September 22, 2007 (LPAC)--In an interview Sept. 22 with the Times of London, British Chancellor of the Exchequer Alistair Darling proposed a set of proposals, a leading one of which would potentially triple the British government's insurance of depositors' deposits from approximately 33,000 pounds ($66,000) to 100,000 pounds ($200,000). The change in depositors' insurance would be applied to all banks in the British banking system, not just the troubled Northern Rock home lender. This indicates that Darling, and others in British policy elites, are concerned about, and trying to prepare for, the next phase of the spreading British and international crisis that goes far beyond Northern Rock.

Under the existing British Financial Services Authority (FSA) deposit protection scheme, the FSA insures 100% on the first 2,000 pounds that a depositor holds on deposit at a bank, and 90% on the next 31,000. That amount would be increased potentially up to 100,000, Darling told the Times. Darling also proposed changes to the Bank of England's lender-of-last-resort system, so that a failing institution would have quicker access to-- and would not have a stigma attached to-- obtaining a bail-out loan from the Bank of England. Darling will unveil the full proposals in testimony before parliament next month.

The problem is that London is the world's center for derivatives trading, and the center for Europe's leveraged buy-out operations. It is those, and other London speculative markets, which, as the contagion spreads, are being shaken to their foundation.

John McFall, chairman of Britain's parliamentary committee that scrutinizes Darling and the Treasury, told BBC today, "We need people to feel reassured that if something happens, they can get their money almost immediately." In wheelbarrows, perhaps?