The British government will become part owner of the nation's biggest banks with a mammoth $88-billion rescue package for the troubled institutions, the Wall Street Journal reports. Under the plan, swiftly assembled after UK bank stocks plummeted in trading yesterday, the government will purchase non-voting shares in eight of the largest banks as a way to provide extra capital to the institutions.
The UK deal aims to boost capital so banks can restart lending. A further $360 billion will be made available for short-term borrowing to restore liquidity. A company will also be established to provide up to $360 billion in loan guarantees. The plan marks the start of "a process of un-bunging a big problem where banks won't lend to each other for long periods," said Finance Minister Alistair Darling.