Birmingham City Council came under fire for advertising “sub-prime” mortgages when questions were raised about its free newspaper in the House of Commons.
Gordon Brown, the Prime Minister, said he would look into claims it accepted advertising aimed at people “who are only on benefits, are in arrears or who have been bankrupt” – encouraging them to take out loans.
The council admitted the ads, offering residents loans to buy council houses, had “slipped through the system”.
The row follows widespread criticism of lenders who gave money to sub-prime borrowers, who could not afford repayments.
In America, the FBI is investigating claims banks and other lenders failed to carry out proper checks when arranging mortgages.
Edgbaston MP Gisela Stuart (Lab) told MPs that Forward, the fortnightly newspaper published by Birmingham City Council, had included adverts encouraging tenants to take out loans “which they can ill afford to repay”.