Bank plans to cap risky mortgages

[AtW]

Responsible for what? It makes little difference whether it is from savers or other sources, the bank is still lending borrowed money. That's how it works.

It makes all the difference - when money come from savers there is a limited supply of such money in locality where bank is, this acts as a limiter on local asset bubbles (unless a lot of foreigners move in to buy it for cash), however when bank can get money on money market from countries that print them like no tomorrow then it skews local market with run away prices and giving loans to people who should not have had them (not at those volumes for sure).

[shaunbhoy]

Still bitter about missing the property gravy train. Let it go man FFS!

[centurian]

It makes all the difference

Don't want to ruin my cred by agreeing with Atw, but he's right here. The housing bubble was precipitated by foreign money being shoveled into banks and building societies.

If banks could only lend out depositors money, they would have had less to lend out, so would have cherry picked the customers according to risk.

It was made worse by the perpensity of such investors to cut and run at the first sign of trouble. Northern Rock wasn't brought to it's knees by the queue of customers at branches, but their complete exclusion from the financial markets.