CGS funds should be diverted to RSLs
Embley said that if the government was serious about looking at the housing crisis, it could easily extend the repayment schedule on the credit guarantee scheme specifically to fund RSLs.
Under the CGS the Treasury attached State guarantees to bank loans in exchange for a commercial charge.
This was to provide banks and building societies with short term liquidity and give them the resources to restructure their finances to the extent required to fulfil their roles as lenders following the credit crunch.
The time to pay back the guarantee is soon approaching, due between 2012 and 2014.
However Embley said an alternative would be extending the guarantee on the condition that banks and building societies lent the funds to Registered Social Landlords.
He said: “Funding the RSLs would be a more socially acceptable way of ensuring that people with lower incomes could actually get on the housing ladder.
“Osborne has to balance shoring up our economy while giving capital markets across the world confidence in the UK. And if he lets banks off the hook on the huge £125bn of help, it will have a huge impact on our credit rating.
“Our solvency and our interest rates will go up and we don’t want to see our bonds at 7.5% like Italy.”