Bank of England must use QE to buy 'bad mortgages', warns Fathom Consulting
In a paper published on Tuesday, Fathom Consulting has urged the Treasury and the Bank of England to join forces and create a new "bad bank" to buy lenders' worst mortgages in a bid to "unblock" the credit supply. Outlining unprecedented policy measures, Fathom said the purchases should be done through a second round of quantitative easing (QE). "Put simply, [banks] have lent too much money against assets that have fallen in value, and those losses have to be fully recognised. Until they are, the economy will not be free to move forward," Danny Gabay and Erik Britton argue in the paper.