"Frankly, I believe the government needs to provide funds to support domestic subprime mortgages. America has already done so, primarily targeting ordinary people with a reasonable repayment capacity. Over $100 billion has been allocated to ensure that those who have been paying their mortgages for a considerable period of time will not have their homes repossessed due to temporary difficulties."
As previously mentioned, the British government's financial policy is still primarily based on minimal interventionist liberalism. This policy generally fosters a more dynamic financial system, but in times of severe disruption like the subprime mortgage crisis, it can easily lead to a chain reaction of disasters.
This time, Barron's meeting with Chancellor of the Exchequer Darling was intended to convince him to agree to provide assistance to ordinary people struggling to repay their mortgages, leading to a British rescue plan similar to America's "Lifeline" program.
"The bailout I'm talking about isn't for the banks involved, but for those who would normally be able to repay their mortgages but are experiencing temporary difficulties due to the subprime mortgage crisis. These individuals are the backbone of our society, and we need to ensure they can weather this crisis and keep the properties they've purchased."
Baron hadn't lied to Darling. Such bailouts were indeed necessary. If those were simply speculating on real estate for investment, then government assistance wouldn't be necessary.
However, many people do need to buy homes and have considerable repayment capacity, but have been affected by the subprime mortgage crisis—either through losses in other investments, or because their employers have suddenly closed down or faced layoffs, among other unexpected reasons.
Under normal circumstances, the government could maintain a "free economy," but in this situation, it's imperative to curb panic and provide the "middle class" with support to weather the crisis.
Of course, Baron and the others were already aware of the British government's stance.
Therefore, last month, Britain's four largest listed banks—HSBC Holdings, Royal Bank of Scotland, Standard Chartered, and Barclays—jointly established a £50 billion crisis response fund to provide partial guarantees for the nonperforming assets of some British banks affected by the subprime mortgage crisis.
Naturally, the assets guaranteed by this fund will also be subject to review by a temporary body formed by the four banks.
This government bailout plan is not just driven by Barron's; senior executives at other banks are also pushing for it.
After all, these banks are all involved in residential mortgage lending to varying degrees, and they undoubtedly hope that the government will provide assistance to qualified clients to reduce their nonperforming asset ratios. Even if they can repossess mortgaged properties in the event of a client default, as banks, not real estate agencies, they simply don't want to expend the effort of dealing with these properties.
Furthermore, the entire British real estate market has been in a continuous decline since last year, with the market value of nearly all mortgaged properties now falling below the value of the mortgages they provide.
Standard Chartered Bank is in relatively good shape. After being acquired by Barron's, Standard Chartered has strictly controlled its mortgage lending, particularly the riskier subprime mortgages, which now account for a very small portion of its operations.
Standard Chartered's non-performing assets primarily stem from the businesses of its acquisition of Northern Rock Bank.
While these businesses represent a significant portion of Northern Rock's overall size, they are not particularly significant given the scale of Standard Chartered.
Furthermore, even before Standard Chartered acquired Northern Rock, these non-performing assets had already significantly reduced Northern Rock's market capitalization.
Then, just recently, the Cavendish Trust injected €10 billion of its profits from the DS Group's short-selling into its Cavendish Asset Management subsidiary. Through Cavendish Asset Management, it also purchased €10 billion worth of assets from Standard Chartered Bank.
These assets came from some of the non-performing assets of Northern Rock Bank, which Standard Chartered acquired—properties that had been repossessed due to mortgage defaults. After purchasing these properties, Cavendish Asset Management will perform some simple renovations and renovate them before leasing them out temporarily. Once British housing prices rebound, even without rent, they should be able to generate a satisfactory return. Standard Chartered
Bank, in turn, will recover funds from the sale of these assets, significantly reducing its non-performing loan ratio and repaying a significant portion of its previous high-interest short-term foreign debt owed to Northern Rock Bank.
It's a win-win situation for both parties. Currently, Cavendish Asset Management appears to be at a slight disadvantage. Although they acquired these properties at a price slightly below current market value, British real estate prices continue to decline, and the market is not optimistic about this. This transaction may soon result in a loss on paper.
However, Barron understands that the British real estate market, especially in London, will rebound in the coming years, exceeding previous prices. As a long-term investment, Cavendish Asset Management's transaction should at least yield satisfactory returns.
...
On September 8th, Bonnie Cavendish began to feel the effects of her pregnancy three days before her due date.
That night, in the best maternity hospital in London, with Barron anxiously waiting, Bonnie gave birth to their second son.
"Thank you for your hard work, baby."
Barron held Bonnie's hand, looked at her somewhat weak appearance, and kissed her on the forehead.
"I want to see our child..."
"He has just been taken out to be cleaned up, I believe he will be back soon."
Of course, as Barron's descendant, after the child was born, someone would accompany the nurse throughout the process to ensure the baby's safety.
Just as Barron's voice fell, the nurse had already brought the baby in.
"Look, he is so cute, just like George when he was a child..."
Barron took the child, placed it in front of Bonnie's eyes, and said to her softly.
Their child is also the second in line to the title of Duke of Devonshire. Barron named him Richard Cavendish.