Under a new scheme the UK government is to guarantee over 560 billion euros worth of risky loans and so called toxic – that is probably worthless – assets.
In other words, if those loans do not get repaid the taxpayer, rather than the banks, will foot most of the bill. That news came as Royal Bank of Scotland announced the biggest corporate loss in British history. Financial analyst Lothar Menthal said: “The loss that they have announced today is just absolutely humungous. It’s huge. It’s equivalent to 160,000 family homes that you could purchase had you not lost that 24 billion (pounds).” And anger is mounting over the fact that the former chief executive of RBS – who is being blamed for much of the bank’s troubles – is getting a massive pension. Sir Fred Goodwin is collecting a pension from RBS worth 780,000 euros a year. The British government wants him to give that up. Prime Minister Gordon Brown said: “Nobody can support very extensive pension arrangements at a time when the bank is both losing jobs of its employees and at the same time reporting major losses.” The British Finance Minister Alistair Darling added: “Banks have got to put an end to the excesses and certainly put an end to this business of people are rewarded for failure.” Goodwin’s pension was guaranteed by his contract of employment. After bailing out RBS, the British government is the biggest shareholder with 70 percent and its stake could rise as high as 95 percent in return for the risky loans insurance scheme.