HIGHLIGHTS - Second bank rescue plan

LONDON (Reuters) - The government unveiled a second support package on Monday for struggling banks to try and get lending flowing again in an economy lurching into its first recession since the early 1990s. Here are highlights from comments made by policymakers following the announcement.

ALISTAIR DARLING: EU DEAL ON BANK CAPITAL REQUIREMENTS

"The Financial Services Authority have set out today their policy on capital requirements."

"It will be a key signal that banks should allow their capital to be used to absorb the losses from investments -- while not unnecessarily restricting their lending.

"And because the regulation of capital is fundamentally an international matter -- tomorrow I will present our plan to European finance ministers in Brussels. I hope we will be able to agree similar capital policy changes. It is essential."

ALISTAIR DARLING: LOWER MORTGAGE DEPOSIT REQUIREMENTS

"Looking at when the housing market recovers, I am considering whether, and if so how, Northern Rock or other UK lenders can best support prudent lending to creditworthy customers, who will need mortgages, but can only afford deposits less than 25 per cent."

ALISTAIR DARLING: BOE FUND WILL NOT BOOST MONEY SUPPLY

"What we've said today is that the money that is going from the Bank of England to help the corporate sector will be counted by normal money market operations to take the money out of the system elsewhere, it won't increase the money supply. So our policy has not changed in relation to that."

"This is going to be neutral in terms of additional money that goes into the wider economy."

NB - As well as the 50 billion pound fund Darling was referring to, the BoE will also have the power to adjust reserves to lift the monetary base and thereby British money supply.

GORDON BROWN ON G20

"Look back on speeches I've been making for years, asking for that to happen -- a global supervisory and financial structure that allows us to have the information about what's happening on cross-border flows."

"Until we get that I will not be satisfied, and that is something I will be pressing for to come out of the G20 meeting in April."

ALISTAIR DARLING ON NORTHERN ROCK

"In the present climate you're facing the departure of foreign-based banks and some of the smaller building societies are not going into too much lending, so it's time to take stock. What we have stopped is the (Northern Rock's) policy of actively getting people off its books. I hope to make shortly a further statement on how we see that bank developing."

"We have decided it is not appropriate for Northern Rock to continue to shrink it's activities, they have made substantial repayments to the government and is ahead of its repayment schedule. It is right for them to maintain their lending in the housing market."

PRIME MINISTER GORDON BROWN

"The scheme is temporary, based on loans rather than grants, is backed by assets and can be capped if necessary."

BANK OF ENGLAND GOVERNOR MERVYN KING

"The Asset Purchase Facility will provide an important additional tool to improve financing conditions in the economy."

CHANCELLOR ALISTAIR DARLING, ECONOMIC DOWNTURN HAS MADE THINGS WORSE

"There's no doubt that because the economic downturn has been much sharper, especially over the last few weeks, that has exacerbated the situation."

NO LONG-TERM INVOLVEMENT IN BANKS

"I have said that in the longer term, I don't believe that governments ought to be running banks. Provided that they are properly supervised and regulated, provided their boards take proper decisions on who they lend to and they lend responsibly."

DARLING ON BANKS REVEALING RISKS

"In relation to exposing losses: if we're offering insurance we've got to be sure we know what those risks are."

DARLING ON BANK SUPERVISION

"It's quite clear in the world we're living in just now we do need to look again at the way we supervise and regulate these banks."

"We're doing it, because if the banking system collapsed, every single one of us, the economy would come down with it. I don't think anyone would argue you ought to let that happen."

"The banks' management has got to be strengthened. We've got to make sure we tighten up regulations. Banks have to remember that they are a servant to the people of this country and many countries and the regulatory system has got to reflect that."

"Every government in the world has this problem and we'll get through it much quicker if government's right across the world work together."

DARLING ON ECONOMIC DOWNTURN

"There is a way to go yet. Looking out towards the next year, there's no doubt that the downturn in economies across the world is really quite sharp now."

"We'll get figures later this week ... confirming that the country has gone into recession. America is, Germany, France, the Asian countries: the Chinese situation has deteriorated dramatically over the last few weeks so we're all facing a tough time. If countries act together, whether it's getting lending going, or supporting their people, businesses, supporting their economy, then this recession will be less severe than would otherwise have been the case. Really, you can't sit back and do nothing and hope for the best."

DARLING ON GETTING LENDING GOING TO HELP ECONOMY

"If we didn't do anything ... the cost of not doing anything would be far, far greater. If we don't get lending going, the recession would be longer and deeper and more painful than would otherwise be the case."

DARLING ON SUPERVISORY CHANGE

"When we get through this recovery, we can look to getting banks away from government again. Make no mistake about it, the supervisory regime has got to change. We've got to make sure that we avoid this problem happening again, because it has been so, so costly to everyone of us: the banks have got into difficulties, it hasn't just affected them. It's the wider public interest, that's what I'm concerned about and that's what I'm determined to protect."

DARLING ON GLOBAL ACTION

"Banks all over the world have got themselves into huge difficulties and governments all over the world are having to sort this out."

"These are difficult times, the key to success here is to make sure governments across the world act to put money into supporting people and to deal with this problem in general lending."