Northern Rock...(a year or so later)

Anonymous Guest's picture
Submitted by Anonymous Guest on Tue, 2008-08-05 06:08

A year or so ago I strongly criticised the bailout of the UK bank Northern Rock and did so for a number of reasons such as:

1. Bailing out people for mismanagement

2. The Chancellor, Alistair Darling, having a mortgage with the bank and the conflict of interest of he considering their future

3. The enormous cost of bailing them out.

4. That Northern Rock competitors paying taxes are required to assist with bailing them out

5. In business "you pay your money and take your chances"

...and various other reasons.

The chickens have predictably come home to roost with the, now state owned, bank losing 500 million pounds in the first six months of the financial year.

As this article in the Telegraph says, Northern Rock was "offer[ing] particularly high risk loans of up to 125 per cent of the value of properties..." and anyone who could not see that as a recipe for disaster...ummmmm...(will probably get a seat on the Board) ...ha ha!

I just shudder to think how much more British taxpayer money will be poured into this mismanaged and technically bankrupt bank before they face reality and close up shop.


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It gets worse

Marcus's picture

Confirming that the Government is to convert £3bn of the taxpayers' money leant to Northern Rock into a cash injection to help the bank's ailing finances, Mr Darling said that the pains being felt by the nationalised bank, which today announced losses of £585m over the last six months, were also being suffered internationally.

"Northern Rock, along with every other bank across the world, is facing a very difficult time," Mr Darling said.

"The difficult situation is going to continue for a while yet. Northern Rock needs more share capital, it doesn't have shareholders of its own, so it's got to come to us. What we've said is that we will put in up to £3bn."

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