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Page last updated at 14:28 GMT, Monday, 19 January 2009
New plan to make loans easier

By Dave Howard
Newsbeat politics reporter

Gordon Brown says the government will do 'everything it takes' to support the economy

Four months ago Gordon Brown announced billions of pounds to rescue Britain's banks.

He said then that he would do everything in his power "to keep the economy moving forward".

Now though, the banks are still in trouble - so he's announced a new rescue package - and this time, it could be worth hundreds of billions of pounds.

In October last year, British banks got 37 billion of our cash to help keep them afloat.

It was just one of dozens of measures that have been taken since summer 2007 to get banks lending.

The total amount of taxpayers' cash offered to them so far could be as much as 600 billion.

Today's announcement sees the possibility of billions MORE going the same way - all with that aim of getting the economy moving.

It's going ahead even though some people are asking whether previous bail-outs were effective.

One of the banks that got the most help last time was the Royal Bank of Scotland, and today they say they've lost 7-8bn

It's the biggest single drop in British banking history.

So how's this new bail-out going to work?

It's a bit like your car insurance.

The banks agree to pay a sum of money to the government. In return, they'll be backed up if they get into trouble.

Just like you'd get cash off your insurance company if you crash your motor.

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Why's the government doing this?

Banks still aren't lending to people and businesses as they should. Many of them are sitting on big pots of cash in case they get into more trouble.

In Britain, America, and all around the world, it's that refusal to lend that's the root cause of all the economy's problems.

So the government's saying to banks 'Don't sit on that cash. Get that money out to the British businesses that need it.'

In return, banks that do find themselves in trouble will get tax cash to help them out.



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