Italy govt prepares to defuse bank loan crisis

Italy's government on Tuesday prepared to defuse a potential crisis threatening the country's banks, which may have to refund customers huge amounts of loan interest payments after a Supreme Court ruling.

Prime Minister Giuliano Amato's cabinet gathered for a regular meeting on Tuesday morning but it was believed ministers would discuss a warning by Bank of Italy governor Antonio Fazio that the court ruling could be ruinous for Italian banks and damage the economy.

Fazio's note of doom, sent in