parliament on 11 October 2007, the Tripartite Authorities' objectives in relation to Northern Rock are to protect taxpayers; to promote financial stability; and to protect consumers. The specific objectives of the FSA are set out in Part I of the Financial Services and Markets Act 2000.

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