Lehman Brothers ban collapse threatens thousands of jobs

Sep 15 2008 by Alistair Houghton, Liverpool Daily Post

London’s FTSE 100 Index was down nearly 4% today amid the fresh turmoil, with banks taking the brunt of the punishment.

Britain’s biggest mortgage lender, HBOS, was the worst hit stock, losing more than 15%. Royal Bank of Scotland down 9% and Barclays 8%.

Both the Bank of England and the Treasury have said they are monitoring the financial turmoil, with the Bank ready to intervene in money markets if necessary.

European stock markets were also suffering hefty losses.

In what have been seen as moves to help shore up the financial system in the wake of Lehman Brothers' bankruptcy, Bank of America has agreed to buy under-pressure investment bank Merrill Lynch, and a consortium of commercial and investments banks have also agreed to extend 70 US billion dollars (#39 billion) of credit.

Lib Dem Treasury spokesman Vince Cable, a former chief economist with Shell, said the situation was “very grave”.

He told the BBC Radio 4 Today programme there would be intervention to stop banks failing because the “whole of the international financial system” was at risk.

“I think the least we are going to have to learn from this is that the whole of the financial sector simply cannot return to where it was before,” Dr Cable said.

“It is going to have to be much more tightly regulated in the public interest.”

Angela Knight, chief executive of the British Bankers’ Association, said no UK banks were in a similar position to Lehman Brothers, which as an investment bank does not take retail deposits.

She said: “Lehman Brothers is a relatively small player in the UK.