Rumour mill churning overtime in the City ...

[sasguru]

Don't know how it would work in practice but even slimy slippery Gordon and Co would struggle to not pay up. I have read NickGesque scenarios where if a big bank or two went down then the government would be in tulip creek and that the scheme is woefully underfunded !?

Yes that is a possibility. The govt can't bail out every bank if they fall like dominoes. Very unlikely though.

[oracleslave]

There is one, here: http://tinyurl.com/yskzg4 (it's safe for work)

Excellent AtW.

[Moscow Mule]

Yes that is a possibility. The govt can't bail out every bank if they fall like dominoes. Very unlikely though.

If a bank goes down, quite a few smaller ones will probably go too - Credit Default Swaps are often issued on banks as they are seen as "safe".