Now the Chancellor has accused banks of lending money too freely, and has told them to take a more cautious approach. Commenting on the on-going global credit crisis, Alistair Darling told the Daily Telegraph, in crude terms they need to know who they're lending to, how much they're lending and what the risk is. Now, that's elementary banking, one might think, but there are times when going back to good old-fashioned banking may not be a bad idea.

Well, I am joined now by our economics correspondent Faisal Islam. Some people would say after 10 years in power, it's a bit rich for a Labour Chancellor to be blaming the banks for giving out easy money. What's he driving at?

There are two things going on here. Firstly, there seems to be the Chancellor by definition the government laying the blame as a current crisis in the financial markets, the credit crisis firmly at all of one set of institutions, the banks. And the implication here, the timing is highly significant because it comes just a day after the Governor of the Bank of England Mervyn King came out with a lengthy defense of his stoic position on all of this, that the bank's job is to intervene very forensically and selectively to keep the wheels of the financial system turning as they have done this morning by confirming a 4.4 billion pounds of money on offer to the markets. But not to kind of go about doing a more general bailout, not to sow the seeds of future financial crisis by letting, by bailing out those people that made stupid risky investment decisions, for example, on dodgy American mortgage debts. What this is is the Chancellor backing that view.

Ok. And what exactly did he mean when he talked about going back to good old-fashioned banking?

Well, I don't think he's suggesting that we perhaps go back to the days of a gentlemanly bank manager who knows the name, everything about you including the name of your pets. That's, those are gone. Yeah, we are living in a banking system just all about how you transfer risk around the financial system between borrowers and lenders and across the world and they repackage these debts they sell them on and guess what, it's the British banking system that has made billions of pounds out of that very act and will continue to. I don't think we are gonna see the end of that. But he is clearly saying that it may have gone too far.

And what does this all mean for us consumers then.

We are already seeing the effects of this banking crisis with the interest rate rises coming without the Bank of England raising its interest rates. This is gonna be a fixed role over the next few months. The banks say that shows that credit is being more sensibly given out, they say it's the lenders who are borrowing too much not the banks who are lending too much as they told me earlier.

We are quite interested in the Chancellor's comments because of course the banks have been reviewing the way they lend money (um...) particularly unsecured credit for a number of years now. And in fact about 1 in 2 of every credit card applications are declined. I think there's a message for consumers that are looking to take on credit where they have been declined. And that is to think very carefully before going elsewhere for credit.

So what we see is the Chancellor and the Bank of England ganging up, saying that this position is right, the banks are gonna have to accept that they are gonna make losses.

Faisal. Thank you.

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1.stoic: adj. If you say that someone behaves in a stoic way, you approve of them because they do not complain or show they are upset in bad situations. (FORMAL)

2.forensical: adj. Forensic means relating to the legal profession.